Exhibit
1















Table of contents



|CORPORATE STRUCTURE                                        | 8  
|---------------------------------------------------------- | ---
|GENERAL DEVELOPMENT OF THE BUSINESS                        | 9  
|Developments – Mines and Projects                          | 9  
|Developments – Financial                                   | 10 
|DESCRIPTION OF THE BUSINESS                                | 12 
|Specialized Skills and Knowledge                           | 12 
|Principal Products                                         | 12 
|Competitive Conditions                                     | 12 
|Operations                                                 | 13 
|Technical Information                                      | 15 
|Summary of Mineral Reserve and Mineral Resource Estimates  | 15 
|MINERAL PROPERTIES                                         | 20 
|Rainy River Mine, Canada                                   | 20 
|New Afton Mine, Canada                                     | 26 
|Mesquite Mine, United States                               | 31 
|Cerro San Pedro Mine, Mexico                               | 33 
|Blackwater Project, Canada                                 | 34 
|RISK FACTORS                                               | 37 
|NOTES                                                      | 56 
|DIVIDENDS                                                  | 57 
|DESCRIPTION OF CAPITAL STRUCTURE                           | 57 
|MARKET FOR SECURITIES                                      | 59 
|DIRECTORS AND OFFICERS                                     | 60 
|LEGAL PROCEEDINGS AND REGULATORY ACTIONS                   | 67 
|INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 67 
|TRANSFER AGENT AND REGISTRAR                               | 67 
|MATERIAL CONTRACTS                                         | 67 
|TECHNICAL REPORTS                                          | 68 
|SCHEDULE A – Audit Committee Charter                       | A-1
|SCHEDULE B – Definitions                                   | B-1
|SCHEDULE C – Abbreviations and Measurement Conversion      | C-1
|SCHEDULE D – Exchange Rate and Metal Price Information     | D-1



2







Annual information
form
for the financial year ended december 31, 2017



All information in this annual information form (“Annual
Information Form”) is as at December 31, 2017 unless otherwise indicated.



Cautionary
Note Regarding Forward-Looking Statements



Certain information contained in this Annual Information Form,
including any information relating to New Gold’s future financial or operating performance are “forward looking”.
All statements in this Annual Information Form, other than statements of historical fact, which address events, results, outcomes
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 use of forward-looking terminology such as “plans”,
“expects”, “is expected”, “budget”, “scheduled”, “targeted”, “estimates”,
“forecasts”, “intends”, “anticipates”, “projects”, “potential”, “believes”
or variations of such words and phrases or statements that certain actions, events or results “may”, “could”,
“would”, “should”, “might” or “will be taken”, “occur” or “be
achieved” or the negative connotation of such terms. Forward-looking statements in this Annual Information Form include those
under the headings “General Developments of the Business”, “Description of the Business” and “Mineral
Properties” and include, among others, statements with respect to: guidance for production, operating expenses per gold ounce
sold, total cash costs, all-in sustaining costs and capital costs, and the factors contributing to those expected results, as well
as expected capital expenditures; mine life; Mineral Reserve and Mineral Resource estimates; grades expected to be mined at the
Company’s operations; the expected production, costs, economics and operating parameters of Blackwater and New Afton C-zone;
planned activities for 2018 and beyond at the Company’s operations and projects, as well as planned exploration activities
and expenses; and targeted timing for permits for the Blackwater Project; and the timing of achievement of closing conditions for
the sale of the Peak Mines.



All forward-looking statements in this Annual Information Form
are based on the opinions and estimates of management as of the date such statements are made and are subject to important risk
factors and uncertainties, many of which are beyond New Gold’s ability to control or predict. Certain material assumptions
regarding such forward-looking statements are discussed in this Annual Information Form, New Gold’s annual and quarterly
management’s discussion and analysis (“MD&A”) and its Technical Reports filed on SEDAR at www.sedar.com.
In addition to, and subject to, such assumptions discussed in more detail elsewhere, the forward-looking statements in this Annual
Information Form are also subject to the following assumptions: (1) there being no significant disruptions affecting New Gold’s
operations; (2) political and legal developments in jurisdictions where New Gold operates, or may in the future operate, being
consistent with New Gold’s current expectations; (3) the accuracy of New Gold’s current Mineral Reserve and Mineral
Resource estimates; (4) the exchange rate between the Canadian dollar, Mexican peso, Australian dollar and U.S. dollar being approximately
consistent with current levels; (5) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately
consistent with current levels; (6) equipment, labour and material costs increasing on a basis consistent with New Gold’s
current expectations; (7) arrangements with First Nations and other indigenous groups in respect of Rainy River and Blackwater
being consistent with New Gold’s current expectations; (8) all required permits, licenses and authorizations being obtained
from the relevant governments and other relevant stakeholders within the expected timelines; (9) the results of the feasibility
studies for the New Afton C-zone and Blackwater being realized; (10) and in the case of production, cost and expenditure outlooks
at operating mines for 2018, commodity prices and exchange rates being consistent with those estimated for the purposes of 2018
guidance.



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 actual results,
level of activity, performance or



3







achievements to be materially different from those expressed
or implied by such forward-looking statements. Such factors include, without limitation: significant capital requirements and the
availability and management of capital resources; additional funding requirements; price volatility in the spot and forward markets
for metals and other commodities; fluctuations in the international currency markets and in the rates of exchange of the currencies
of Canada, the United States, Australia and Mexico; discrepancies between actual and estimated production, between actual and estimated
Mineral Reserves and Mineral Resources and between actual and estimated metallurgical recoveries; changes in national and local
government legislation in the countries in which New Gold does 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 in the future carry on business; the speculative
nature of mineral exploration and development, including the risks of obtaining and maintaining the validity and enforceability
of the necessary licenses and permits and complying with the permitting requirements of each jurisdiction in which New Gold operates,
including, but not limited to: in Canada, obtaining the necessary permits for the Blackwater and New Afton C-zone Projects; the
uncertainties inherent to current and future legal challenges to which New Gold is or may become a party; diminishing quantities
or grades of Mineral Reserves and Mineral Resources; competition; loss of key employees; rising costs of labour, supplies, fuel
and equipment; actual results of current exploration or reclamation activities; uncertainties inherent to mining economic studies
including the feasibility studies for the New Afton C-zone and Blackwater Projects; the uncertainty with respect to prevailing
market conditions necessary for a positive development or construction decision at the New Afton C-zone and Blackwater Projects;
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; unexpected delays and costs inherent to consulting and accommodating rights
of First Nations and other indigenous groups; uncertainties and unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations, complying with permitting requirements, and receiving the environmental assessment
approval for the Blackwater Project. In addition, there are risks and hazards associated with the business of mineral exploration,
development and mining, including environmental events and hazards, industrial accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion losses (and, in each case, the risk of inadequate insurance or inability to obtain insurance
to cover these risks) as well as “Risk Factors” included in this Annual Information Form and in New Gold’s disclosure
documents incorporated by reference herein. 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 Annual Information Form or in documents incorporated by reference herein 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.



A significant portion of the historical financial information
in this Annual Information Form is derived from New Gold’s audited consolidated financial statements for the year ended December
31, 2017 (a copy of which is available under the Company’s profile on SEDAR at www.sedar.com). Readers should refer to such
financial statements for additional information.



Cautionary
Note to U.S. Readers Concerning Estimates of Mineral Reserves and Mineral Resources



Information concerning the properties and operations of New
Gold has been prepared in accordance with Canadian standards under applicable Canadian securities laws, and may not be comparable
to similar information for United States companies. The terms “Mineral Reserve”, “proven Mineral Reserve”
and “probable Mineral Reserve” are Canadian mining terms defined in accordance with Canadian National Instrument 43-101
— Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy
and Petroleum (the “CIM”) — CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted
by the CIM Council, as amended. These definitions differ



4







from the definitions in Industry Guide 7 (“SEC Industry
Guide 7”) under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). Under SEC
Industry Guide 7 standards, mineralization may not be classified as a “reserve” unless the determination has been made
that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.
Also, under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report
reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary
environmental analysis or report must be filed with the appropriate governmental authority.



In addition, the terms “Mineral Resource”, “measured
Mineral Resource”, “indicated Mineral Resource” and “inferred Mineral Resource” are defined in and
required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed with the United States Securities and Exchange Commission (the
“SEC”). Investors are cautioned not to assume that any part or all of the mineral deposits in these categories
will ever be converted into reserves. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence
and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred Mineral Resource will
ever be upgraded to a higher category. Under Canadian rules, estimates of inferred Mineral Resources may not form the basis of
feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an
inferred Mineral Resource exists or is economically or legally mineable. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. Disclosure of “contained ounces” in a resource is permitted disclosure under
Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves”
by SEC standards as in place tonnage and grade without reference to unit measures.



Accordingly, information contained in this Annual Information
Form describes the Company’s mineral deposits may not be comparable to similar information made public by United States companies
subject to reporting and disclosure requirements under United States federal securities laws and the rules and regulations thereunder.



Non-GAAP Measures



Total Cash Costs per Gold Ounce



“Total cash costs per gold ounce” is a non-GAAP
measure that is a common financial performance measure in the gold mining industry but with no standard meaning under International
Financial Reporting Standards (“IFRS”). New Gold reports total cash costs on a sales basis. The Company believes
that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate
the Company’s performance and ability to generate liquidity through operating cash flow to fund future capital expenditures
and working capital needs. New Gold believes that this measure, along with sales, is a key indicator of a company’s ability
to generate operating earnings and cash flow from its mining operations.



Total cash cost figures are calculated in accordance with a
standard developed by The Gold Institute, a worldwide association of suppliers of gold and gold products that ceased operations
in 2002. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled
measures of other companies. Total cash costs include mine site operating costs such as mining, processing and administration costs,
royalties, production taxes and realized gains and losses on fuel contracts, but are exclusive of amortization, reclamation, capital
and exploration costs and net of by-product sales. Total cash costs are then divided by gold ounces sold to arrive at the total
cash costs per ounce sold.



The Company produces copper and silver as by-products of its
gold production. The calculation of total cash costs per gold ounce for Rainy River and Cerro San Pedro is net of by-product silver
sales revenue, and the calculation of total cash costs per gold ounce sold for Peak Mines and New Afton is net of by-product silver
and copper sales revenue. New Gold



5







notes that in connection with New Afton, the copper by-product
revenue is sufficiently large to result in a negative total cash cost on a single mine basis. Notwithstanding this by-product contribution,
as a company focused on gold production, New Gold aims to assess the economic results of its operations in relation to gold, which
is the primary driver of New Gold’s business. New Gold believes this metric is of interest to its investors, who invest in
the Company primarily as a gold mining company. To determine the relevant costs associated with gold only, New Gold believes it
is appropriate to reflect all operating costs, as well as any revenue related to metals other than gold that are extracted in its
operations.



To provide additional information to investors, New Gold has
also calculated total cash costs on a co-product basis, which removes the impact of other metal sales that are produced as a by-product
of our gold production and apportions the cash costs to each metal produced on a percentage of revenue basis, and subsequently
divides the amount by the total gold ounces, silver ounces or pounds of copper sold, as the case may be, to arrive at per ounce
or per pound figures. Unless indicated otherwise, all information about total cash costs in this Annual Information Form is net
of by-product sales.



Total cash costs are intended to provide additional information
only and do not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining
companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with
IFRS. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
Further details regarding historical total cash costs and a reconciliation to the nearest IFRS measures are provided in the MD&A
accompanying New Gold’s financial statements and filed at www.sedar.com.



All-in Sustaining Costs per Gold Ounce



“All-in sustaining costs per gold ounce” is a non-GAAP
measure based on guidance announced by the World Gold Council (“WGC”) in June 2013. The WGC is a non-profit
association of the world’s leading gold mining companies established in 1987 to promote the use of gold to industry, consumers
and investors. The WGC is not a regulatory body and does not have the authority to develop accounting standards or disclosure requirements.
The WGC has worked with its member companies, including New Gold, to develop a measure that expands on IFRS measures such as operating
expenses and non-GAAP measures to provide visibility into the economics of a gold mining company. Current IFRS measures used in
the gold industry, such as operating expenses, do not capture all of the expenditures incurred to discover, develop and sustain
gold production. New Gold believes the all-in sustaining costs measure provides further transparency into costs associated with
producing gold and will assist analysts, investors and other stakeholders of the Company in assessing its operating performance,
its ability to generate free cash flow from current operations and its overall value. In addition, the Compensation Committee of
the Board of Directors uses all-in sustaining costs, together with other measures, in its company scorecard to set incentive compensation
goals and assess performance.



All-in sustaining costs per gold ounce is intended to provide
additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures
presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared
in accordance with IFRS. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented
under IFRS. Further details regarding historical all-in sustaining costs and a reconciliation to the nearest IFRS measures are
provided in the MD&A accompanying New Gold’s financial statements and filed at www.sedar.com.



New Gold defines all-in sustaining costs per ounce as the sum
of total cash costs, net capital expenditures that are sustaining in nature, corporate general and administrative costs, capitalized
and expensed exploration that is sustaining in nature, and environmental reclamation costs, all divided by the total gold ounces
sold to arrive at a per ounce figure. To determine sustaining capital expenditures, New Gold uses cash flow related to mining interests
from its statement of



6







cash flows and deducts any expenditures that are non-sustaining.
Capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these
projects will materially increase production are classified as non-sustaining and are excluded. The table “Sustaining Capital
Expenditure Reconciliation” (in New Gold’s MD&A available under the Company’s profile on SEDAR at www.sedar.com)
reconciles New Gold’s sustaining capital to its cash flow statement. The definition of sustaining versus non-sustaining is
similarly applied to capitalized and expensed exploration costs. Exploration costs to develop new operations or that relate to
major projects at existing operations where these projects are expected to materially increase production are classified as non-sustaining
and are excluded.



Costs excluded from all-in sustaining costs are non-sustaining
capital expenditures and exploration costs, financing costs, tax expense, transaction costs associated with mergers and acquisitions,
and any items that are deducted for the purposes of adjusted earnings.



By including total cash costs as a component of all-in sustaining
costs, the measure deducts by-product revenue from gross cash costs. Refer to the discussion above regarding total cash costs per
gold ounce for the discussion of deduction of by-product revenue.



Currency Presentation
and Exchange Rate Information



All dollar amounts referenced in this Annual Information Form
are in United States dollars unless otherwise indicated. Canadian dollars are referred to as “Canadian dollars” or
“C$” and Australian dollars are referred to as “Australian dollars” or “A$”. See Schedule D
of this Annual Information Form for applicable exchange rate information.



Technical Information



The scientific and technical information relating to the operation
of New Gold’s operating mines in this Annual Information Form has been reviewed and approved by Mr. Nicholas Kwong, Director,
Business Improvement of New Gold. All other scientific and technical information contained herein has been reviewed and approved
by Mr. Mark A. Petersen, Vice President, Exploration of New Gold. Mr. Kwong is a Professional Engineer and a member of the Association
of Professional Engineers and Geoscientists of British Columbia. Mr. Petersen is a SME Registered Member and AIPG Certified Professional
Geologist. Mr. Kwong and Mr. Petersen and are "Qualified Persons" for the purposes of NI 43-101. To the Company’s
knowledge, each of the aforementioned persons holds less than 1% of the outstanding securities of the Company.



The estimates of Mineral Reserves and Mineral Resources discussed
in this Annual Information Form may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical,
marketing and other risks and relevant issues. New Gold’s current NI 43-101 Technical Reports, which are available at www.sedar.com,
contain further information regarding Mineral Reserve and Mineral Resource estimates, classification, reporting parameters, key
assumptions and risks for each of New Gold's material mineral properties.



Additional
Information



Additional information about the Company, including, without
limitation, directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities
and securities authorized for issuance under equity compensation plans, may be found in the Management Information Circular of
the Company for its most recent annual meeting of shareholders and other continuous disclosure documents of the Company filed on
SEDAR at www.sedar.com. Additional financial information is provided in the Company’s audited consolidated financial statements
and MD&A for the three months and year ended December 31, 2017. These documents and other information about the Company are
available under the Company’s profile on SEDAR at www.sedar.com.



7







CORPORATE STRUCTURE



The Company was incorporated on January 31, 1980 as DRC Resources
Corporation under the Company Act (British Columbia) and was transitioned on May 10, 2005 under the Business Corporations Act (British
Columbia). On May 4, 2005, the shareholders of the Company passed a special resolution to remove the pre-existing company provisions
and adopt new articles. On June 1, 2005 the Company changed its name to New Gold Inc. Effective January 1, 2012, New Gold amalgamated
with its wholly owned subsidiaries Silver Quest Resources Ltd. (“Silver Quest”), Geo Minerals Ltd. (“Geo”)
and Richfield Ventures Corp. (“Richfield”). The amalgamated company continued as New Gold Inc. Effective October
1, 2014, New Gold amalgamated with its wholly owned subsidiaries Rainy River Resources Ltd. (“RRRL”) and 0608457
B.C. Ltd, with the amalgamated company continuing as New Gold Inc. On January 1, 2016, New Gold amalgamated with its wholly owned
subsidiaries Peak Gold Ltd. and New Gold Bayfield Corp. The amalgamated company continued as New Gold Inc.



The registered office of the Company is Suite 610, 1100 Melville
Street, Vancouver, British Columbia V6E 4A6, Canada and its head office is at Suite 3510, 181 Bay Street, Toronto, Ontario, M5J
2T3, Canada.



The following chart illustrates the Company’s principal
subsidiaries as at the date of this Annual Information Form together with the jurisdiction of incorporation or organization of
each subsidiary and the percentage of voting securities beneficially owned or over which control or direction is exercised by the
Company, as well as the Company’s mines and development projects. New Gold has entered into an agreement to sell Peak Gold
Asia Pacific Pty Ltd. and Peak Gold Mines Pty Ltd. – see “Developments – Mines and Projects – Peak Mines”
on page 10.



In this Annual Information Form, except as otherwise required
by the context, reference to “New Gold” or the “Company” means, collectively, New Gold Inc.
and its subsidiaries.







8







GENERAL DEVELOPMENT
OF THE BUSINESS



New Gold is an intermediate gold mining company engaged in
the acquisition, exploration, development and operation of mineral properties. New Gold currently has the following mines and development
projects which are described in greater detail in the “Mineral Properties” section of this Annual Information Form:



| | · | 100% interest in the Rainy River gold-silver mine in Ontario, Canada (“Rainy River Mine”)
| | - | -----------------------------------------------------------------------------------------



| | · | 100% interest in the New Afton gold-copper mine British Columbia, Canada (“New Afton Mine”)
| | - | -------------------------------------------------------------------------------------------



| | · | 100% interest in the Mesquite gold mine in California, United States (“Mesquite Mine”)
| | - | --------------------------------------------------------------------------------------



| | · | 100% interest in the Cerro San Pedro gold-silver mine in San Luis Potosí, Mexico (“Cerro San Pedro Mine”)
| | - | ---------------------------------------------------------------------------------------------------------



| | · | 100% interest in the Blackwater gold-silver project in British Columbia, Canada (“Blackwater Project”)
| | - | ------------------------------------------------------------------------------------------------------



New Gold also has a 100% interest in the Peak gold-copper mines
in New South Wales, Australia (“Peak Mines”). The Company has entered into an agreement to sell the Peak Mines
– see “Developments – Mines and Projects – Peak Mines” on page 10. New Gold has been engaged in the
acquisition, exploration and development of natural resource properties since 1980. The Company’s current structure arose
through two accretive business combinations in mid-2008 and mid-2009. To achieve its growth strategy, New Gold focuses on:



| | · | Delivering on operational targets (safety, cost, production, environment and social responsibility);
| | - | ----------------------------------------------------------------------------------------------------



| | · | Maintaining a strong financial position;
| | - | ----------------------------------------



| | · | Internal growth through project development and continuous improvement of existing operations; and
| | - | --------------------------------------------------------------------------------------------------



| | · | External growth through value enhancing merger and acquisition opportunities.
| | - | -----------------------------------------------------------------------------



Developments
– Mines and Projects



Rainy River Mine



On January 30, 2015, New Gold announced receipt of Environmental
Assessment (“EA”) approvals at both the Federal and Provincial levels for the Rainy River Mine. Construction
of the Rainy River Mine commenced in early 2015.



On July 20, 2015, New Gold announced it had entered into a
$175 million streaming agreement with RGLD Gold AG, a wholly owned subsidiary of Royal Gold Inc., (“Royal Gold”)
pursuant to which Royal Gold agreed to provide New Gold with a deposit of $175 million, to be used for the ongoing development
of the Rainy River Mine, in return for a percentage of the future annual gold and silver production from the Rainy River Mine.
Royal Gold paid $100 million of the deposit on signing of the agreement, with the remaining $75 million paid in November 2016 after
60% of the Project development capital had been spent.



On January 30, 2017, the Company announced an increase in the
expected capital cost to build the Rainy River Mine to $1,292 million, including contingency, and that startup was scheduled for
September 2017 with commercial production expected to commence November 2017. The first gold pour at the Rainy River Mine occurred
on October 5, 2017 and commercial production was achieved on October 19, 2017.



9







New Afton Mine



In February 2015, New Gold announced the results of a scoping
study to evaluate the potential for the New Afton C-zone to extend the mine’s life. The C-zone is the down plunge extension
of the B-zone block cave that is currently being mined at New Afton. In January 2016, the Company completed a Feasibility Study,
which indicated positive economics for mining the C-zone consistent with the scoping study. In January 2018, the Company announced
it would defer underground development of the C-zone in 2018, reducing its short term capital spending profile at New Afton, and
use its business improvement function to further optimize the C-zone project by focusing on alternative tailings management options
and mining approaches.



Peak Mines



On November 20, 2017, New Gold announced that it had entered
into an agreement with Aurelia Metals Limited to sell its 100% interest in the Peak gold-copper mines in New South Wales, Australia
(“Peak Mines”) for cash consideration of $58 million. The transaction is subject to customary closing conditions,
including consent from the New South Wales Minister responsible for the Mining Act 1992 for the transfer of control of certain
exploration licenses. The transaction is expected to close in the second quarter of 2018.



Cerro San Pedro Mine



The Cerro San Pedro Mine completed active mining in June 2016
and has now transitioned to residual leaching. It is expected that residual leaching will continue for one to two years, subject
to future recovery performance and gold and silver prices.



Blackwater Project



In December 2013, the Company completed a Feasibility Study
for the Blackwater Project which confirmed the parameters of a conventional truck and shovel open pit mine with a 60,000 tonne
per day processing plant and average annual gold production of 485,000 ounces during the first nine years of the mine’s anticipated
17-year life. In 2015, the Company announced that its near-term focus would be on the advancement of the Rainy River Mine and began
development of that project. The Blackwater Project continues to move through the permitting phase. The Company is also currently
working on internal trade-off studies with the objective of further enhancing the economics of the Blackwater Project and maximizing
free cash flow by reducing the project strip ratio, maximizing the feed grade and lowering both development capital and operating
costs.



Sale of El Morro Project and El Morro
Stream



In November 2015, New Gold sold its 30% interest in the El
Morro Project to an affiliate of Goldcorp Inc. (“Goldcorp”). In exchange for the Company’s 30% interest,
New Gold received net cash proceeds of $62.4 million (gross proceeds of $90 million less applicable withholding taxes and transaction
costs) and the Company’s $94.5 million carried funding loan payable was cancelled. In addition, New Gold entered into an
agreement to receive a 4% stream on gold production from the El Morro property, under which New Gold would pay $400 per ounce for
the first 217,000 ounces of gold delivered as part of the stream, and would pay $400 per ounce plus a 1% annual inflation adjustment
for subsequent ounces of gold delivered as part of the stream (the “El Morro Gold Stream”). In February 2017,
New Gold sold the El Morro Gold Stream to Goldcorp for $65 million.



Developments
– Financial



In August 2014, New Gold entered into a $300 million revolving
secured credit facility with a syndicate of banks led by The Bank of Nova Scotia and RBC Capital Markets (the “Credit
Facility”). In November 2015, the term of the Credit



10







Facility was extended to August 2019, and it was further extended
to August 2020 in June 2017. In October 2016, the size of the Credit Facility was increased to $400 million.



As at December 31, 2017, the Company has drawn $230 million
under the Credit Facility, and the Credit Facility has been used to issue letters of credit in the aggregate amount of $139 million.



In February 2016, New Gold amended the Credit Facility to increase
the maximum ratio of net debt to earnings before interest, taxes, depreciation, amortization, exploration, impairment and other
non-cash adjustments (“Adjusted EBITDA”) covenant (“Leverage Ratio”) from 3.5 to 1.0 (as
initially provided in the Credit Facility) to 4.0 to 1.0 at the September 30, 2016 measurement date and to 4.5 to 1.0 for the three
subsequent quarter-end measurement periods. In October 2016, New Gold again amended the Credit Facility to increase the maximum
Leverage Ratio to 4.0 to 1.0 for the period from July 1, 2017 to December 31, 2017. In May 2017, New Gold further amended the Credit
Facility to increase the maximum Leverage Ratio to 4.5 to 1.0 from July 1, 2017 to September 30, 2017 and 4.0 to 1.0 from January
1, 2018 to March 31, 2018. Thereafter, the maximum Leverage Ratio will return to 3.5 to 1.0. The Leverage Ratio contained in the
Company's agreement with Royal Gold has also been adjusted to match the revised Leverage Ratio noted above.



On October 4, 2016, New Gold purchased put options with a strike
price of $1,300 per ounce covering 120,000 ounces of gold and simultaneously sold call options with a strike price of $1,400 per
ounce covering 120,000 ounces of gold. These contracts covered 20,000 ounces of gold per month for the first six months of 2017.
On June 27, 2017, New Gold purchased put options with a strike price of $1,250 per ounce covering 120,000 ounces of gold and simultaneously
sold call options with a strike price of $1,400 per ounce covering 120,000 ounces of gold. These contracts covered 20,000 ounces
of gold per month for the last six months of 2017. In aggregate, those option contracts provided the Company a guaranteed floor
price of $1,300 per ounce of gold on 120,000 ounces of gold for the first six months of 2017 and $1,250 per ounce on 120,000 ounces
of gold for the last six months of 2017 while also providing exposure to increases in the gold price up to $1,400 per ounce.



On November 14, 2016, New Gold fixed the price for 31.7 million
pounds of the Company's copper production in the first six months of 2017 at $2.52 per pound using swap contracts that settled
against the monthly average London Metals Exchange price. The swap contracts covered 5.3 million pounds of copper per month from
January through June 2017. On February 16, 2017, New Gold fixed the price for 43.7 million pounds of the Company’s copper
production in the second half of 2017 at $2.73 per pound using swap contracts that settled against the monthly average London Metals
Exchange price. The swap contracts covered 7.3 million pounds of copper per month from July through December 2017. On October 18,
2017, New Gold purchased put options with a strike price of $3.00 per pound covering 60 million pounds of its 2018 production and
simultaneously sold call options with a strike price of $3.37 per ounce covering 60 million pounds of its 2018 production.



On February 22, 2017, New Gold announced that it had entered
into an agreement with a syndicate of underwriters (the “Underwriters”) pursuant to which they agreed to purchase,
on a bought deal basis, 53,600,000 of the Company’s common shares (“Common Shares”) at a price of $2.80
per share (the “Offering”), for aggregate gross proceeds to the Company of approximately $150 million. In addition,
the Company agreed to grant to the Underwriters an option to purchase up to an additional 8,040,000 Common Shares at a price of
$2.80 per share, on the same terms and conditions as the Offering, which was exercised in full by the Underwriters. The Offering
closed on March 10, 2017. The aggregate gross proceeds of the Offering to the Company were approximately $173 million and proceeds
net of underwriting fees and expenses were approximately $164.5 million.



11







On May 18, 2017, New Gold announced that it had completed an
offering of $300 million aggregate principal amount of 6.375% Senior Notes due 2025. The Company used the net proceeds from the
offering, together with cash on hand, to fund the redemption of all of its outstanding $300 million 7.00% Senior Notes due 2020.



DESCRIPTION OF THE
BUSINESS



The Company’s principal operating assets consist of the
Rainy River Mine and New Afton Mine in Canada. New Gold also owns the Mesquite Mine in the United States, the Cerro San Pedro Mine
in Mexico and the Peak Mines in Australia. (The Cerro San Pedro Mine transitioned in 2016 from active mining to residual leaching.
The Company has entered into an agreement to sell the Peak Mines – see “Developments – Mines and Projects –
Peak Mines” on page 10.) It also owns the Blackwater Project in Canada. For purposes of NI 43-101, the Company considers
the Rainy River Mine and the New Afton Mine to be its material properties.



New Gold is continually working to maximize shareholder value
through diversified production, maintaining an attractive risk profile and enhancing growth potential in a safe and an environmentally
and socially responsible manner.



Refer to the Company’s MD&A for the year ended December
31, 2017, available under the Company’s profile on SEDAR at www.sedar.com, for a detailed description of the Company’s
business, including each of its operating segments.



Specialized
Skills and Knowledge



All aspects of New Gold’s business require specialized
skills and knowledge. Such required areas of specialized skills and knowledge include geology, drilling, mine planning, metallurgy,
engineering, construction, technology, community and public relations, regulatory compliance, legal and accounting. New Gold has
found that it can locate and retain employees and contractors with such skills and knowledge.



Principal Products



The Company’s principal products are gold, copper and
silver, which generally require refining or smelting to become marketable metal. As described in more detail with respect to each
operation, the Company uses the services of refiners to refine gold doré. The refined gold is sold to bullion banks or gold
trading counterparties at market prices, though in some cases the Company sells doré to such banks and counterparties with
delivery to the refinery. Copper concentrate produced by the New Afton Mine is sold to various smelters or concentrate marketing
firms. The Company has also entered into financial instruments, such as option or swap contracts, for the purpose of hedging gold
and copper prices – see “Developments – Financial” on page 10. There are worldwide gold, copper and silver
markets into which the Company can sell and, as a result, the Company is not dependent on a particular purchaser with regard to
the sale of the gold, copper and silver which it produces. Further, due to the availability of alternative refineries and smelters,
the Company is not dependent on the services on any one refiner or smelter.



Competitive
Conditions



The precious and base mineral exploration and mining business
is competitive. The Company competes with numerous other companies and individuals in the search for and the acquisition of attractive
mineral properties. The ability of the Company to acquire mineral properties in the future will depend on its ability to develop
its present properties, and on its ability to select and acquire suitable producing properties or prospects for development or
mineral exploration.



12







Operations



Mineral Reserves and Mineral Resources



The Company has the following Mineral Reserves and Mineral
Resources: gold and silver at the Rainy River Mine; gold, copper and silver at the New Afton Mine; gold at the Mesquite Mine; gold
and silver at the Cerro San Pedro Mine; and gold and silver at the Blackwater Project. See “Summary of Mineral Reserve and
Mineral Resource Estimates” on page 15.



Foreign Operations



The Company currently owns 100% of the Mesquite Mine in the
United States, 100% of the Cerro San Pedro Mine in Mexico and 100% of the Peak Mines in Australia as its foreign operations. (The
Company has entered into an agreement to sell the Peak Mines – see “Developments – Mines and Projects –
Peak Mines” on page 10.) Any changes in regulations (or the application of regulations) or shifts in political attitudes
in these foreign jurisdictions are beyond the control of the Company and may adversely affect its business. Future development
and operations may be affected in varying degrees by factors such as government regulations (or changes to such regulations or
the application of regulations) with respect to the restrictions on production, export controls, income taxes, expropriation of
property, repatriation of profits, environmental legislation, land use, water use, operating activities, land claims of local people
and mine safety. The impact of these factors cannot be accurately predicted. See “Risk Factors – Foreign Operations”
on page 55.



Employees



As at December 31, 2017, the Company had the following employees
and contractors:



|Location                | Employees
|----------------------- | ---------
|Corporate Office        | 42       
|Rainy River Mine        | 583      
|New Afton Mine          | 433      
|Mesquite Mine           | 297      
|Peak Mines(1)           | 329      
|Cerro San Pedro Mine(2) | 144      
|Blackwater Project      | 6        
|Total                   | 1834     

| | (1) | The Company has entered into an agreement to sell the Peak Mines – see “Developments – Mines and Projects
– Peak Mines” on page 10.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | (2) | As at December 31, 2017, 72 employees at the Cerro San Pedro Mine belonged to a union.
| | --- | --------------------------------------------------------------------------------------



Environmental Protection and Social and
Environmental Practices



New Gold is committed to excellence in corporate social responsibility.
The Company considers its ability to make a lasting and positive contribution toward sustainable development a key driver to achieving
a productive and profitable business.  New Gold aims to achieve these objectives through the protection of the health and
well-being of its people and host communities as well as maintaining industry leading practices in the areas of environmental stewardship
and community engagement and development.  As a partner of the United Nations Global Compact, New Gold’s policies and
practices are guided by its principles with reference to human rights, labour, environmental stewardship and anti-corruption. As
a member of the Mining Association of Canada (“MAC”), New Gold’s operations adopt the MAC’s Towards
Sustainable Mining protocols which form part of the New Gold Environmental Management Standards and Community Engagement and Development
Management Standards.



13







New Gold’s corporate social responsibility objectives
include promoting and protecting the welfare of its employees through safety-first work practices, upholding fair employment practices
and encouraging a diverse workforce, where people are treated with respect and supported to realize their full potential. New Gold
believes that people are its most valuable assets and strives to create a culture of inclusiveness that begins at the top and is
reflected in its hiring, promotion and overall human resources practices. New Gold encourages tolerance and respect in worker-to-worker
relationships. The Company strives to be an employer of choice through the provision of competitive wages and benefits, the implementation
of policies that recognize and reward employee performance, and promotion from within wherever possible.



The Company is committed to preserving the long-term health
and viability of the natural environments that host its operations. Wherever New Gold operates – in all stages of mining
activity, from early exploration and planning, to commercial mining operations through to eventual closure – the Company
is committed to excellence in environmental management. Prior to commencing significant construction activities, New Gold carries
out comprehensive environmental studies to establish baseline measurements for flora, fauna, earth, air and water. During operations,
it promotes the efficient use of raw materials and resources, works to minimize environmental impacts and maintains robust monitoring
programs. After mining activities are complete, New Gold’s objective is to restore the land to a level of productivity equivalent
to its pre-mining capacity or to an alternative land use determined through consultation with regulatory authorities and the communities
of interest.



New Gold is committed to establishing relationships with host
communities based on mutual benefit and active engagement with these communities to contribute to their sustainability. Wherever
the Company’s operations interact with Indigenous peoples, New Gold promotes understanding of, and respect for, traditional
values, customs and culture and takes meaningful action to consider the interests of Indigenous peoples. New Gold aims to foster
open communication with local residents and community leaders so that issues can be resolved collaboratively. The Company believes
that by thoroughly understanding the people, their histories, and their needs and aspirations, it can engage in a meaningful and
sustainable development process.



The Company’s mining, exploration and development activities
are subject to various federal, provincial, state, county and municipal laws and regulations relating to the protection of the
environment, including requirements for closure and reclamation of mining properties.  In all jurisdictions where New Gold
operates, specific statutory and regulatory requirements and standards must be met throughout the exploration, development and
operations stages of a mining property with regard to air quality, water quality, fisheries and wildlife protection, solid and
hazardous waste management and disposal, noise, land use and reclamation.  Details and quantification of New Gold’s
reclamation and closure costs obligations are set out in Note 18 of the Company’s audited consolidated financial statements
for the year ended December 31, 2017.



Management does not believe that the financial and operational
effects of environmental protection requirements on the capital expenditures and earnings of each mineral property are significant,
and estimates the undiscounted closure cost for all of its properties is $187.1 million as at December 31, 2017. As at December
31, 2017, the Company had posted letters of credit or other financial assurance issued pursuant to the Credit Facility in an aggregate
amount of $139 million to address these liabilities.



14







Technical Information



CIM Standards Definitions



New Gold’s estimated Mineral Reserves and Mineral Resources
have been calculated in accordance with the CIM Definitions Standards for Mineral Reserves and Mineral Resources adopted by the
CIM Council on May 10, 2014 (the “CIM Standards”).



Technical Terms and Abbreviations



Unless otherwise defined, technical terms used in this Annual
Information Form are set out in Schedule B and abbreviations terms used are defined in Schedule C.



Summary of
Mineral Reserve and Mineral Resource Estimates



On February 20, 2018, the Company reported consolidated Mineral
Reserve and Mineral Resource estimates for its mines and development projects as at December 31, 2017 (excluding Peak Mines). A
consolidated summary of total gold, copper and silver contained within New Gold’s global Mineral Reserves and Mineral Resources
(excluding Peak) is set out in the table below. Measured and Indicated Mineral Resources are reported exclusive of Mineral Reserves.



MINERAL RESERVES AND
MINERAL RESOURCES SUMMARY TABLE

|                                                         | GoldKoz | SilverMoz | CopperMlbs
|-------------------------------------------------------- | ------- | --------- | ----------
|PROVEN AND PROBABLE RESERVES                             | 14,795  | 77,108    | 941       
|New Afton                                                | 1,078   | 3,533     | 941       
|Mesquite                                                 | 1,129   | -         | -         
|Rainy River                                              | 4,418   | 12,775    | -         
|Blackwater                                               | 8,170   | 60,800    | -         
|MEASURED AND INDICATED RESOURCES (EXCLUSIVE OF RESERVES) | 5,977   | 20,654    | 1,158     
|INFERRED RESOURCES                                       | 1,253   | 4,591     | 246       



Notes to the Mineral Reserve and Mineral
Resource estimates are provided on pages 19-20.



15







|MINERAL RESERVES                                          
|----------------------------------------------------------
|                                                          
|                                                          
|RAINY RIVER                                               
|Direct processing reserves
        Open Pit
        Proven
|Probable                                                  
|Open Pit P&P (direct proc.)                               
|Underground                                               
|Proven                                                    
|Probable                                                  
|Underground P&P (direct proc.)                            
|Total Direct Processing Reserves                          
|Low grade reserves                                        
|Open Pit                                                  
|Proven                                                    
|Probable                                                  
|Open Pit P&P (low grade)                                  
|Stockpile                                                 
|Proven                                                    
|Stockpile reserves                                        
|Combined P&P                                              
|Proven                                                    
|Probable                                                  
|Total Rainy River P&P                                     
|NEW AFTON                                                 
|A&B Zones                                                 
|Proven                                                    
|Probable                                                  
|C Zone                                                    
|Proven                                                    
|Probable                                                  
|Total New Afton P&P                                       
|MESQUITE                                                  
|Proven                                                    
|Probable                                                  
|Total Mesquite P&P                                        
|BLACKWATER                                                
|Direct processing reserves                                
|Proven                                                    
|Probable                                                  
|P&P (direct proc.)                                        
|Low grade reserves                                        
|Proven                                                    
|Probable                                                  
|P&P (low grade)                                           
|Total Blackwater P&P                                      
|Total Proven & Probable Reserves                          



Notes to the Mineral Reserve and Mineral
Resource estimates are provided on pages 19-20.



16







|MEASURED & INDICATED MINERAL RESOURCES (EXCLUSIVE OF MINERAL RESERVES)
|----------------------------------------------------------------------
|                                                                      
|                                                                      
|RAINY RIVER                                                           
|Direct processing resources                                           
|Open Pit                                                              
|Measured                                                              
|Indicated                                                             
|Open Pit M&I (direct proc.)                                           
|Underground                                                           
|Measured                                                              
|Indicated                                                             
|Underground M&I (direct proc.)                                        
|Low grade resources                                                   
|Open Pit                                                              
|Measured                                                              
|Indicated                                                             
|Open Pit M&I (low grade)                                              
|Combined M&I                                                          
|Measured                                                              
|Indicated                                                             
|Total Rainy River M&I                                                 
|NEW AFTON                                                             
|A&B Zones                                                             
|Measured                                                              
|Indicated                                                             
|A&B Zone M&I                                                          
|C-Zone                                                                
|Measured                                                              
|Indicated                                                             
|C-Zone M&I                                                            
|HW Lens                                                               
|Measured                                                              
|Indicated                                                             
|HW Lens M&I                                                           
|Total New Afton M&I                                                   
|MESQUITE                                                              
|Measured                                                              
|Indicated                                                             
|Total Mesquite M&I                                                    
|BLACKWATER                                                            
|Direct processing resources                                           
|Measured                                                              
|Indicated                                                             
|M&I (direct proc.)                                                    
|Low grade resources                                                   
|Measured                                                              
|Indicated                                                             
|M&I (low grade)                                                       
|Total Blackwater M&I                                                  
|Total M&I Exclusive of Reserves                                       



Notes to the Mineral Reserve and Mineral
Resource estimates are provided on pages 19-20.



17











INFERRED MINERAL RESOURCES

|                        |             | Metal grade | Contained metal
|----------------------- | ----------- | ----------- | ---------------
|                        | Tonnes000’s | Goldg/t     | Silverg/t      
|RAINY RIVER             |             |             |                
|Direct processing       |             |             |                
|Open Pit                | 6,016       | 1.20        | 3.4            
|Underground             | 1,271       | 3.68        | 3.8            
|Total Direct Processing | 7,286       | 1.63        | 3.4            
|Low grade resources     |             |             |                
|Open Pit                | 6,219       | 0.37        | 1.6            
|Rainy River Inferred    | 13,505      | 1.05        | 2.6            
|NEW AFTON               |             |             |                
|A&B-Zone                | 7,564       | 0.35        | 1.3            
|C-Zone                  | 7,688       | 0.43        | 1.3            
|HW Lens                 | -           | -           | -              
|New Afton Inferred      | 15,253      | 0.39        | 1.3            
|MESQUITE                | 8,871       | 0.38        | -              
|BLACKWATER              |             |             |                
|Direct processing       | 13,933      | 0.76        | 4.0            
|Low grade resources     | 4,225       | 0.32        | 3.5            
|Blackwater Inferred     | 18,159      | 0.66        | 3.9            
|Total Inferred          |             |             |                



Notes to the Mineral Reserve and Mineral
Resource estimates are provided on pages 19-20.



The Company has entered into an agreement to sell the Peak
Mines – see “Developments – Mines and Projects – Peak Mines” on page 10 – and Peak Mines is
classified as a discontinued operation in the Company’s audited consolidated financial statements for the year ended December
31, 2017. Set out below are the Mineral Reserve and Mineral Resource estimates for Peak Mines as at December 31, 2017.



|PEAK MINES MINERAL RESERVES & RESOURCES               
|------------------------------------------------------
|                                                      
|                                                      
|MINERAL RESERVES                                      
|Proven                                                
|Probable                                              
|Total Peak Mines P&P                                  
|Measured and Indicated Resources EXCLUSIVE OF RESERVES
|Measured                                              
|Indicated                                             
|Total Peak Mines M&I                                  





|                           |             | Metal grade | Contained metal
|-------------------------- | ----------- | ----------- | ---------------
|INFERRED RESOURCES         | Tonnes000’s | Goldg/t     | Silverg/t      
|Gold-Copper resources      | 2,620       | 1.32        | 6.4            
|Silver-Lead-Zinc resources | 2,300       | 1.95        | 29.4           
|Total Peak Inferred        |             |             |                



Notes to the Mineral Reserve and Mineral
Resource estimates are provided on pages 19-20.



18







Notes to Mineral Reserve and Resource
Estimates



| | 1. | New Gold’s Mineral Reserves and Resources have been estimated in accordance with the CIM
Standards, which are incorporated by reference in NI 43-101.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | All Mineral Resource and Mineral Reserve estimates for New Gold’s properties and projects are effective December 31,
2017.
| | -- | --------------------------------------------------------------------------------------------------------------------------



| | 3. | New Gold’s year-end 2017 Mineral Reserves and Mineral Resources have been estimated based
on the following metal prices and foreign exchange rate criteria:
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



|                  | Gold
        $/ounce | Silver
        $/ounce | Copper
        $/pound | Lead
        $/pound | Zinc
        $/pound | CAD  | AUD  | MXN  
|----------------- | -------------------- | ---------------------- | ---------------------- | -------------------- | -------------------- | ---- | ---- | -----
|Mineral Reserves  | $1,275               | $17.00                 | $2.75                  | N/A                  | N/A                  | 1.30 | 1.30 | 18.00
|Mineral Resources | $1,375               | $19.00                 | $3.00                  | $1.00                | $1.20                | 1.30 | 1.30 | 18.00



| | 4. | Lower cut-offs for the Company’s Mineral Reserves and Mineral Resources are outlined in the following table:
| | -- | ------------------------------------------------------------------------------------------------------------



|Mineral Property | Mineral Reserves
        LOWER cut-off | Mineral Resources
        LOWER Cut-off
|---------------- | -------------------------------------- | ---------------------------------------
|Rainy River      | O/P direct processing:                 | 0.30 – 0.50 g/t AuEq                   
|                 | O/P low grade material:                | 0.30 g/t AuEq                          
|                 | U/G direct processing:                 | 2.20 g/t AuEg                          
|New Afton        | Main Zone – B1 & B2 Blocks:            | C$ 17.00/t                             
|                 | B3 Block & C-Zone:                     | C$ 24.00/t                             
|Mesquite         | Oxide:                                 | 0.14 g/t Au (0.0045 oz/t Au)           
|                 | Transitional & Non-ox:                 | 0.28 g/t Au (0.0090 oz/t Au)           
|Blackwater       | O/P direct processing:                 | 0.26 – 0.38 g/t AuEq                   
|                 |                                        |                                        
|                 | O/P low grade material:                | 0.32 g/t AuEq                          
|Peak Mines       | All ore types:                         | A$ 80/t to A$140/t                     



| | 5. | New Gold reports its measured and indicated mineral resources exclusive of mineral reserves. Measured
and indicated mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred Mineral Resources
have a greater amount of uncertainty as to their existence, economic and legal feasibility, do not have demonstrated economic viability,
and are likewise exclusive of mineral reserves. Numbers may not add due to rounding.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | Mineral resources are classified as measured, indicated and inferred based on relative levels of
confidence in their estimation and on technical and economic parameters consistent with the methods most suitable to their potential
commercial extraction. Where different mining and/or processing methods might be applied to different portions of a mineral resource,
the designators ‘open pit’ and ‘underground’ are used to indicate the envisioned mining method. Likewise
in certain instances, the designators ‘oxide’, ‘transitional’, ‘non-oxide’ and ‘sulphide’
have likewise been applied to indicate the type of mineralization as it relates to the appropriate mineral processing method and
expected payable metal recoveries, and the designators ‘direct processing’ and ‘lower grade reserves’ or
‘lower grade resources’ have been applied to differentiate material envisioned to be mined and processed directly from
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19







material
to be mined and stored separately for future processing. Mineral reserves and mineral resources may be materially affected by environmental,
permitting, legal, title, taxation, sociopolitical, marketing and other risks and relevant issues. Additional information regarding
mineral reserve and mineral resource estimation, classification, reporting parameters, key assumptions and associated risks for
each of New Gold’s material properties are provided in the respective NI 43-101 Technical Reports, which are available at
www.sedar.com.



| | 7. | Rainy River Project: In addition to the criteria described above, mineral reserves and mineral
resources for the Rainy River project are reported according to the following criteria: Underground mineral reserves are reported
peripheral to and/or below the open pit mineral reserve pit shell, which has been designed and optimized based on a $1,275/oz gold
price. Open pit and underground mineral resources are reported based on a $1,375/oz gold price.  Open pit mineral resources
are reported from within an open pit resource shell that extends to a depth of approximately 400 metres from surface. Underground
mineral resources are reported below and peripheral to the mineral resource pit shell. Approximately forty percent (40%) of the
gold metal content defined as underground mineral reserves is derived from material located between the mineral reserve pit shell
and the mineral resource pit shell; the remaining sixty percent (60%) of the metal content defined as underground mineral reserves
is derived from material located below the mineral resource pit shell.  Open pit mineral resources exclude material reported
as underground mineral reserves.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | Qualified Person: The preparation of New Gold's mineral reserve and mineral resource estimates
has been done by Qualified Persons as defined under NI 43-101, under the oversight and review of Mr. Mark A. Petersen, a Qualified
Person under NI 43-101.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



MINERAL PROPERTIES



Rainy River
Mine, Canada



Project Description, Location, Access,
Infrastructure and Other Information



The Rainy River Mine is located in the southern half of Richardson
Township, approximately 50 kilometres northwest of Fort Frances in northwestern Ontario, Canada. Regional population centres Kenora
and Thunder Bay lie 162 kilometres to the north and 418 kilometres to the east, respectively. Access to the Project area is via
secondary all-weather roads branching off Trans-Canada Highways 11 and 71. An east-west rail line is located 21 kilometres to the
south, populated by a number of small towns and villages. Temperature extremes generally range from 35 degrees Celsius to minus
40 degrees Celsius. Annual precipitation averages approximately 60 centimetres rainfall and 150 centimetres snowfall. Mining activities
are conducted year-round.



Terrain in the vicinity of the Rainy River Mine is dominated
by a distinct northwest to southeast divide known as the Rainy Lake-Lake of the Woods Moraine. Topography is relatively gentle,
with relief ranging from zero southwest of the divide to up to 90 metres northeast of the divide. In areas of low relief, bedrock
typically is overlain by glacial till, thick silts and clays and, in poorly drained areas, by thick peat.



The Rainy River Mine occupies approximately 6,050 hectares,
comprising 87 patented mining rights and surface rights claims (including 8 leasehold interest mining rights and/or surface rights
claims). In addition, the Company has a land package of approximately 17,240 hectares surrounding the mine site, including patented
mining rights and/or surface rights and unpatented claims. All unpatented claims are in good standing and assessment work credits
are sufficient to maintain that standing for several years.



20







All claims are held in the name of New Gold. The currently
defined mineral reserves and mineral resources lie largely within nine patented claims. Portions of the presently defined mineral
reserves and mineral resources are covered by either a 2% NSR royalty or a 10% net profits interest royalty. In addition, New Gold
has agreed to financial participation in the Project in the form of royalties in favour of certain First Nations.



In July 2015, New Gold entered into a $175 million streaming
agreement with Royal Gold in which Royal Gold agreed to provide New Gold with an upfront deposit of $175 million, which was used
for the development of the Rainy River Mine, in return for: (i) 6.5% of the Project’s gold production up to a total of 230,000
ounces of gold, and 3.25% of the Project’s gold production thereafter; and (ii) 60% of the Project’s silver production
up to a total of 3.1 million ounces of silver, and 30% of the Project’s silver production thereafter. In addition to the
upfront deposit, Royal Gold will pay 25% of the average spot gold or silver price at the time each ounce of gold or silver is delivered
under the stream. Royal Gold paid $100 million of the deposit on signing of the agreement, with the remaining $75 million paid
in November 2016 after 60% of the Project development capital had been spent.



History



Exploration commenced in the Rainy River area during the period
1967 to 1989, during which time the Ontario Geological Survey conducted sporadic geologic mapping, and companies including Noranda,
International Nickel Corporation of Canada, Hudson’s Bay Exploration and Development and Mingold Resources were active in
the area.



Nuinsco Resources Limited (“Nuinsco”) initiated
exploration of the area in 1990. During the period 1993 through 2004, Nuinsco engaged in geologic mapping, geochemical grid sampling,
magnetic and IP geophysical surveys and Landsat remote sensing studies. Additionally, Nuinsco completed 597 reverse circulation
holes and 217 diamond drill holes (49,515 metres) during the period. The program resulted in the discovery of three significant
zones of gold mineralization (the 17, 34 and 433 Zones). Nuinsco drilled a final eight diamond drill holes (1,549 metres) in 2004
to test the depth continuity of the 34 Zone.



RRRL acquired a 100% interest in the Rainy River Mine from
Nuinsco in June 2005. RRRL re-logged portions of historical core, established a GIS database, conducted petrographical studies,
and carried out airborne and ground-based geophysical surveys. During the period 2005 through 2007, RRRL drilled more than 100
reverse circulation holes and 209 diamond drill holes (95,340 metres), sufficient to complete the first of a number of mineral
resource estimates. Additional diamond drilling by RRRL from 2008 through February 2011 totaled 449 diamond drill holes (239,329
metres).



A Preliminary Economic Assessment was published in December
2011 and updated in October 2012 based on an additional 375 diamond drill holes (181,682 metres) drilled from March to December
2011. RRRL published a Feasibility Study for the Project in May 2013 based on 1,435 diamond drill holes (662,849 metres) representing
drill results through June 10, 2012.



RRRL drilled an additional 225 diamond drill holes (77,969
metres) between August 2012 and June 2013, focusing on the Intrepid Zone situated one kilometre east of the proposed open pit.
By June 2013, a number of significant gold mineralized zones had been defined over a 3.5-kilometre strike length. New Gold acquired
the Rainy River Mine through its purchase of RRRL in 2013. New Gold completed an updated Feasibility Study in January 2014 incorporating
the previous exploration results.



In 2015, New Gold acquired Bayfield Ventures Ltd. (“Bayfield”),
which held a 100% interest in six patented mining rights claims and six unpatented claims totaling approximately 11 square kilometres
adjacent to the Rainy River Mine.



21







Geological Setting and Mineralization



The Rainy River Mine lies within the Rainy River Greenstone
Belt, part of the larger Late Archean age Wabigoon Subprovince of komatiitic to calc-alkaline metavolcanics overlain by clastic
and chemical sediments and intruded by granitoid batholiths. The intrusions deformed their host rocks into synformal fold structures,
often producing shear zones along the axial planes. The Archean rocks are overlain by remnant Mesozoic age sediments and Quaternary
Labradorian age till of northeastern provenance containing anomalous gold grains, auriferous pyrite and copper-zinc sulphides.
The till is overlain by glacially-derived clays, silts and younger till of western provenance.



Rocks within the immediate area of the mine comprise a series
of tholeiitic mafic rocks structurally overlain by calc-alkalic intermediate to felsic metavolcanic rocks. Rocks of intermediate
dacitic composition host most of the gold mineralization.



Three main styles of gold and silver mineralization have been
identified within a large cluster of multiple deposits: gold-bearing sulphide ± quartz stringers and veins in felsic quartz-phyric
rocks (ODM/17 and 34, Beaver Pond, 433 and HS Zones); quartz-ankerite-pyrite shear veins in mafic volcanic rocks (CAP/South Zone);
and sulphide-bearing silver-enriched quartz veinlets in dacitic tuffs and breccias (Intrepid Zone). A fourth style of mineralization
characterized by copper-nickel-platinum minerals occurs within a small younger mafic-ultramafic intrusion (34 Zone) situated within
the main cluster of gold and silver deposits. All deposits show some degree of deformation, excepting the copper-nickel-platinum-bearing
type. Most of the gold mineralization identified to date occurs in the sulphide-bearing stringers and veins within the felsic quartz-phyric
rocks.



Mineralized zones hosted by the felsic rocks generally follow
the regional northwesterly strike and southerly dip of stratigraphy. The largest of these is the ODM/17 Zone which extends 1600
metres along strike, 975 metres down dip, and has an average true width of 200 metres.



The Rainy River mineralization is interpreted to be a hybrid
deposit type consisting of early gold-rich volcanogenic sulphide mineralization overprinted by shear-hosted mesothermal gold mineralization
associated with regional deformation. A final stage of hydrothermal mineralization in the main auriferous zones crosscuts both
types of earlier mineralization.



Exploration and Drilling



Exploration and drilling undertaken in the area of the mine
prior to New Gold’s acquisition of the property through its acquisition of RRRL are summarized in the section entitled “History”.



Since New Gold’s acquisition of RRRL, the Company has
focused its exploration efforts within a five kilometre radius of the central mine development area. From January 2014 through
December 2017, a total of 96,750 metres of core drilling in 353 holes have been completed to evaluate the potential to extend and
improve classification confidence for the mineral resource both laterally and at depth, and to provide geotechnical information
for the mining operation. The results of this drilling in combination with the historic drilling described above provide the basis
for the current mineral resource and mineral reserve estimates.



Sampling and Analysis



There are no records describing the sampling and analytical
methods used by Nuinsco during its drilling programs. Mineralized sections of core were re-sampled and analyzed by RRRL to incorporate
into the drill database.



22







Sampling and analysis of core has been conducted via industry
best practices under New Gold, RRRL and Bayfield drilling programs. Sampling was typically conducted at nominal 1.5 metre intervals,
though Bayfield sampling intervals vary from 0.5 to 1.5 metres in length. Core was sawn and half placed in sample bags for laboratory
analysis. Certified reference standards, blanks and duplicates were systematically inserted into the sample batches to be shipped
to the lab. Samples were collected on site by a Fort Frances shipping company and delivered directly to the laboratory.



RRRL used two principal accredited laboratories for analyses:
ALS Vancouver, British Columbia from 2005 to 2006 and from early 2011 onward; and Accurassay Laboratories in Thunder Bay, Ontario
from 2006 to 2011. Bayfield’s drill core was analyzed by Activation Laboratories (“Actlabs”), an accredited
laboratory located in Thunder Bay, Ontario. New Gold uses ALS for the analysis of all of its exploration and resource delineation
drilling at the Rainy River Mine. Since the start of commercial production in late 2017, analyses of grade control samples for
the open pit (and future underground) mine are done by an onsite analytical laboratory. All of these laboratories use standard
industry analytical procedures: fire assay procedures for precious metal analyses; aqua regia digestion and atomic absorption spectrometry
for metal analyses. Each laboratory employs an internal QA/QC program in accordance with its accreditation requirements. Additionally,
the company employs a separate set of best practice QA/QC protocols for all of its exploration and grade control sampling programs.



Data verification includes site visits to inspect procedures,
QA/QC data validation and examination of database accuracy. An overall improvement in the performance of quality control samples
has been noted since ALS’s 2011 reinstatement as the primary laboratory for the Rainy River Mine. The results of data verification
to date indicate the data collected from the Rainy River Mine adequately reflect deposit dimensions, style, and true widths of
mineralization; adequately support the geological interpretations; and are of sufficient analytical and database quality for use
in mineral resource estimation.



Mineral Processing and Metallurgical Testing



Metallurgical testing was performed to evaluate the mineralogy
of the deposit and contribute to the design of the Rainy River Mine’s processing plant and tailings facility. A number of
studies and tests were performed as part of the testing program, including mineralization, comminution, gravity separation, flotation,
flotation concentrate leaching, whole ore leaching, cyanide destruction testwork and environmental testwork. It was determined
that whole rock leaching with gravity separation was the most economical processing alternative for the ore mainly because, among
other reasons, it required less energy and cyanide inputs than other processing alternatives.



Infrastructure, Permitting and Compliance
Activities



Infrastructure and local terrain are accessible, with numerous
gravel/paved roads, power and water resources and areas for tailings management facilities available within close proximity. Personnel
for the mine, including skilled trades and professions, have been and will continue to be sourced through a combination of local
hiring and recruitment.



Power is supplied to the mine through a connection to a provincial
transmission line approximately 17 kilometres to the east. There is a supply of water in the area from the Pinewood River, and
a pipeline has been constructed from the Pinewood River to the site. A site water management pond contains water for mineral processing.
Other infrastructure includes open pit infrastructure, the processing plant, tailings facility and administrative offices. The
updated Feasibility Study also contemplates development of an underground mine. New Gold expects to commence development of the
underground mine in the second half of 2018.



In 2012, RRRL (prior to its acquisition by New Gold), and six
Rainy River-area First Nations entered into a Participation Agreement with respect to the development and operation of the Rainy
River Mine.  The Participation Agreement



23







identifies key project milestones to be met through mutual
cooperation and consultation with the First Nations. In 2014, the Company concluded an Impacts and Benefits Agreement with Naicatchewenin
First Nation and Rainy River First Nations embracing commitments to environmental and sustainable development and ensuring that
First Nation communities and members benefit from opportunities resulting from the Project in their traditional territory. The
Company also concluded Participation Agreements with the Métis Nation of Ontario in 2014, the Big Grassy River First Nation
in 2015, the Naotkamegwanning First Nation, the Ojibways of Onigaming First Nation and the Anishinaabeg of Naongashing First Nation
in 2017, and the Animakee Wa Zhing 37 First Nation in 2018. The Participation Agreements provide for how each of these communities
will benefit from the Rainy River Mine. New Gold has ongoing dialogue with local communities and various First Nations in the area
surrounding the Rainy River Mine.



During the course of construction of the water and tailings
management area (“TMA”) at the Rainy River Mine, deformations were identified at one of the dams associated
with such facilities. In line with best practices in Canada, the Company has established an Independent Tailings Review Board (“ITRB”),
which is comprised of four independent experts, to provide input with respect to tailings management at New Gold’s operations
and projects in Canada. After receiving feedback from the ITRB and the Ministry of Natural Resources and Forestry (“MNRF”)
and completion of additional geotechnical drilling to further investigate the ground conditions, New Gold redesigned Rainy River’s
tailings management facility. The final redesign included the use of flatter slopes, rock toe buttresses and wick drains, and New
Gold also implemented enhanced construction management procedures. The Company has decided to extend aspects of the redesign across
all of the water and tailings management facilities. The Company received approval to recommence construction of the TMA from MNRF
in mid-November 2016. On September 28, 2017, New Gold announced that the amendment to Schedule 2 of the Metal Mining Effluent Regulations
under the Fisheries Act (Canada) to close two small creeks and deposit tailings under the Fisheries Act (Canada), had become effective,
which was also required to complete construction of the TMA. Construction of the TMA continues and is expected to be completed
in 2018. To accommodate production until construction of the full TMA is completed, the TMA incorporates a start-up tailings cell
which will provide capacity for approximately six months of tailings and a second cell which provides capacity for approximately
an additional 12 months of tailings.



In 2017, New Gold was subject to charges in relation to two
incidents from 2016.  Specifically, on July 13, 2017, New Gold was charged with five breaches of the Environmental Protection
Act (Ontario) in connection with alleged effluent discharges at the Rainy River project in July 2016 in excess of permit limits.
On November 9, 2017, New Gold plead guilty to discharging un-ionized ammonia above the EPA limit on July 27, 2016 and failing to
report a July 20, 2016 discharge above the standard for un-ionized ammonia. The three remaining charges were withdrawn. New Gold
was sentenced to a fine of $100,000 for the July 27, 2016 discharge and $50,000 for the failure to report the July 20, 2016 discharge.
A mandatory victim surcharge of 25% applies to the fines, for a total amount owing of $187,500.  In addition, on July 24,
2017, New Gold was charged with two breaches of the Lakes and Rivers Improvement Act (Ontario) in connection with water allegedly
overtopping a dam on the Rainy River construction site prior to completion of construction of the dam. New Gold takes all environmental
incidents seriously and is progressing this matter.



The mine closure plan was accepted by the Ontario Ministry
of Northern Development and Mines (“MNDM”) on February 23, 2015. As of December 31, 2017, bonding of C$83.9
million had been posted pursuant to the closure plan. The undiscounted closure cost liability for Rainy River as at December 31,
2017 is estimated to be $87.9 million. An updated closure plan is expected to be approved by MNDM in 2018, which may affect the
amount required for reclamation security. It is expected the updated closure plan will have include phasing in greater bonding
requirements consistent with the expected development and operational activities in the initial years of operations.



24







Mineral Reserve and Mineral Resource Estimates



The Rainy River Mine Mineral Reserves, effective December 31,
2017, are summarized in the “Mineral Reserve Estimates” table. The Rainy River Mine Mineral Resources, effective December
31, 2017, are summarized in the “Measured and Indicated Mineral Resource Estimates (Exclusive of Mineral Reserves)”
and “Inferred Mineral Resource Estimates” tables. See “Description of Business – Summary of Mineral Reserve
and Mineral Resource Estimates” on page 15. The parameters, assumptions and methodologies applied in generating the mineral
reserve and mineral resource estimates are considered reasonable and appropriate. Furthermore, the mining, metallurgical, infrastructure,
permitting and other relevant factors relating to the Rainy River Mineral Reserves and Mineral Resources fully support these estimates.



Mining Operations



The Rainy River Mine commenced processing ore on September
14, 2017 and completed its first gold pour on October 5, 2017. Commercial production was achieved on October 19, 2017. Development
of the underground mine will begin in the second half of 2018. The projected life of the Rainy River Mine extends through 2032
based on current mineral reserves and throughput levels.



As the mine is now fully operational, the Company is currently
completing an update of the life-of-mine plan for Rainy River. The update will incorporate the insights and refinements in expectation
gained from both the successful commissioning and production experience over the first few months of operation. The focus for 2018
will be on optimizing throughput at the mill, which has a 21,000 tonne per day nameplate capacity, as well as advancing initiatives
to potentially increase production.



Mining Methods



Surface mining uses a conventional truck/shovel open-pit mining
method, with 10 metre benches. The pit was designed considering the geology of the bedrock, which is considered to have a good
rock mass rating and geological strength index for an open pit design.



Underground reserves will be mined by longhole open stope backfilled
with cemented aggregate fill. Rock mass conditions are generally good and little water ingress is anticipated. A portion of underground
waste rock to be extracted will be used for rock fill.



Recovery Methods



Run-of-mine material is delivered to a common gyratory crusher
for size reduction, stockpiling and delivery to the processing plant. The processing plant is a SAG/ball mill/crusher circuit feeding
a whole-ore-leach gold-silver recovery plant. A portion of the coarser material will be subjected to a gravity circuit. The gravity
concentrate will be sent to a cyanidation reactor and electrowinning cell for gold and silver extraction. Ground mineralized material
will be thickened, passed through a leaching and carbon-in-pulp extraction circuit, and subjected to carbon stripping and electrowinning
prior to being smelted into a gold-silver doré. Life-of-mine recoveries are expected to be approximately 90% for gold and
approximately 55% for silver. The mill’s nameplate capacity is 21,000 tpd, or 7.7 mtpa. The milling rate for December 2017
averaged 21,000 tpd, and the focus for 2018 will be on optimizing the milling process as well as advancing initiatives to potentially
increase throughput beyond the 21,000 tpd.



Capital and Operating Costs



During 2017, the Rainy River Mine produced 37,047 ounces of
gold (including pre-commercial production) at an operating expense per ounce of gold sold of $442 and all-in sustaining costs of
$1,594 per ounce.  In 2018, the Rainy River Mine is expected to produce between 325,000 and 365,000 ounces of gold with an
expected operating expense per



25







gold ounce sold of between $430 and $470 per ounce and all-in
sustaining cost of between $990 and $1,090 per ounce.  2018 guidance assumes a $17 per ounce silver price and a foreign exchange
rate of C$1.25 to one United States dollar.  All-in sustaining costs per ounce is a non-GAAP measure.  See “Non-GAAP
Measures” on page 5. Sustaining capital expenditures at the Rainy River Mine are expected to be approximately $195 million
in 2018. Below is a breakdown of expected capital expenditures and expected all-in sustaining costs at the Rainy River Mine for
2018.



|2018 Expected Capital Expenditures(1) |      | 2018 Expected All-in Sustaining Costs/ gold oz sold
|------------------------------------- | ---- | ---------------------------------------------------
|Sustaining Capital(2)                 | $195 |                                                    
|Growth Capital(2)                     | $20  |                                                    
|Total                                 | $215 |                                                    
|                                      |      |                                                    
|                                      |      |                                                    

| | (1) | In millions.
| | --- | ------------

| | (2) | Based on the Company’s 2018 estimated capital expenditures. Sustaining capital excludes expenditures related to growth-related
initiatives. Growth capital excludes sustaining capital.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes adjustments for non-cash expenses, including inventory write-downs, that are included in operating expenses as well
as revenue from the sale of silver by-product. See “Non-GAAP Financial Performance Measures” in New Gold’s MD&A.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Includes sustaining capital expenditures, capitalized and expensed exploration that is sustaining in nature, and environmental
reclamation costs. See “Non-GAAP Financial Performance Measures” in New Gold’s MD&A.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Exploration and Development



2018 will be the first full year of production for the Rainy
River Mine. The Company expects to gather and incorporate insights from this early period of production experience. Sustaining
capital expenditures are expected to be significantly higher in 2018 than the life of mine average as construction of the TMA is
completed, including construction of the foundation of the full tailings dam. Growth development capital expenditures in 2018 will
primarily include development of the underground, which is scheduled to begin in the second half of the year. Reconnaissance level
exploration is also planned in 2018 to identify new areas of potential mineralization within the Company’s broader mineral
tenure in the region.



New Afton Mine,
Canada



Project Description, Location, Access
and Other Information



The New Afton Mine is located approximately 350 kilometres
northeast of Vancouver in the south-central interior of British Columbia. The property is 10 kilometres from the regional hub of
Kamloops and is easily accessible by paved road. The mine has a continental, semi-arid climate, with light winter snow and infrequent
rain during the spring, summer and fall. Summer temperatures can reach 38 degrees Celsius and winter temperatures are generally
at, or near, freezing.



The New Afton Mine occupies the site of the historic Afton
mine and includes an open pit (currently inactive), underground workings and support facilities. The New Afton deposit extends
to the southwest from immediately beneath the Afton open pit. As it is currently defined, the deposit hosts a mineral resource
comprised of the A&B-zones, the C-zone and the Hanging Wall Lens. The A&B-zones host the portion of the mineral reserve
which is currently being mined. The C-zone contains additional mineral reserves and was the subject of the C-zone Feasibility Study
completed in January 2016. The Hanging Wall Lens is a satellite mineral resource located adjacent to the historic Afton open pit.



26







The Company’s holdings in the area comprise the Afton
group of claims and the Ajax group of claims. The New Afton Mine lies within the Afton group. The Afton group consists of a 902-hectare
mining lease issued by the Ministry of Energy, Mines and Petroleum Resources on November 29, 2006 (“Afton Mining Lease”)
and 62 mineral claims totaling 9,360 hectares. The Company also holds surface rights on approximately 1,603 hectares surrounding
the New Afton Mine. Sufficient surface rights have been obtained for current operations at the property.



New Gold holds an option to acquire three fee simple properties
located to the south of the New Afton mine site (the “Ranch Option Lands”) and mineral claim no. 1023220 which
is also located to the south of the New Afton mine site. The Ranch Option Lands and the lands on which mineral claim no. 1023220
are located are currently used for ranching purposes. The option to acquire the Ranch Option Lands expires on December 11, 2019.



History



The first significant mining-related activity in the Afton
area commenced in 1970, when drilling by Afton Mines Ltd. intercepted 52 metres of 0.4% copper in what ultimately became the Afton
deposit. During the subsequent three years, over 45,700 metres of drilling was carried out by a number of operators.



Teck Corporation and Iso Mines Ltd. acquired the Afton property
in 1973 and initiated engineering and metallurgical studies. Commercial production commenced at the Afton open pit mine in late
1977. Mining took place at the Afton, Crescent, Pothook and Ajax pits. The mine closed in 1997.



In 1999, the Company acquired an option on the property, staked
additional claims and in 2000 began a concerted exploration program to test the potential for additional mineralization extending
beyond the Afton open pit. This work resulted in the successful delineation of the New Afton underground mineral resource.



Geological Setting and Mineralization



The New Afton deposit is a copper-gold, alkalic porphyry system
situated within the Iron Mask batholith complex. The Iron Mask complex is part of the Paleozoic age island-arc assemblage known
as the Quesnel Terrane. Regional-scale fault zones are believed to be the principal control to intrusion of the batholithic rocks
and related copper and gold mineralization in the New Afton area.



Mineralization is characterized by discontinuous copper sulphide
veinlets and disseminations (principally chalcopyrite and minor bornite) at brecciated margins between altered porphyry intrusives
and volcanic rocks of the Triassic Nicola Formation. The copper sulphides are replaced by tennantite-tetrahedrite locally and along
faults that transect the mineralized body. Native copper with accessory chalcocite occurs in minor amounts within highly oxidized
near-surface portions of the deposit. Gold and silver generally occur as electrum grains within the chalcopyrite and bornite.



The bulk of the New Afton deposit forms a tabular, nearly vertical,
southwest-plunging zone of continuous mineralization measuring 1.4 kilometres long by approximately 100 metres wide, with a down-plunge
extent of over 1.5 kilometres. The deposit plunges toward the southwest where it remains open at depth.



Exploration and Drilling



The Company initiated surface drilling at New Afton in 2000,
and in 2001 completed an initial scoping study which was followed by further definition drilling. A subsequent more advanced scoping
study was completed in 2004.



In November 2004, an underground access portal was excavated
in the former Afton open pit and a ramp driven 2,200 metres to provide access for underground sampling, infill drilling and further
exploration drilling.



27







In late 2005 New Gold commissioned a Feasibility Study which
was completed in 2007 and laid the foundation for the current mining operation. Exploration prior to and subsequent to the 2007
Feasibility Study has focused primarily on the delineating mineral resources within and immediately adjacent to the New Afton deposit.
Exploration beyond the limits of the deposit has involved preliminary scout drilling of satellite targets identified within the
Afton mine lease and generative reconnaissance level exploration of the Company’s broader regional mineral tenure.



During the period from 2000 through 2017 a series of diamond
bit core drilling campaigns have been conducted at New Afton to delineate the main B-zone mineral resource currently being mined
and additional resources located in the adjacent Hanging Wall Lens zone to the south and underlying C-zone. Additionally, reconnaissance
scout drilling has been conducted to test the potential of other exploration targets located within the Afton mining lease. Drilling
completed from 2000 to 2017 comprises 557 core holes totaling 254,151 metres, the results of which have been incorporated into
the Company’s mineral reserve and mineral resource estimates.



New Gold has likewise completed a series of airborne and ground-based
geophysical surveys over its mineral tenure in the immediate mine area and broader region. The results of this work are being used
to support ongoing exploration of the New Afton district.



Sampling and Analysis



Sampling protocols have remained generally consistent among
the different drill campaigns with a few incremental improvements over time. Sampling intervals have averaged two metres in all
campaigns since 2003. Routine insertion of blanks and standards into the sample stream has been conducted since 2005. Drilling
protocols in place at New Afton meet or exceed common industry standards.



Sample preparation, which involves drying, crushing and pulverizing
rock to produce a pulp sample sufficient for analysis, has been conducted according to accepted industry practice. Analytical work
prior to July 2012 was conducted by ALS Global of Kamloops, British Columbia (formerly EcoTech Laboratories Ltd.). Since July 2012,
sample preparation and analyses have been performed by Activation Labs of Kamloops, British Columbia. Analytical procedures for
samples collected during the 2000-2003 drilling programs included conventional fire assay with an AA or ICP finish for gold and
palladium, and AA for copper and silver. During 2005 and all subsequent drilling programs, copper and silver assays were determined
using standard acid digestion followed by an AA finish. Gold and palladium were determined using fire assay followed by an AA finish.



Sampling and analytical protocols are considered to have been
appropriate and consistent with common industry practice, data quality is adequate for resource estimation, and protocols for data
acquisition and management are reasonable.



Mineral Processing and Metallurgical Testing



Metallurgical testing was performed to evaluate the mineralogy
of the deposit and contribute to the design of the New Afton Mine’s processing plant and tailings facility. A number of studies
and tests were performed as part of the testing program, including mineralogical studies, modal analysis, grinding tests, flotation
tests, gravity tests, variability tests and dewatering tests. It was determined that conventional crushing, grinding and concentration
processes were appropriate given the mineralogy of the deposit.



The deposit consists primarily of primary hypogene sulphide
mineralization, but some secondary supergene sulphide and native copper mineralization is also present. Localized elevated arsenic
concentrations in the deposit which may pose an economic concern for the concentrate produced are mitigated through ore blending.
Supergene ore is expected to



28







impact the New Afton mill feed around 2019 and will require
an additional step in the processing circuit to recover native copper and free gold. Current metallurgical studies are investigating
gravity separation, jigging, dense media separation and coarse particle flotation methods to address the requirements of the supergene
ore.



Infrastructure, Permitting and Compliance
Activities



Power is supplied to the New Afton Mine via its connection
to the BC Hydro grid through a substation located approximately one kilometre away. Water is supplied from Kamloops Lake through
an approximately four-kilometre pipeline.



Two First Nations, the Tk’emlúps te Secwépemc
and the Skeetchestn Indian Band (collectively, the “SSN”) have asserted Aboriginal rights and interests in the
Mine area. A formal agreement between the SSN and New Gold dated March 20, 2008, and amended and restated November 14, 2011 (“Participation
Agreement”) provides the SSN’s consent to the New Afton Mine and agreement not to challenge any New Gold interests
or permits related to the mine before a court of law. New Gold has undertaken to provide the SSN with certain economic and social
benefits, including education, training, employment and business opportunities. In accordance with the Participation Agreement,
New Gold must make annual payments into a trust created for the benefit of SSN members. Furthermore, New Gold must pay the trust,
in each year in which commercial production occurs at the mine, a percentage of net smelter returns ranging from 0.5% to 2%, depending
on the price of copper and whether New Gold has recovered its development and construction costs, subject to an annual minimum
amount.



On October 31, 2007, the Ministry of Energy, Mines and Petroleum
Resources issued Mine Permit M-229 approving the work system and reclamation program for the New Afton Mine. The Mine Permit will
need to be amended in the future to allow mining of the B3-block and C-zone. The Mine Permit obligates New Gold to post reclamation
security of C$9.5 million. This amount is based on the mine closure plan filed in 2012, which will be updated in 2018. It is expected
that the reclamation security requirement will increase with the updated closure plan to be more in line with New Afton’s
undiscounted closure liability due to several factors including the acquisition of historic Afton mine tailings facility and extension
of post-closure monitoring from five to twenty years to better align with industry standards. As at December 31, 2017, the
Company has posted this security in the form of an irrevocable standby letter of credit. The undiscounted closure cost liability
for the New Afton Mine as at December 31, 2017 is estimated to be C$14.8 million based on a third party cost estimate. New Gold
expects to incur this obligation between 2017 and 2028. The site is considered a zero discharge facility with regard to liquid
effluents. All waste waters are either deposited in the tailings area and recycled to the processing plant or treated offsite.



Mineral Reserve and Mineral Resource Estimates



The New Afton Mineral Reserves, effective December 31, 2017,
are summarized in the “Mineral Reserve Estimates” table. The New Afton Mineral Resources, effective December 31, 2017,
are summarized in the “Measured and Indicated Mineral Resource Estimates (Exclusive of Mineral Reserves)” and “Inferred
Mineral Resource Estimates” tables. See “Description of Business – Summary of Mineral Reserve and Mineral Resource
Estimates” on page 15.



The parameters, assumptions and methodologies applied in generating
the mineral reserve and mineral resource estimates are considered reasonable and appropriate. Furthermore, the mining, metallurgical,
infrastructure, permitting and other relevant factors relating to the New Afton mineral reserves and mineral resources fully support
these estimates. It has been noted, however, that the ground subsidence that has occurred to date is slightly offset from the original
mine plan design, an offset which is thought to be driven largely by a weaker rockmass located south of the underground block cave
footprint. A large expansion of the existing subsidence monitoring network was implemented in 2016 and 2017 which has further improved
the Company’s ability to accurately track and monitor changes in the surface



29







subsidence profile and the rockmass at depth and to implement
appropriate measures to mitigate any potential impact of such subsidence, including any impact to the mineral reserves, as appropriate.
Real time monitoring that was incorporated into the in instrumentation in 2017 and has further improved the Company’s ability
to accurately track and monitor changes in the surface subsidence profile and to implement appropriate measures as required. The
analyses conducted from this data have indicated that there has been a reduction in the surface subsidence perimeter, largely attributed
to the shift in production from the West to East cave.



Mining Operations



The New Afton Mine began commercial production on July 31,
2012 and has a current projected life extending through 2022 based on current Mineral Reserves contained within the A&B-zones
and throughput levels. The C-zone could provide an additional five years of production at current throughput levels. See “Exploration
and Developments - New Afton C-zone” on page 31.



Mining Methods



The New Afton Mine is a block cave mining operation. Other
mining methods, including open pit mining and sublevel caving, were considered but block caving was chosen for the New Afton deposit
because this method starts from the bottom and is conducive to large-scale low-cost mining. The operation is designed to produce
close to 5 Mtpa of copper-gold ore for processing in a flotation plant. Each block in the block cave has an undercut and extraction
level. Ore is hauled to ore passes and dropped to a tramming level, where it is hauled by trucks to the crusher level. From the
crusher, the ore is conveyed from underground to the mill via a 4.5-kilometre long conveyor system.



Waste mined as part of development activities is transported
to surface by conveyor and deposited in an area apart from the ore via a belt plow. The waste is then trucked to an area on the
edge of the historic Afton mine pit. Less than 5% of the mined rock is treated in this manner.



Recovery Methods



The New Afton mill was originally designed to process 11,000
tpd (4 Mtpa) of ore, recovering copper, gold and silver in a concentrate. During 2014, and through the first half of 2015, average
daily throughput levels were increased to over 13,000 tpd (4.7 Mtpa). A mill expansion was completed in 2015 to increase processing
capacity. The expansion involved the installation of tertiary grinding and additional pre-cleaner flotation capacity.



The mill processes a blend of primary hypogene and secondary
supergene ore types using conventional crushing, grinding and concentration processes. Mineral separation is by gravity concentration
and differential flotation of the copper bearing minerals to recover copper, gold and silver in a sulphide concentrate. Life-of-mine
recoveries are expected to total 80% for copper, 75% for gold and 68% for silver.



Capital and Operating Costs



During 2017, the New Afton Mine produced 86,163 ounces of gold
at an operating expense per ounce of gold sold of $412 and all-in sustaining costs of negative $605 per ounce ($692 per ounce on
a co-product basis).  The New Afton Mine produced 90.6 million pounds of copper in 2017 at an operating expense per pound
of copper sold of $0.85. In 2018, the New Afton Mine is expected to produce between 55,000 and 65,000 ounces of gold with an expected
operating expense per gold ounce sold of between $455 and $495 per ounce and all-in sustaining cost of between negative $1,020
and negative $980 per ounce.  2018 guidance assumes a $3.20 per pound copper price, $17 per ounce silver price and a foreign
exchange rate of C$1.25 to one United States dollar.  All-in sustaining costs per ounce is a non-GAAP measure.  See “Non-GAAP
Measures” on page 5. Sustaining capital expenditures at the New Afton Mine are expected to



30







be approximately $40 million in 2018. Below is a breakdown
of expected capital expenditures and expected all-in sustaining costs at the New Afton Mine for 2018.



|2018 Expected Capital Expenditures(1) |     | 2018 Expected All-in Sustaining Costs/ gold oz sold
|------------------------------------- | --- | ---------------------------------------------------
|Sustaining Capital(2)                 | $40 |                                                    
|Growth Capital(2)                     | $5  |                                                    
|Total                                 | $45 |                                                    
|                                      |     |                                                    
|                                      |     |                                                    

| | (1) | In millions.
| | --- | ------------

| | (2) | Based on the Company’s 2018 estimated capital expenditures. Sustaining capital excludes expenditures related to growth-related
initiatives. Growth capital excludes sustaining capital.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes treatment and refining charges on concentrate sales and adjustments for non-cash expenses, including inventory write-downs,
that are included in operating expenses as well as revenue from the sale of copper and silver by-products. See “Non-GAAP
Financial Performance Measures” in New Gold’s MD&A.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Includes sustaining capital expenditures, capitalized and expensed exploration that is sustaining in nature, and environmental
reclamation costs. See “Non-GAAP Financial Performance Measures” in New Gold’s MD&A.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Exploration and Development



New Afton C-zone



The C-zone is the down plunge extension of the B-zone block
cave that is currently being mined at New Afton. The C-zone extraction level would be approximately 550 metres below the current
B-zone extraction level. The mineralogy in the C-zone is expected to be consistent with the mineralogy in the west cave of New
Afton’s B-zone and C-zone would use the same development, production and materials handling strategies that are currently
being used to mine the B-zone. In January 2016, the Company completed a Feasibility Study in January 2016, which confirmed the
viability and positive economics for the C-zone deposit (separate from the current mining of the B-zone) determined in the 2015
scoping study described in the most recent technical report on the New Afton Mine. The C-zone is expected to have a mine life of
over five years, with average annual production of 108,000 ounces of gold and 81 million pounds of copper. The Company has elected
to defer development of the C-zone in 2018. While the January 2016 Feasibility Study forecasts solid economics at spot prices,
the Company intends to defer the commencement of capital spending while evaluating opportunities that have the potential to further
optimize the C-zone project (including options to manage surface subsidence and alternative tailings storage arrangements).



Other Projects



Reconnaissance level exploration is also planned in 2018 to
identify new areas of potential mineralization on the broader New Afton regional claim block.



Mesquite Mine,
United States



Project Description, Location, Access
and Other Information



The Mesquite Mine is located in Imperial County in southern
California, United States, 39 kilometres (24 miles) north of the border with Mexico and 26 kilometres (16 miles) west of the border
with Arizona. Access to the property is via good quality paved roads. Local resources are available in the towns of Brawley, California
and Yuma, Arizona, at distances from the mine of 56 kilometres (35 miles) and 84 kilometres (52 miles), respectively. Mesquite’s
climate is arid, with high temperatures in the summer and an average annual temperature of approximately 23 degrees Celsius (73
degrees Fahrenheit).



31







The Company became the owner of the Mesquite Mine in 2009 following
New Gold’s 2009 business combination with Western Goldfields Inc. (“WGI”). The mine is operated by the
Company’s wholly owned subsidiary, Western Mesquite Mines, Inc. (“WMMI”).



The mineral rights at the Mesquite Mine cover a total area
of approximately 2,104 hectares (5,200 acres) controlled by WMMI. They include 212 unpatented and 53 patented mining lode claims,
127 patented and 97 unpatented mill site claims, 266 hectares (658 acres) of California state leased land and 128 hectares (315
acres) of fee lands. Patented claims on federal land represent a secure title to the land. Some of the unpatented and patented
mining and mill site claims are leased by WMMI from the Los Angeles County Sanitation District (“LACSD”). Unpatented
claims are valid as long as annual claim maintenance fees are paid (in lieu of assessment work) and the land is held for mining
purposes. All mineral rights and other property interests are reviewed at least annually to identify any payments or commitments
required to maintain such interests. Sufficient surface rights have been obtained for current operations at the property.



Geological Setting and Mineralization



The Mesquite district lies on the southwest flank of the Chocolate
Mountains in metamorphic rocks of the upper plate of the Vincent-Chocolate Mountain Thrust. These upper plate rocks represent a
fragment of Precambrian and Mesozoic age continental crust of extremely complex history.



The Mesquite Mine comprises two sub-parallel, Oligocene-age
(23 million to 34 million years ago) mineral deposits: Big Chief-Vista and Rainbow. Gold mineralization is hosted by Mesozoic gneisses
that are intruded by biotite/muscovite rich granites. Gold mineralization is controlled by post-mineral faulting related to the
Neogene age San Andreas fault system. The district is covered by a thin veneer (0-90 metres, or 0-295 feet) of Tertiary and Quaternary
sediments.



Gold mineralization at Mesquite was deposited in an epithermal
setting, within 150 to 300 metres (500 feet to 1,000 feet) of the paleo-surface and subsequent to regional scale metamorphism.
The bulk of the mineralization occurs as disseminations and veins in the gneisses, with the majority of veining being controlled
by moderate to steeply dipping faults. Two types of gold mineralization are dominant: pods of mineralization of limited extent
at fault intersections and mineralized trends along faults. Gold occurs at Mesquite as native gold ranging in size from very coarse
to submicron disseminations. Silver-free native gold is the most common type of gold in the oxidized zone. A second type of gold
is silver-bearing coarse gold typically found in the unoxidized zone.



Infrastructure, Permitting and Compliance
Activities



Power is supplied through a powerline directly to the Mesquite
Mine by the Imperial Irrigation District Power Company. Water is pumped from the Vista well field located approximately three kilometres
(two miles) to the south.



WMMI is required to post security for reclamation and for closure
with Imperial County, California as lead agency under the California Surface Mining and Reclamation Act, and for pit backfill with
the California State Lands Commission under a public/private land lease agreement. As at December 31, 2017, the Company has met
its security requirements in the form of bonds posted through a surety underwriter. The undiscounted closure cost liability for
the Mesquite Mine as of December 31, 2017 is $23.1 million. New Gold expects to incur this obligation between 2017 and 2032.



Mineral Reserve and Mineral Resource Estimates



The Mesquite Mineral Reserves, effective December 31, 2017,
are summarized in the “Mineral Reserve Estimates” table. The Mesquite Mineral Resources, effective December 31, 2017,
are summarized in the “Measured and Indicated Mineral Resource Estimates (Exclusive of Mineral Reserves)” and “Inferred
Mineral Resource Estimates” tables. See “Description of Business – Summary of Mineral Reserve and Mineral Resource
Estimates” on page 15. The parameters, assumptions



32







and methodologies applied in generating the mineral reserve
and mineral resource estimates are considered reasonable and appropriate. Furthermore, the mining, metallurgical, infrastructure,
permitting and other relevant factors relating to the Mesquite mineral reserves and mineral resources fully support these estimates.



Mining Operations



Mining Methods



The Mesquite Mine is an operating open pit mine. Mining is
performed using a conventional truck/shovel open-pit mining method. Due to the nature of the ore bodies, ore is mined from multiple
open pits. Run-of-mine ore is hauled directly to the leach pad for processing. Rock not containing economically recoverable metal
is deposited in areas as close as possible to the mining area and may be placed in mined-out pits. Pit designs are optimized using
geological information, metallurgical results, pit stability analyses and operating and processing cost estimates.



Recovery Methods



Mineral processing is by heap leach using a sodium cyanide
solution and a carbon-in-column circuit. Lime is added to the ore to ensure a basic pH which ensures that the gold remains soluble
and does not precipitate. The leach solution is distributed over the leach pads using the drip method, which saves water. Gold
is precipitated from the leach solution and sent to a furnace where impurities are removed and doré bars are produced. Process
recoveries on the heap are determined by the level of oxidation in the ore. The mine’s mineral reserves and life-of-mine
production plan are currently based on 75% average recovery of the oxide ores and 35% average recovery of the non-oxide ores. There
is a variably oxidized transition zone located between the oxide and non-oxide zones, which is treated as non-oxide ore in the
production plan.



A leach pad expansion project, adding approximately nine million
square feet (approximately 840,000 square metres) of liner, was completed in the second quarter of 2016. Following the expansion,
leach pad capacity is sufficient to hold current life-of-mine reserves.



Capital and Operating Costs



The Mesquite Mine is projected to operate through 2021 based
on current mineral reserves and the currently expected mining rate, followed by several years of residual leaching. During 2017,
Mesquite produced 168,889 ounces of gold at an operating expense per ounce of gold sold of $727 and all-in sustaining costs of
$817 per ounce.  In 2018, the Mesquite Mine is expected to produce between 140,000 and 150,000 ounces of gold at an expected
operating expense per gold ounce sold of between $890 and $930 per ounce and an expected all-in sustaining costs of between $1,005
and $1,045 per ounce.  All-in sustaining costs per ounce is a non-GAAP measure.  See “Non-GAAP Measures”
on page 5. Sustaining capital expenditures at the Mesquite Mine are expected to be $10 million in 2018. Below is a breakdown of
expected production and expected all-in sustaining costs at the Mesquite Mine for 2018.



Cerro San Pedro
Mine, Mexico



The Cerro San Pedro Mine is an open-pit gold and silver heap
leach operation located in central Mexico in the state of San Luis Potosí, approximately 400 kilometres north of Mexico
City and 14 kilometres east of the city of San Luis Potosí. The mine is operated by the Company’s wholly owned subsidiary,
Minera San Xavier S.A. de C.V. (“MSX”). The Cerro San Pedro Mine concluded active mining operations in June 2016. It
is expected that the processing of residual ore by heap leach will continue for one to two years, subject to recovery performance
and future gold and silver prices.



The mineral rights at the Cerro San Pedro Mine consist of 16
mineral concessions covering an area of 7,871 hectares. The mineral concessions begin to expire in December 2036 through March
2062. The surface rights to the Cerro San Pedro Mine are controlled by private parties and ejidos (communal agrarian entities).
MSX holds a Temporary



33







Occupancy and Right of Way Authorization for land belonging
to certain local ejidos, providing surface rights access over the life of the mine. Franco-Nevada holds a 1.95% gross value royalty
relating to the Cerro San Pedro Mine.



The Cerro San Pedro Mine has had a history of ongoing legal
challenges related to the environmental authorization (“EIS”) for the mine. On August 5, 2011 a new EIS was
granted based on a new municipal land use plan by the municipality of Cerro de San Pedro, which clearly designates the area of
the Cerro San Pedro Mine for mining. The new EIS is subject to a number of ongoing conditions that will need to be fulfilled through
the continued operation and eventual closure of the mine. In addition, some authorizations necessary for the operation of the Cerro
San Pedro Mine, such as the municipal functioning license, have durations of one year or other periods that are shorter than the
remaining mine and leach pad life.



Recovery Methods



Ore is processed by heap leaching with a Merrill-Crowe processing
circuit that recovers both gold and silver. At the leach pad, a weak cyanide solution is applied to dissolve the gold and silver.
Lime is added to the ore to ensure a basic leach solution so that the precious metals remain soluble. The leach solution is distributed
over the leach pads using the drip method, which saves water. The pregnant solution is collected in the Merrill-Crowe plant where
zinc is added to precipitate gold and silver. The precipitate is collected and sent to a furnace where impurities are removed and
doré bars poured. Current recovery is estimated to be 55% gold and 20% silver.



Capital and Operating Costs



During 2017, the Cerro San Pedro Mine produced 34,337 ounces
of gold at operating expense per gold ounce sold of $1,298 and an all-in sustaining costs of $1,425 per ounce. The Cerro San Pedro
Mine produced 0.6 million ounces of silver in 2017 at an operating expense per silver ounce sold of $17.29. The Cerro San Pedro
Mine is expected to produce between 20,000 and 30,000 of gold in 2018 at an expected operating expense per gold ounce sold between
$890 and $930 and all-in sustaining cost between $1,005 and $1,045 per ounce.  2018 guidance assumes a $17.00 per ounce silver
price and a foreign exchange rate of 18.00 Mexican pesos to one United States dollar.  Total cash costs per ounce and all-in
sustaining costs per ounce are non-GAAP measures.  See “Non-GAAP Measures” on page 5.



Mine Closure



The schedule for completing the activities relating to the
closure of Cerro San Pedro is dictated by the EIS. The site reclamation must be completed within four years of final processing,
including residual leaching. MSX is required to post reclamation security of approximately $15.6 million with the Mexican environmental
regulatory agency, SEMARNAT, under the general law for ecological balance and environmental protection. As at December 31, 2017,
the Company has posted this security in the form of an irrevocable standby letter of credit. The undiscounted closure cost liability
for the Cerro San Pedro Mine as at December 31, 2017 is estimated to be $22 million. New Gold expects to incur this obligation
between 2018 and 2026.



Blackwater
Project, Canada



The following disclosure does not contain detailed information
pertaining to the Capoose, Auro, Key, Parlane and RJK claim blocks, which are peripheral to the Blackwater deposit.



Project Description, Location, Access
and Other Information



The Blackwater Project is a gold-silver project located in
central British Columbia, approximately 110 kilometres southwest of Vanderhoof and 450 kilometres northeast of Vancouver. The Project
site is readily accessible by forest service and mine road. A new 16-kilometre road is planned to connect the Project site with
the Kluskus Forest Service Road. Helicopter access is available from bases in Prince George, Vanderhoof and, Quesnel. The climate
in the project



34







area is sub-continental, characterized by brief warm summers
and long cold winters. It is expected that mining activities will be conducted year-round.



As at December 31, 2017, New Gold holds a 100% interest in
329 mineral claims covering an area of 148,900 hectares distributed among the Blackwater, Capoose, Auro, Key, Parlane and RJK claim
blocks. To keep claims in good standing, a minimum value of work or cash-in-lieu is required annually. The required cash-in-lieu
to maintain a mineral claim for an anniversary year is double the value of exploration and development that would be required to
maintain the claim. Sixty-three claims are due for renewal in 2018 and six claims are due for renewal in 2019, with the remainder
in good standing until 2022.



The Blackwater deposit spans one Davidson claim (Tenure No.
509273), the Dave claim (Tenure No. 515809) and the Jarrit claim (Tenure No. 515810) within the greater Blackwater claim block
(75 mineral claims covering 30,578 hectares). The majority of the Blackwater claims are located on Crown lands and none are known
to overlap any legacy, Crown-granted mineral claims or no-staking reserves. A variety of surface use permits, licenses and authorizations
have been granted across the Project area, but none are expected to significantly impact mine design and estimated costs.



New Gold’s 100% interest in the Blackwater claim block
is subject to four NSR royalties ranging from 1% to 3%, two of which cover the Blackwater deposit.



Geological Setting and Mineralization



The Blackwater Project is located on the Nechako Plateau, within
the Stikine terrane of the Intermontane Belt. The Stikine terrane comprises Jurassic to early Tertiary age magmatic arc and related
sedimentary rocks.



The Blackwater deposit is hosted by a sequence of andesite,
felsic volcaniclastic rock, breccias, and tuff interpreted to belong to the late Cretaceous age Kasalka Group. These rocks are
overlain by a post-mineral sequence of felsic and mafic volcanics of the Eocene age Ootsa Lake Group and underlain by basinal clastic
rocks of the late Jurassic age Bowser Lake Group. A well-developed system of north-easterly, north-westerly and northerly-striking
faults cuts the entire package. Quaternary glacial, colluvial and fluvial deposits obscure most of the bedrock within the immediate
Project area.



The Blackwater deposit is considered to be an example of a
volcanic-hosted, intermediate sulphidation, epithermal-style gold-silver deposit. Host rocks within the deposit are pervasively
hydrofractured, pyritized, and altered to a mixture of silica and sericite. Mineralization is typified by gold-bearing polymetallic
sulphides (pyrite, sphalerite, marcasite, pyrrhotite) as disseminations and porosity infillings within the fragmental unit of the
deposit. Mineralization is strongly controlled by northwest-southeast-trending zones of tectonic brecciation and chloritic gouge
and by northeast-trending structural discontinuities. The mineralization is bounded by graben-forming faults to the north and south.
A major north-south-trending fault transects the ore body, subdividing it into two distinct geological domains integral to the
mineral resource block model.



Drilling has defined the Blackwater deposit as a zone of continuous
disseminated gold-silver mineralization extending at least 1,300 metres east-west and at least 950 metres north-south. The vertical
thickness of the zone averages 350 metres but ranges up to 600 metres, remaining open at depth to the southwest, north and northwest.



Infrastructure, Permitting and Environmental
Conditions



The deposit is located on the north slope of Mt. Davidson,
and the proposed project infrastructure will be sited predominantly in the Davidson Creek watershed. There is sufficient suitable
land for future mine infrastructure within



35







the mineral claims. Personnel to support development and operation
of the mine can be drawn from British Columbia’s well-developed mining industry. Water for the camp is currently obtained
from groundwater wells.



The closest connection to the provincial power grid is 140
kilometres from the Blackwater Project. An overland transmission line is planned to connect to the provincial grid. Freshwater
requirements will be met by pumping water from Tatelkuz Lake via a 20-kilometre long pipeline and groundwater wells. The 2013 Feasibility
Study includes plans for on-site infrastructure including a 60,000 tpd process plant facility, open pit mine infrastructure, tailings
facility and administrative offices.



The Blackwater Project is subject to review under the British
Columbia Environmental Assessment Act and the Canadian Environmental Assessment Act, 2012. The EA process was initiated in October
2012. The final EA report was submitted for public review by the end of 2015 and public review started in January 2016. New Gold
anticipates receiving EA approval in 2018.



Mine construction and operation will require a large number
of federal and provincial permits, many pertaining to potential impacts on surface water and fisheries. A number of key engineering
and environmental studies in support of the broader permitting effort were completed between 2015 and 2017. Various studies required
to support permit application preparation are planned to continue in 2018.



The federal and provincial permitting requirements include
public and First Nations consultations. New Gold consults with provincial and federal ministries and agencies about research, design,
permits, and environmental assessment questions and issues as they arise. The Company continues to engage a number of First Nations
groups who have interests in the project area, including discussions regarding Participation Agreements for construction and operation
of the mine with key local First Nations.



There is no evidence of historic mining activities in the project
area. Existing environmental liabilities are related to the exploration activities of New Gold and its predecessor companies. The
post-mining reclamation objective is wildlife habitat and return of the land for traditional use by indigenous groups.



New Gold has conducted extensive environmental baseline studies
and is preparing comprehensive environmental management plans for the Blackwater Project. Mitigation plans are in place for potential
effects on fish due to flow reductions in Davidson Creek and for potential effects on caribou and the whitebark pine species. A
fish habitat compensation plan will be implemented to ensure no net loss of fish habitat will result from the operations. The project
is located at the periphery of caribou range and a plan has been proposed to offset for potential impacts to the habitat.



New Gold has posted an irrevocable standby letter of credit
totaling approximately C$1.9 million in respect of reclamation security deposits for the Blackwater Project’s Mines Act permit,
gravel pit project and adjacent properties. The undiscounted reclamation liability for the Blackwater Project as at December 31,
2017 is estimated to be $14.1 million.



Mineral Reserve and Mineral Resource Estimates



The Blackwater Project Mineral Reserves estimate is summarized
in the “Mineral Reserve Estimates” table. The Blackwater Project Mineral Resource estimate is summarized in the “Measured
and Indicated Mineral Resource Estimates (Exclusive of Mineral Reserves)” and “Inferred Mineral Resource Estimates”
tables. See “Description of Business – Summary of Mineral Reserve and Mineral Resource Estimates” on page 15.
The parameters, assumptions and methodologies applied in generating the mineral reserve and mineral resource estimates are considered
reasonable and



36







appropriate. Furthermore, the mining, metallurgical, infrastructure,
permitting and other relevant factors relating to the Mesquite mineral reserves and mineral resources fully support these estimates.



Mining Operations



The mining operations described below are set out in the 2013
Feasibility Study. The Company is currently working on internal trade-off studies for the Blackwater Project. The objective of
these studies is to further enhance project economics and maximize free cash flow by reducing the strip ratio, maximizing the feed
grade and lowering both development capital and operating costs. Aspects of the project being evaluated include the scale of the
operation, ore sorting and flowsheet configurations.



Mining and Recovery Methods



The Blackwater Project has been designed as a conventional
open pit mining operation. A truck and shovel operation will operate year-round in a pit designed considering the geology, technical,
economic and related environmental characteristics of mineral resource to be mined, and location of the deposit. The 2013 Feasibility
Study contemplates that run-of-mine ore will be delivered to a primary crusher that feeds a whole ore leach gold-silver recovery
plant, ground mineralized material from a conventional milling circuit will be thickened, passed through a leaching and carbon-in-pulp
extraction circuit, and subjected to carbon stripping and electrowinning prior to being smelted into a gold-silver doré.



Capital and Operating Costs



The Blackwater Project has Proven and Probable Mineral Reserves
of over 8.2 million ounces of gold and 60.8 million ounces of silver and, as designed in the 2013 Feasibility Study, is expected
to have a 17-year mine life. The 2013 Feasibility Study estimated production of approximately 485,000 ounces of gold and 1,800,000
ounces of silver annually for the first nine years of full production.  The 2013 Feasibility Study also estimated the life-of-mine
total cash costs and all-in sustaining costs per ounce of gold to be C$609 and C$706 per ounce respectively, assuming a $1,300
per ounce gold price, $22.00 per ounce silver price and an exchange rate of C$0.95 to one United States dollar.  Total cash
costs per ounce and all-in sustaining costs are non-GAAP measures.  See “Non-GAAP Measures” on page 5.



RISK FACTORS



New Gold’s business activities are subject to significant
risks, including, but not limited to, those described below. Every investor or potential investor in New Gold securities should
carefully consider these risks. Any of the following risks could have a material adverse effect on the Company, its business and
prospects, and could cause actual events to differ materially from those described in forward-looking statements relating to the
Company. Additional risks related to our material properties are discussed in the technical reports and other documents filed by
the Company from time to time on SEDAR. In addition, other risks and uncertainties not presently known by management of the Company
or that management currently believes are immaterial could affect the Company, its business and prospects.



Changes in
Metal Prices



The Company’s earnings, cash flows and financial condition
are subject to risk due to fluctuations in the market price of gold, copper and silver. World gold prices have historically fluctuated
widely. World gold prices are affected by numerous factors beyond the Company’s control, including:



| | · | the strength of the United States economy and the economies of other industrialized and developing nations;
| | - | -----------------------------------------------------------------------------------------------------------



| | · | global and regional political and economic conditions;
| | - | ------------------------------------------------------



37







| | · | the relative strength of the United States dollar and other currencies;
| | - | -----------------------------------------------------------------------



| | · | expectations with respect to the rate of inflation;
| | - | ---------------------------------------------------



| | · | interest rates;
| | - | ---------------



| | · | purchases and sales of gold by central banks and other large holders, including speculators;
| | - | --------------------------------------------------------------------------------------------



| | · | demand for jewellery containing gold;
| | - | -------------------------------------



| | · | investment activity, including speculation, in gold as a commodity; and
| | - | -----------------------------------------------------------------------



| | · | worldwide production.
| | - | ---------------------



The price of gold was US$1,297 per ounce as at December 31,
2017, compared to US$1,159 as at December 31, 2016. Future metal price declines could cause continued development of, and commercial
production from, the Company’s properties to be uneconomic. In addition, there is a time lag between the shipment of gold
and copper and final pricing, and changes in pricing can significantly impact the Company’s revenue and working capital position.
Depending on the price of gold, copper and silver, the Company’s cash flow from mining operations may be insufficient to
meet its operating needs and capital expenditures, and as a result the Company could experience losses and/or may curtail or suspend
some or all of its exploration, development, construction and mining activities (including residual leaching) or otherwise revise
its mine plans and exploration, development and construction plans, and could lose its interest in, or be forced to sell, some
or all of its properties.



Reserve calculations and mine plans that are revised using
significantly lower gold, copper, silver and other metal prices could result in significant reductions in estimated mineral reserves
and resources as well as revisions in the Company’s life-of-mine plans, which in turn could result in material write-downs
of the Company’s investments in mining properties and increased depletion, reclamation and closure charges. Depending on
the price of gold or other metals, the Company may determine that it is impractical to commence or, if commenced, to continue commercial
production at a particular site. Metal price fluctuations also create adjustments to the provisional prices of sales made in previous
periods that have not yet been subject to final pricing, and these adjustments could have an adverse impact on the Company’s
financial results and financial condition. In addition, cash costs and all-in sustaining costs of gold production are calculated
net of by-product credits, and therefore may also be impacted by downward fluctuations in the price of by-product metals. Any of
these factors could result in a material adverse effect on the Company’s results of operations and financial condition.



In addition to adversely affecting the Company’s mineral
reserve and mineral resource estimates and its financial condition, declining metal prices can impact operations by requiring a
reassessment of the feasibility of a particular project or mine. Such a reassessment may be the result of a management decision
or may be required under financing arrangements related to a particular project or mine. Even if a project or mine is ultimately
determined to be economically viable, the need to conduct such a reassessment may cause substantial delays and/or may interrupt
operations until the reassessment can be completed, which may have a material adverse effect on the Company’s results of
operations and financial condition.



From time to time the Company engages in commodity hedging
transactions intended to reduce the risk associated with fluctuations in commodity prices, but there is no assurance that any such
commodity hedging transactions designed to reduce the risk associated with fluctuations in commodity prices will be successful.
Hedging may not protect adequately against declines in the price of the hedged commodity. Furthermore, although hedging may protect
the Company from a



38







decline in the price of the commodity being hedged, it may
also prevent the Company from benefiting from price increases.



Production
Estimates



Forecasts of future production are estimates based on interpretation
and assumptions, and actual production may be less than estimated. Unless otherwise noted, the Company’s production forecasts
are based on full production being achieved at all of its mines. The Company’s ability to achieve and maintain full production
rates at these mines is subject to a number of risks and uncertainties. The Company’s production estimates are dependent
on, among other things, the accuracy of mineral reserve and mineral resource estimates, the accuracy of assumptions regarding ore
grades and recovery rates, ground conditions, physical characteristics of ores, such as hardness and the presence or absence of
particular metallurgical characteristics, the accuracy of estimated rates and costs of mining and processing, and the receipt and
maintenance of permits. The Company’s actual production may vary from its estimates for a variety of reasons, including those
identified under the heading “Operating Risks” below. The failure of the Company to achieve its production estimates
could have a material adverse effect on the Company’s prospects, results of operations and financial condition.



Cost Estimates



The Company prepares estimates of operating costs and/or capital
costs for each operation and project. The Company’s actual costs are dependent on a number of factors, including the exchange
rate between the United States dollar and the Canadian dollar and Mexican peso, smelting and refining charges, penalty elements
in concentrates, royalties, the price of gold and by-product metals, the cost of inputs used in mining operations and production
levels.



New Gold’s actual costs may vary from estimates for a
variety of reasons, including changing waste-to-ore ratios, ore grade metallurgy, labour and other input costs, commodity prices,
general inflationary pressures and currency exchange rates, as well as those risks identified under the heading “Operating
Risks” below. Failure to achieve cost estimates or material increases in costs could have an adverse impact on New Gold’s
future cash flows, profitability, results of operations and financial condition.



Volatility
in the Market Price of the Company’s Securities



The Common Shares are listed on the TSX and NYSE American.
The per share price of the Common Shares on the TSX fluctuated from a high of C$5.79 to a low of C$3.11 and on the NYSE American
from a high of US$4.41 to a low of US$2.39 during the twelve-month period ending December 31, 2017. There can be no assurance that
continual fluctuation in price will not occur.



Securities of mining companies have experienced substantial
volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These
factors include macroeconomic developments in North America and globally, currency fluctuations and market perceptions of the attractiveness
of particular industries. Other factors unrelated to the Company’s performance that may have an effect on the price of the
Common Shares include the following: the extent of analytical coverage available to investors concerning the Company’s business
may be limited if investment banks with research capabilities do not continue to follow the Company’s securities; the lessening
in trading volume and general market interest in the Company’s securities may affect an investor’s ability to trade
significant numbers of Common Shares; and the size of the Company’s public float may limit the ability of some institutions
to invest in the Company’s securities. The price of the Common Shares is also likely to be significantly affected by short-term
changes in gold, and, to a lesser extent, copper and silver, prices, by the Company’s financial



39







condition and results of operations as reflected in its quarterly
financial statements and by other operational and regulatory matters.



As a result of any of these factors, the market price of the
Common Shares at any given point in time may not accurately reflect New Gold’s long-term value. Securities class action litigation
often has been brought against companies following periods of volatility in the market price of their securities. New Gold may
in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert
management’s attention and resources.



Government
Regulation



The mining, processing, development and exploration activities
of the Company are subject to various laws governing prospecting, development, production, exports, imports, taxes, labour standards
and occupational health and safety, mine safety, toxic substances, waste disposal, environmental protection and remediation, protection
of endangered and protected species, land use, water use, land claims of local people and other matters. No assurance can be given
that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which
could have a material adverse effect on the Company’s financial position and results of operations. Amendments to current
laws, regulations and permits governing operations or development activities and activities of mining and exploration companies,
or the application of existing laws, regulations and permits (including a more stringent or different application), could have
a material adverse impact on the Company’s results of operations or financial position, or could require abandonment or delays
in the development of new mining properties or the suspension or curtailment of operations at existing mines. Failure to comply
with any applicable laws, regulations or permitting requirements may result in enforcement actions against the Company, including
orders issued by regulatory or judicial authorities causing operations or development activities to cease or be curtailed or suspended,
and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions (see
also “Permitting” below). Additionally, the Company could be forced to compensate those suffering loss or damage by
reason of its mining operations or exploration or development activities and could face civil or criminal fines or penalties imposed
for violations of applicable laws or regulations. Any such regulatory or judicial action could materially increase the Company’s
operating costs and delay or curtail or otherwise negatively impact the Company’s operations and other activities.



Permitting



The Company’s operations, development projects and exploration
activities are subject to receiving and maintaining licenses, permits and approvals, including regulatory relief or amendments,
(collectively, “permits”) from appropriate governmental authorities. Before any development on any of its properties
the Company must receive numerous permits, and continued operations at the Company’s mines is also dependent on maintaining,
complying with and renewing required permits or obtaining additional permits.



New Gold may be unable to obtain on a timely basis or maintain
in the future all necessary permits required to explore and develop its properties, commence construction or operation of mining
facilities and properties or maintain continued operations. Delays may occur in connection with obtaining necessary renewals of
permits for the Company’s existing operations and activities, additional permits for existing or future operations or activities,
or additional permits associated with new legislation. It is possible that previously issued permits may become suspended or revoked
for a variety of reasons, including through government or court action.



In October 2016, the federal and provincial governments entered
into a memorandum of understanding regarding the environmental assessment process for the Blackwater Project with the Ulkatcho
First Nation and the Lhoosk’uz Dené



40







Nation to facilitate government-to-government collaboration
in such process. In addition, in April 2015, the provincial government entered into an agreement with the Nadleh Whuten First Nation,
Saik’uz First Nation, Stellat’en First Nation and other First Nations included in the Carrier Sekani Tribal Council
to facilitate a government-to-government relationship based on collaboration in connection with natural resource development carried
on in their traditional territories, including the Blackwater Project. New Gold continues to engage indigenous groups who have
interests in the Blackwater Project area. New Gold anticipates receiving environmental assessment approval for the Blackwater Project
in 2018, however, there can be no assurance that such approval will be obtained on such timeline or at all.



In the past there have been challenges to the Company’s
permits that were temporarily successful as well as delays in the renewal of certain permits or in receiving additional required
permits. There can be no assurance that the Company will receive or continue to hold all permits necessary to develop or continue
operating at any particular property or to pursue the Company’s exploration activities. To the extent that required permits
cannot be obtained or maintained, the Company may be curtailed or prohibited from continuing its mining operations or from proceeding
with planned exploration or development of mineral properties. Even if permits or renewals are available, the terms of such permits
may be unattractive to the Company and result in the applicable operations or activities being financially unattractive or uneconomic.
An inability to obtain or maintain permits or to conduct mining operations pursuant to applicable permits would materially reduce
the Company’s production and cash flow and could undermine its profitability.



Dependence
on the Rainy River AND New Afton MineS



The Company’s operations at the Rainy River and New Afton
Mines are expected to account for 70% of the Company’s gold production and 100% of its copper production in 2018. Any adverse
condition affecting mining or milling conditions at the Rainy River Mine or New Afton Mine could have a material adverse effect
on the Company’s financial performance and results of operations.



Unless the Company acquires or develops other significant gold-producing
assets, the Company will continue to be dependent on its operations at the Rainy River and New Afton Mines for a substantial portion
of its cash flow provided by operating activities.



Operating Risks



Mining operations generally involve a high degree of risk.
The Company’s operations are subject to all the hazards and risks normally encountered in the exploration, development and
production of gold, copper and silver including unusual and unexpected ground conditions or geologic formations, seismic activity,
rock bursts, rock slides, cave-ins, slope or pit wall failures, flooding, fire, metal losses, periodic interruption due to inclement
or hazardous weather conditions and other conditions that would impact the drilling and removal of material. Block caving activities,
including at the New Afton Mine, generally result in surface subsidence. The configuration of subsidence presently occurring above
the west cave at the New Afton Mine is slightly offset from the original model, which is thought to be driven largely by the weaker
rockmass located south of the cave footprint. The subsidence is being monitored and evaluated on an ongoing basis. Surface subsidence
or any of the above hazards and risks could result in reduced production, damage to, or destruction of, mines and other producing
facilities, damage to life or property, environmental damage and possible legal liability. In addition, production may be adversely
impacted by operational problems such as a failure of a production hoist, filter press, SAG mill or other equipment, or industrial
accidents, as well as other potential issues such as actual ore mined varying from estimates of grade or tonnage, dilution, block
cave performance and metallurgical or other characteristics, interruptions in or shortages of electrical power or water, shortages
of required inputs, labour shortages or strikes, claims by or disagreements with First Nations and other indigenous groups, restrictions
or regulations imposed by government agencies or changes in the regulatory environment. The Company’s milling operations
are subject to



41







hazards such as equipment failure or failure of retaining dams
around tailings disposal areas, which may result in environmental pollution and consequent liability. In addition, short-term operating
factors, such as the need for orderly development of the ore bodies or the processing of new or different ore grades, may cause
a mining operation to be unprofitable in any particular accounting period.



The occurrence of one or more of these events may result in
the death of, or personal injury to, employees, other personnel or third parties, the loss of mining equipment, damage to or destruction
of mineral properties or production facilities, monetary losses, deferral or unanticipated fluctuations in production, suspension,
curtailment or termination of operations, environmental damage and potential legal liabilities, any of which may adversely affect
the Company’s business, reputation, prospects, results of operations and financial condition.



Exploration
and Development Risks



The exploration for and development of mineral deposits involves
significant risks, which even a combination of careful evaluation, experience and knowledge cannot eliminate. While the discovery
of an ore body may result in substantial rewards, few properties that are explored are ultimately developed into producing mines.
Once a site with mineralization is discovered, it may take several years from the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change. Major expenses may be required to locate and establish
mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It
is impossible to ensure that the exploration or development programs planned by the Company will result in a profitable commercial
mining operation.



Whether a mineral deposit will be commercially viable depends
on a number of factors, including but not limited to: the particular attributes of the deposit, such as accuracy of estimated size,
continuity of mineralization, average grade and metallurgical characteristics (see “Uncertainty in the Estimation of Mineral
Reserves and Mineral Resources” below); proximity to infrastructure; metal prices, which are highly cyclical (see “Changes
in Metal Prices” above); and government regulations, including regulations relating to prices, taxes, royalties, land tenure,
land use, importing and exporting of minerals and environmental protection (see “Government Regulation” above). The
exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company being
unable to receive an adequate return on invested capital.



Development projects are uncertain and capital cost estimates,
projected operating costs, production rates, recovery rates, mine life and other operating parameters and economic returns may
differ significantly from those estimated for a project. Development projects rely on the accuracy of predicted factors including
capital and operating costs, metallurgical recoveries, reserve estimates and future metal prices. In addition, there can be no
assurance that gold, copper or silver recoveries in small scale laboratory tests will be duplicated in larger scale tests under
on-site conditions or during production.



The Company has one project currently in the development phase:
Rainy River, which is in the construction stage, and Blackwater, which is in the permitting stage. In addition, the Company may
engage in expansion activities at its operating mines from time to time. For example, in 2018 the Company plans to commence construction
of the Rainy River underground mine. In addition, the C-zone, if pursued, would be an expansion of the New Afton Mine. Expansion
projects, including expansions of facilities and extensions to new ore bodies or new portions of existing ore bodies, can have
risks and uncertainties similar to development projects.



A project is subject to numerous risks during development including,
but not limited to, the accuracy of feasibility studies, obtaining and complying with required permits, changes in environmental
or other government regulations,



42







securing all necessary surface and land tenure rights, consulting
and accommodating First Nations and other indigenous groups and financing risks. In particular, the Company is actively engaged
in consultation with various First Nations and other indigenous groups in connection with the Blackwater Project. Unforeseen circumstances,
including those related to the amount and nature of the mineralization at the development site, technological impediments to extraction
and processing, legal challenges or restrictions or governmental intervention, infrastructure limitations, environmental issues,
unexpected ground conditions or other unforeseen development challenges, commodity prices, disputes with local communities or other
events, could result in one or more of New Gold’s planned developments becoming impractical or uneconomic to complete. Any
such occurrence could have an adverse impact on New Gold’s growth, financial condition and results of operations. There can
be no assurance that the development of either of the Rainy River underground mine or the Blackwater Project will continue in accordance
with current expectations or at all. See also “Permitting” above.



Risks Related
to RAINY RIVER’s Early production



The Rainy River Mine commenced commercial production on October
19, 2017. Despite achieving this milestone, the Rainy River Mine is in the early stages of the production phase and so is subject
to a number of inherent risks. It is not unusual in the mining industry for new mining operations to experience unexpected problems
during the early stages of the production phase (which can last twelve months or longer), including failure of equipment, machinery,
the processing circuit or other processes to perform as designed or intended, inadequate water, insufficient ore stockpile or grade,
and failure to deliver adequate tonnes of ore to the mill, any of which could result in delays, slowdowns or suspensions and require
more capital than anticipated. In addition, mineral reserves and mineral resources projected by the Feasibility Study, and anticipated
costs, including, without limitation, operating expenses, cash costs and all-in sustaining costs, anticipated mine life, projected
production, anticipated production rates and other projected economic and operating parameters may not be realized, and the level
of future metal prices needed to ensure commercial viability may deteriorate. Consequently, there is a risk that Rainy River may
encounter problems or be subject to delays or suspensions during the early stages of the production phase, which may or have other
material adverse consequences for the Company, including its operating results, cash flow and financial condition.



Financing Risks



The Company’s mining, processing, development and exploration
activities may require additional external financing. There can be no assurance that additional capital or other types of financing
will be available when needed or that, if available, the terms of such financing will be acceptable to the Company. Furthermore,
if the Company raises additional capital by offering equity securities or securities convertible into equity securities, any additional
financing may involve substantial dilution to existing shareholders. Failure to obtain sufficient financing could result in the
delay or indefinite postponement of exploration, development, construction or production of any or all of the Company’s mineral
properties. The cost and terms of such financing may significantly reduce the expected benefits from new developments or render
such developments uneconomic.



Need for Additional
Mineral Reserves and Mineral Resources



Because mines have limited lives based on proven and probable
mineral reserves, the Company continually seeks to replace and expand its mineral reserves and mineral resources. The Company’s
ability to maintain or increase its annual production of gold, copper and silver depends in significant part on its ability to
find or acquire new mineral reserves and mineral resources and bring new mines into production, and to expand mineral reserves
and mineral resources at existing mines. Exploration is inherently speculative. New Gold’s exploration projects involve many
risks and exploration is frequently unsuccessful. See “Exploration and Development Risks” above. There is a risk that
depletion of reserves will



43







not be offset by discoveries or acquisitions. The mineral base
of New Gold may decline if reserves are mined without adequate replacement.



Uncertainty
in the Estimation of Mineral Reserves and Mineral Resources



Mineral reserves and mineral resources are estimates only and
no assurance can be given that the anticipated tonnages and grades will be achieved, that the indicated level of recovery will
be realized or that mineral reserves can be mined or processed profitably. Mineral reserve and mineral resource estimates may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, geotechnical factors (such as pit slope
angles), marketing and other risks and relevant issues. There are numerous uncertainties inherent in estimating mineral reserves
and mineral resources, including many factors beyond the Company’s control. Such estimation is a subjective process, and
the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data, the
nature of the ore body and of the assumptions made and judgments used in engineering and geological interpretation. These estimates
may require adjustments or downward revisions based upon further exploration or development work, drilling or actual production
experience.



Fluctuations in gold, copper and silver prices, results of
drilling, metallurgical testing and production, the evaluation of mine plans after the date of any estimate, permitting requirements
or unforeseen technical or operational difficulties may require revision of mineral reserve and mineral resource estimates. Prolonged
declines in the market price of gold (or applicable by-product metal prices) may render mineral reserves and mineral resources
containing relatively lower grades of mineralization uneconomical to recover and could materially reduce the Company’s mineral
reserves and mineral resources. Mineral resource estimates for properties that have not commenced production or at deposits that
have not yet been exploited are based, in most instances, on very limited and widely-spaced drill hole information, which is not
necessarily indicative of conditions between and around the drill holes. There may also be outliers in the representative samples
that may disproportionally skew the estimates. Accordingly, such mineral Resource estimates may require revision as more geologic
and drilling information becomes available and as actual production experience is gained. Should reductions in mineral resources
or mineral reserves occur, the Company may be required to take a material write-down of its investment in mining properties, reduce
the carrying value of one or more of its assets or delay or discontinue production or the development of new projects, resulting
in reduced net income or increased net losses and reduced cash flow. Mineral resources and mineral reserves should not be interpreted
as assurances of mine life or of the profitability of current or future operations. In addition, the estimates of mineral resources,
mineral reserves and economic projections rely in part on third-party reports and investigations. There is a degree of uncertainty
attributable to the calculation and estimation of mineral resources and mineral reserves and corresponding grades being mined and,
as a result, the volume and grade of reserves mined and processed and recovery rates may not be the same as currently anticipated.
Any material reductions in estimates of mineral reserves and mineral resources, or of the Company’s ability to extract these
mineral reserves and mineral resources, could have a material adverse effect on the Company’s projects, results of operations
and financial condition.



Mineral resources are not mineral reserves and have a greater
degree of uncertainty as to their existence and feasibility. There is no assurance that mineral resources will be upgraded to proven
or probable mineral reserves.



Uncertainty
Relating to Inferred Mineral Resources



Inferred mineral resources are not mineral reserves and do
not have demonstrated economic viability. Due to the uncertainty which may attach to inferred mineral resources, there is no assurance
that inferred mineral resources will be upgraded through further exploration to the measured and indicated resource classification
level of confidence





44







necessary for their potential conversion to proven or probable mineral reserves as a result of a pre-feasibility
or feasibility level technical study.



Impairment



On a quarterly basis, the Company reviews and evaluates its
mining interests for indicators of impairment. In the past, the Company has recognized material impairment losses (for example,
a US$161 million impairment was recorded in the fourth quarter of 2017 in relation to the Rainy River Mine). Impairment assessments
are conducted at the level of cash-generating units (“CGU”). A CGU is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Each operating
mine, development and exploration project represents a separate CGU. If an indication of impairment exists, the recoverable amount
of the CGU is estimated. An impairment loss is recognized when the carrying amount of the CGU is in excess of its recoverable amount.
The assessment for impairment is subjective and requires management to make significant judgments and assumptions in respect of
a number of factors, including estimates of production levels, operating costs and capital expenditures reflected in New Gold’s
life-of-mine plans, the value of in situ ounces, exploration potential and land holdings, as well as economic factors beyond management’s
control, such as gold, copper and silver prices, discount rates, foreign exchange rates, and observable net asset value multiples.
It is possible that the actual fair value could be significantly different than those estimates. In addition, should management’s
estimate of the future not reflect actual events, further impairment charges may materialize, and the timing and amount of such
impairment charges is difficult to predict.



Title Claims
and Rights of Indigenous Peoples



Certain of New Gold’s properties may be subject to the
rights or the asserted rights of various community stakeholders, including First Nations and other indigenous peoples. The presence
of community stakeholders may impact the Company’s ability to develop or operate its mining properties and its projects or
to conduct exploration activities. Accordingly, the Company is subject to the risk that one or more groups may oppose the continued
operation, further development or new development or exploration of the Company’s current or future mining properties and
projects. Such opposition may be directed through legal or administrative proceedings, or through protests or other campaigns against
the Company’s activities.



Governments in many jurisdictions must consult with, or require
the Company to consult with, indigenous peoples with respect to grants of mineral rights and the issuance or amendment of project
authorizations. Consultation and other rights of indigenous peoples may require accommodation including undertakings regarding
employment, royalty payments and other matters. This may affect the Company’s ability to acquire within a reasonable time
frame effective mineral titles, permits or licenses in these jurisdictions, including in some parts of Canada, the United States,
and Mexico in which title or other rights are claimed by First Nations and other indigenous peoples, and may affect the timetable
and costs of development and operation of mineral properties in these jurisdictions. The risk of unforeseen title claims by indigenous
peoples also could affect existing operations as well as development projects. These legal requirements may also affect the Company’s
ability to expand or transfer existing operations or to develop new projects.



Environmental
Risks



The Company is subject to environmental regulation in Canada,
the United States and Mexico where it operates or has exploration or development activities. In addition, the Company will be subject
to environmental regulation in any other jurisdictions in which it may operate or have exploration or development properties. These
regulations address, among other things, endangered and protected species, emissions, noise, air and water quality standards, land
use and



45







reclamation. They also set out limitations on the generation,
transportation, storage and disposal of solid, liquid and hazardous waste.



Environmental legislation is evolving in a manner which will
involve, in certain jurisdictions, stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors
and employees. No certainty exists that future changes in environmental regulation, or the application of such regulations, if
any, will not adversely affect the Company’s operations or development properties or exploration activities. The Company
cannot give any assurance that, notwithstanding its precautions, breaches of environmental laws (whether inadvertent or not) or
environmental pollution will not materially and adversely affect its financial condition and results of operations. Environmental
hazards may exist on the Company’s properties which are unknown to management at present and which have been caused by previous
owners or operators of the properties. In addition, measures taken to address and mitigate known environmental hazards or risks
may not be fully successful, and such hazards or risks may materialize.



New Gold may also acquire properties with known or undiscovered
environmental risks. Any indemnification from the entity from which the Company acquires such properties may not be adequate to
pay all the fines, penalties and costs (such as clean-up and restoration costs) incurred related to such properties. Some of New
Gold’s properties have also been used for mining and related operations for many years before the Company acquired them and
were acquired as is or with assumed environmental liabilities from previous owners or operators. The Company has been required
to address contamination at its properties in the past and may need to continue to do so in the future, either for existing environmental
conditions or for leaks, discharges or contamination that may arise from its ongoing operations or other contingencies. The cost
of addressing environmental conditions or risks, and liabilities associated with environmental damage, may be significant, and
could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.
Production at New Gold’s mines involves the use of various chemicals, including certain chemicals that are designated as
hazardous substances. Contamination from hazardous substances, either at the Company’s own properties or other locations
for which it may be responsible, may subject the Company to liability for the investigation or remediation of contamination, as
well as for claims seeking to recover for related property damage, personal injury or damage to natural resources. The occurrence
of any of these adverse events could have a material adverse effect on the Company’s prospects, results of operations and
financial position.



Production at certain of the Company’s mines involves
the use of sodium cyanide which is a toxic material. Should sodium cyanide leak or otherwise be discharged from the containment
system, the Company may become subject to liability for cleanup work that may not be insured, in addition to liability for any
damage caused. Such liability could be material.



Insurance and
Uninsured Risks



New Gold’s business is subject to a number of risks and
hazards generally including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological
conditions, ground or slope or wall failures, cave-ins, metallurgical or other processing problems, fires, operational problems,
changes in the regulatory environment and natural phenomena, such as inclement weather conditions, floods, hurricanes and earthquakes.
Such occurrences could result in damage to mineral properties or production facilities or other property, personal injury or death,
environmental damage to the Company’s properties or the properties of others, delays in mining, monetary losses and possible
legal liability.



Although the Company maintains insurance to protect against
certain risks in such amounts as it considers reasonable, such insurance will not cover all the potential risks associated with
the Company’s operations. The Company may also be



46







unable to maintain insurance to cover these risks at economically
feasible premiums. Insurance coverage may not continue to be available on acceptable terms or may not be adequate to cover any
resulting liability. Moreover, insurance against risks such as loss of title to mineral property, environmental pollution, or other
hazards as a result of exploration, development and production is not generally available to the Company or to other companies
in the mining industry on acceptable terms. New Gold may also become subject to liability for pollution or other hazards which
may not be insured against or which the Company may elect not to insure against because of premium costs or other reasons. Losses
from these events may cause the Company to incur significant costs that could have a material adverse effect on results of operations
and financial condition.



Reclamation
Costs



The Company’s operations are subject to reclamation plans
that establish its obligations to reclaim properties after minerals have been mined from a site. These obligations represent significant
future costs for the Company. As at December 31, 2017, the total estimated undiscounted reclamation liability for New Gold’s
operations was approximately $187.1 million. It may be necessary to revise reclamation concepts and plans, which could increase
costs.  At the Rainy River Mine, the ratio of potentially acid generating rock to non-acid generating rock has increased,
which may increase closure costs.



Reclamation bonds or other forms of financial assurance are
often required to secure reclamation activities. Governing authorities require companies to periodically recalculate the amount
of a reclamation bond and may require bond amounts to be increased. It may be necessary to revise the planned reclamation expenditures
and the operating plan for a mine in order to fund an increase to a reclamation bond. In addition, reclamation bonds are generally
issued under the Company’s credit facilities; increases in the amount of reclamation bonds will decrease the amount of the
Credit Facility available for other purposes.



Reclamation bonds may represent only a portion of the total
amount of money that will be spent on reclamation over the life of a mine operation. The actual costs of reclamation set out in
mine plans are estimates only and may not represent the actual amounts that will be required to complete all reclamation activity.
If actual costs are significantly higher than the Company’s estimates, then its results of operations and financial position
could be materially adversely affected.



Foreign Currency
Exchange Rates



New Gold’s mineral properties are located in Canada,
the United States, Australia and Mexico. As a result, the Company has foreign currency exposure with respect to items not denominated
in United States dollars. The three main types of foreign exchange risk the Company faces are:



| | · | transaction exposure: New Gold’s operations sell commodities and incur costs in different currencies. Specifically,
the Company’s revenues are denominated in United States dollars while most of the Company’s expenses are currently
denominated in Canadian dollars and, to a lesser extent, Australian dollars and Mexican pesos. This creates exposure at the operational
level, which may affect its profitability as exchange rates fluctuate. The appreciation of non-United States dollar currencies
against the United States dollar can increase the costs of production at New Gold’s mines, making those mines less profitable;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | exposure to currency risk: New Gold is exposed to currency risk through a portion of the following assets and liabilities
denominated in currencies other than the United States dollar: cash and cash equivalents, investments, accounts receivable, reclamation
deposits, accounts payable and accruals, reclamation and closure cost obligations and long-term debt; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



47







| | · | translation exposure: New Gold’s functional and reporting currency is United States dollars. Certain of the Company’s
operations have assets and liabilities denominated in currencies other than the United States dollar, with translation foreign
exchange gains and losses included in these balances in the determination of profit or loss. Therefore, exchange rate movements
in the Canadian dollar and, to a lesser extent, Australian dollars and Mexican peso can have a significant impact on the Company’s
consolidated operating results.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a result, fluctuations in currency exchange rates could
significantly affect the Company’s business, financial condition, results of operations and liquidity.



Acquisition
and Integration Risks



As part of its business strategy, New Gold has sought and will
continue to seek new operating, development and exploration opportunities in the mining industry. In pursuit of such opportunities,
New Gold may fail to select appropriate acquisition candidates or negotiate acceptable arrangements, including arrangements to
finance acquisitions or integrate the acquired businesses and their personnel into New Gold. The Company cannot assure that it
can complete any acquisition or business arrangement that it pursues, or is pursuing, on favourable terms, if at all, or that any
acquisition or business arrangement completed will ultimately benefit its business. Such acquisitions may be significant in size,
may change the scale of the Company’s business and may expose the Company to new geographic, political, operating, financial
or geological risks. Further, any acquisition the Company makes will require a significant amount of time and attention of New
Gold management, as well as resources that otherwise could be spent on the operation and development of the Company’s existing
business.



Any future acquisitions would be accompanied by risks, such
as a significant decline in the relevant metal price after the Company commits to complete an acquisition on certain terms; the
quality of the mineral deposit acquired proving to be lower than expected; the difficulty of assimilating the operations and personnel
of any acquired companies; the potential disruption of the Company’s ongoing business; the inability of management to realize
anticipated synergies and maximize the Company’s financial and strategic position; the failure to maintain uniform standards,
controls, procedures and policies; the impairment of relationships with employees, customers and contractors as a result of any
integration of new management personnel; and the potential for unknown or unanticipated liabilities associated with acquired assets
and businesses, including tax, environmental or other liabilities. In addition, the Company may need additional capital to finance
an acquisition. Debt financing related to any acquisition may expose the Company to the risks related to increased leverage, while
equity financing may cause existing shareholders to suffer dilution. There can be no assurance that any business or assets acquired
in the future will prove to be profitable, that New Gold will be able to integrate the acquired businesses or assets successfully
or that it will identify all potential liabilities during the course of due diligence. Any of these factors could have a material
adverse effect on the Company’s business, prospects, results of operations and financial condition.



Global Financial
Conditions



Global financial conditions have been subject to continued
volatility. Government debt, the risk of sovereign defaults, political instability and wider economic concerns in many countries
have been causing significant uncertainties in the markets. Disruptions in the credit and capital markets can have a negative impact
on the availability and terms of credit and capital. Uncertainties in these markets could have a material adverse effect on the
Company’s liquidity, ability to raise capital and cost of capital. High levels of volatility and market turmoil could also
adversely impact commodity prices, exchange rates and interest rates and have a detrimental effect on the Company’s business.



48







Debt and Liquidity
Risk



As at December 31, 2017, the Company had long-term debt comprised
of two series of notes in an aggregate principal amount of US$800 million. In addition, the Company has a US$400 million Credit
Facility. The Company’s ability to make scheduled payments of principal and interest on or to refinance its indebtedness
depends on the Company’s future performance, which is subject to economic, financial, competitive and other factors many
of which are not under the control of New Gold. The Company is exposed to interest rate risk on variable rate debt, if any. Liquidity
risk is the risk that the Company will not be able to meet its financial obligations as they become due, including, among others,
debt repayments, interest payments and contractual commitments.



In the future, the Company may not continue to generate cash
flow from operations sufficient to service its debt and make necessary or planned capital expenditures. If the Company is unable
to generate such cash flow, it may be required to adopt one or more alternatives, such as selling assets, borrowing additional
funds, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. The Company’s
ability to borrow additional funds or refinance its indebtedness will depend on the capital markets and its financial condition
at such time. The Company may not be able to engage in any of these activities or engage in these activities on desirable terms,
which could result in a default on its debt obligations. In addition, if New Gold is unable to maintain its indebtedness and financial
ratios at levels acceptable to its credit rating agencies, or should New Gold’s business prospects deteriorate, the ratings
currently assigned to New Gold by Moody’s Investor Services and Standard & Poor’s Ratings Services could be downgraded,
which could adversely affect the value of New Gold’s outstanding securities and existing debt and its ability to obtain new
financing on favourable terms, and increase New Gold’s borrowing costs.



If the Company’s cash flow and other sources of liquidity
are not sufficient to continue operations and make necessary and planned capital expenditures, the Company may cancel or defer
capital expenditures and/or suspend or curtail operations. Such an action may impact production at mining operations and/or the
timelines and cost associated with development projects, which could have a material adverse effect on the Company’s prospects,
results of operations and financial condition.



The terms of the Credit Facility and the Company’s stream
agreement with Royal Gold require the Company to satisfy various affirmative and negative covenants and to meet certain financial
ratios and tests. In May 2017, the Company extended the increase in the Credit Facility’s Leverage Ratio. Following the amendment,
the maximum Leverage Ratio under the Credit Facility is as follows:



|Period(s)                                              | Maximum Leverage Ratio
|------------------------------------------------------ | ----------------------
|Quarter ending September 30, 2016                      | 4.0 : 1.0             
|Quarters ended December 31, 2016 to September 30, 2017 | 4.5 : 1.0             
|Quarters ending December 31, 2017 and March 31, 2018   | 4.0 : 1.0             
|Subsequent quarters                                    | 3.5 : 1.0             



The Leverage Ratio contained in the Company’s stream
agreement with Royal Gold has also been adjusted to match the revised Leverage Ratios for the periods ending on or before March
31, 2018 noted above.



In addition, the terms of the Company’s 2022 Notes (as
defined below) in the aggregate principal amount of US$500 million and 2025 Notes (as defined below) in the aggregate principal
amount of US$300 million require the Company to satisfy various affirmative and negative covenants. These covenants limit, among
other things, the Company’s ability to incur indebtedness, create certain liens on assets or engage in certain types of transactions.
There are no assurances that



49







in the future the Company will not, as a result of these covenants,
be limited in its ability to respond to changes in its business or competitive activities or be restricted in its ability to engage
in mergers, acquisitions or dispositions of assets. Furthermore, a failure to comply with these covenants, including, in the case
of the Credit Facility and stream agreement with Royal Gold, a failure to meet the financial tests or ratios, would likely result
in an event of default under the Company’s outstanding indebtedness and/or the stream agreement and would allow the lenders
or noteholders or other contractual counterparty, as the case may be, to accelerate the debt or other obligations, as the case
may be.



Taxation



New Gold has operations and conducts business in a number of
different jurisdictions and is accordingly subject to the taxation laws of each such jurisdiction, as well as tax reviews and assessments
in the ordinary course. Taxation laws are complex, subject to interpretation and subject to change. Any such changes in taxation
law or reviews and assessments could result in higher taxes being payable by the Company, which could adversely affect its profitability.
Taxes may also adversely affect the Company’s ability to repatriate earnings and otherwise deploy its assets.



Risks Related
to Further Processing



The Company’s operations produce concentrate, doré
or other products that are not refined metals (“Unrefined Product”) and generally require further processing
at a smelter and/or a refinery to become marketable metal. Such Unrefined Product contains metals and other elements that require
removal, some of which may limit the smelters or brokers who can or will purchase or process the Unrefined Product and the refineries
who will process the Unrefined Product, or negatively impact the terms of such purchase or processing arrangements. In addition,
treatment and refining charges are subject to fluctuations, which could negatively impact the Company’s revenue or expenses.
There can be no assurance that the Company will be able to continue to sell and process its Unrefined Product on reasonable commercial
terms or at all.



Availability
and Price OF Inputs



Disruptions in the supply of products or services required
for the Company’s activities could also adversely affect the Company’s operations, financial condition and results
of operations. In particular, due to the limited number of suppliers of sodium cyanide in each jurisdiction in which the Company
operates, a delay in supply, a force majeure event or a breach of contract by one of the Company’s sodium cyanide suppliers
could result in delays in processing times which may adversely affect results of operations.



Mining operations and facilities are intensive users of electricity
and carbon-based fuels. The Company is subject to price risk for fluctuations in the cost of energy, principally electricity and
purchased petroleum products. Energy prices can be affected by numerous factors beyond the Company’s control, including global
and regional supply and demand, political and economic conditions, and applicable regulatory regimes. The prices of various sources
of energy may increase significantly from current levels. An increase in energy prices for which the Company is not hedged could
materially adversely affect its results of operations and financial condition.



The Company’s costs are affected by the prices of commodities
and other inputs it consumes or uses in its operations, such as lime, sodium cyanide and explosives. The prices of such commodities
and inputs are influenced by supply and demand trends affecting the mining industry in general and other factors outside the Company’s
control. Increases in the price for materials consumed in the Company’s mining and production activities could materially
adversely affect the Company’s results of operations and financial condition.



50







Infrastructure



Mining, processing, development and exploration activities
depend on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants which affect
capital and operating costs. Unusual or infrequent weather phenomena, sabotage, or community, government or other interference
in the maintenance or provision of such infrastructure could adversely affect the Company’s operations, financial condition
and results of operations.



Community Relations,
License to Operate and Reputation



The Company’s relationship with the host communities
where it operates is critical to ensure the future success of its existing operations and the construction and development of its
projects. There is an increasing level of public concern relating to the perceived effect of mining activities on the environment
and on communities impacted by such activities. Certain non-governmental organizations (“NGOs”), some of which
oppose globalization and resource development, are often vocal critics of the mining industry and its practices, including the
use of cyanide and other hazardous substances in processing activities. Adverse publicity generated by such NGOs or others related
to extractive industries generally, or New Gold’s operations or development activities specifically, could have an adverse
effect on the Company’s reputation.



Reputation loss may result in decreased investor confidence,
increased challenges in developing and maintaining community relations and an impediment to the Company’s overall ability
to advance its projects, which could have a material adverse impact on the Company’s results of operations, financial condition
and prospects. While New Gold is committed to operating in a socially responsible manner, there is no guarantee that the Company’s
efforts in this respect will mitigate this potential risk.



Climate Change
Risks



Changes in climate conditions could adversely affect the Company’s
business and operations through the impact of (i) more extreme temperatures, precipitation levels and other weather events; (ii)
changes to laws and regulations related to climate change; and (iii) changes in the price or availability of goods and services
required by the business.



Climate change may lead to more extreme in temperatures, precipitation
levels and other weather events. Extreme high or low temperatures could impact the operation of equipment and the safety of personnel
at the Company’s sites, which could result in damage to equipment, injury to personnel and production disruptions. Changes
in precipitation levels may impact the availability of water at the Company’s operations, which the mills require to operate,
potentially leading to production disruptions. Low precipitation also increases the risk of large forest fires, as occurred in
proximity to the Company’s operations in British Columbia in the summer of 2017, which could cause production disruptions
or damage site infrastructure. Increases in precipitation levels could also lead to water management challenges. Extreme weather
events, such as forest fires, severe storms or floods, all of which may be more probable and more extreme due to climate change,
may negatively impact operations and disrupt production. Significant capital investment may be required to address these occurrences
and to adapt to changes in average operating conditions caused by these changes to the climate.



Climate change may lead to new laws and regulations that affect
the Company’s business and operations. Many governments are moving to enact climate change legislation and treaties at the
international, national, state, provincial and local levels. Where legislation already exists, regulations relating to emission
levels and energy efficiency are becoming more stringent. Some of the costs associated with meeting more stringent regulations
can be offset by increased energy efficiency and technological innovation. However, if the current regulatory trend continues,
meeting more stringent regulations is anticipated to result in increased costs.



51







Climate change may lead to changes in the price and availability
of goods and services required for the Company’s operations, which require the regular supply of consumables such as diesel,
electricity, and sodium cyanide to operate efficiently. The Company’s operations also depend on service providers to transport
these consumables and other goods to the operations and to transport doré and concentrate produced by the Company to refiners.
The effects of extreme weather described above and changes in legislation and regulation on the Company’s suppliers and their
industries may cause limited availability or higher price for these goods and services, which could result in higher costs or production
disruptions.



We can provide no assurance that efforts to mitigate the risks
of climate changes will be effective and that the physical risks of climate change will not have an adverse effect on the Company’s
operations and profitability.



Labour and
Employment Matters



Production at the Company’s mines and projects is dependent
on the efforts of the Company’s employees and contractors. The Company competes with mining and other companies on a global
basis to attract and retain employees at all levels with appropriate technical skills and operating experience necessary to operate
its mines. The conduct of the Company’s operations is dependent on access to skilled labour. Access to skilled labour may
prove particularly challenging where mining operations are conducted in remote locations. Shortages of suitably qualified personnel
could have a material adverse effect on the Company’s business and results of operations. Relations between the Company and
its employees may be impacted by changes in the scheme of labour relations, which may be introduced by the relevant governmental
authorities in the jurisdictions where the Company carries on business. New Gold had approximately 72 employees that belong to
a union at the Cerro San Pedro Mine, which ceased active mining operations in 2017. In addition, the Company engages contractors
who may have unionized employees. Adverse changes in the schemes of labour relations in different jurisdictions or in the relationship
between the Company and its employees, or between the Company’s contractors and their respective employees, may have a material
adverse effect on the Company’s business, results of operations and financial condition.



Litigation
and Dispute Resolution



From time to time New Gold is subject to legal claims, with
and without merit. These claims may commence informally and reach a commercial settlement or may progress to a more formal dispute
resolution process. The causes of potential future claims cannot be known and may arise from, among other things, business activities,
environmental laws, land use, contractor engagements, volatility in stock price or failure to comply with disclosure obligations.
In particular, the complex activities and significant expenditures associated with construction activities, such as the construction
of Rainy River, may lead to various claims, some of which may be material. Defense and settlement costs may be substantial, even
with respect to claims that have no merit. Due to the inherent uncertainty of the litigation and dispute resolution process, there
can be no assurance that the resolution of any particular legal proceeding or dispute will not have a material adverse effect on
the Company’s future cash flows, results of operations or financial condition.



Title Risks



The acquisition of title to mineral properties is a very detailed
and time-consuming process. Title to mineral concessions may be disputed. Although the Company believes it has taken reasonable
measures to ensure proper title to its properties, there is no guarantee that title to any of such properties will not be challenged
or impaired. Third parties may have valid claims underlying portions of the Company’s interest, including prior unregistered
liens, agreements, transfers, royalties or claims, including land claims by First Nations or other indigenous groups, and title
may be affected by, among other things, undetected defects. In some cases, title to mineral rights and surface rights has been
divided, and the Company may hold only surface rights or only mineral rights over a particular property, which can lead to



52







potential conflict with the holder of the other rights. As
a result of these issues, the Company may be constrained in its ability to operate its properties or unable to enforce its rights
with respect to its properties, or the economics of its mineral properties may be impacted. An impairment to or defect in the Company’s
title to its properties or a dispute regarding property or other related rights could have a material adverse effect on the Company’s
business, financial condition or results of operations.



Competition



New Gold faces strong competition from other mining companies
in connection with the identification and acquisition of properties producing, or capable of producing, precious and base metals.
Many of these companies have greater financial resources, operational experience and technical capabilities than New Gold. As a
result of this competition, the Company may be unable to identify, maintain or acquire attractive mining properties on acceptable
terms or at all. Consequently, the Company’s prospects, revenues, operations and financial condition could be materially
adversely affected.



Retention of
Key Personnel



The Company’s business is dependent on retaining the
services of a number of key personnel of the appropriate calibre as the business develops. New Gold’s success is, and will
continue to be to a significant extent, dependent on the expertise and experience of the directors and senior management, and the
loss of one or more of such persons could have a material adverse effect on the Company. The Company does not maintain any key
man insurance with respect to any of its officers or directors.



Hedging



From time to time the Company uses or may use certain derivative
products to hedge or manage the risks associated with changes in gold prices, copper prices, silver prices, interest rates, foreign
currency exchange rates and energy prices. The use of derivative instruments involves certain inherent risks including, among other
things: (i) credit risk – the risk of an unexpected loss arising if a counterparty with which the Company has entered into
transactions fails to meet its contractual obligations; (ii) market liquidity risk – the risk that the Company has entered
into a derivative position that cannot be closed out quickly, by either liquidating such derivative instrument or by establishing
an offsetting position; and (iii) unrealized mark-to-market risk – the risk that, in respect of certain derivative products,
an adverse change in market prices for commodities, currencies or interest rates will result in the Company incurring an unrealized
mark-to-market loss in respect of such derivative products.



There is no assurance that any hedging program or transactions
which may be adopted or utilized by New Gold designed to reduce the risk associated with changes in gold prices, copper prices,
silver prices, interest rates, foreign currency exchange rates or energy prices will be successful. Although hedging may protect
New Gold from an adverse price change, it may also prevent New Gold from benefiting fully from a positive price change.



Counterparty
Risk



Counterparty risk is the risk to the Company that a party to
a contract will default on its contractual obligations to the Company. The Company is exposed to various counterparty risks including,
but not limited to: (i) financial institutions that hold the Company’s cash and short term investments; (ii) companies that
have payables to the Company, including concentrate and bullion customers; (iii) providers of its risk management services, such
as hedging arrangements; (iv) shipping service providers that move the Company’s material; (iv) the Company’s insurance
providers; and (v) the Company’s lenders. Although the Company makes efforts to limit its counterparty risk, the Company
cannot effectively operate its business without relying, to a certain extent, on the performance of third party service providers.



53







Investment
Risk



Investment risk is the risk that a financial instrument’s
value will deviate from the expected returns as a result of changes in market conditions, whether those changes are caused by factors
specific to the individual investment or factors affecting all investments traded in the market. This includes interest rate risk,
which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. Other aspects of investment risk include credit risk (the risk of unexpected loss arising if a counterparty with
which the Company has entered into transactions fails to meet its contractual obligations) and liquidity risk (the risk that the
Company has entered into an investment that cannot be closed out quickly). Although the factors that affect investment risk are
outside the Company’s control, the Company limits investment risk by limiting its investment exposure in terms of total funds
to be invested and by being selective of high quality investments.



Disclosure
and Internal Controls



The Company may fail to maintain the adequacy of internal control
over financial reporting as per the requirements of the U.S. Sarbanes-Oxley Act of 2002 (“SOX”). The Company
documented and tested its internal control procedures in order to satisfy the requirements of Section 404 of SOX. Both SOX and
Canadian legislation require an annual assessment by management of the effectiveness of the Company’s internal control over
financial reporting.



The Company may fail to maintain the adequacy of its internal
control over financial reporting as such standards are modified, supplemented or amended from time to time, and the Company may
not be able to ensure that it can conclude on an ongoing basis that it has effective internal controls over financial reporting.
The Company’s failure to satisfy the requirements of Section 404 of SOX and equivalent Canadian legislation on an ongoing,
timely basis could result in the loss of investor confidence in the reliability of its financial statements, which in turn could
harm the Company’s business and negatively impact the trading price of the Common Shares or market value of its other securities.
In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could
harm the Company’s operating results or cause it to fail to meet its reporting obligations.



The Company may fail to maintain the adequacy of its disclosure
controls. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company
in reports filed with securities regulatory agencies is recorded, processed, summarized and reported on a timely basis and is accumulated
and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required disclosure.



No evaluation can provide complete assurance that the Company’s
financial and disclosure controls will detect or uncover all failures of persons within the Company to disclose material information
otherwise required to be reported. A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. The effectiveness
of the Company’s controls and procedures could also be limited by simple errors or faulty judgments.



Conflicts of
Interest



Certain of New Gold’s directors and officers also serve
as directors and/or officers of other companies involved in natural resource exploration and development, and consequently there
exists the possibility for such directors and officers to have interests that conflict with the Company’s interests. Situations
may arise in connection with potential investments where the other interests of the Company’s directors conflict with its
interests. As such, conflicts of interest may arise that may influence these persons in evaluating possible acquisitions or in
generally acting on the Company’s behalf, as they may pursue opportunities that would then be unavailable to the Company.
In the event that the Company’s directors are subject to conflicts of interest, there may be a material adverse effect on
the Company’s business.



54







Corruption
and Bribery Laws



The Company’s operations are governed by, and involve
interactions with, many levels of government in numerous countries. The Company is required to comply with anti-corruption and
anti-bribery laws, including the Criminal Code, the Canadian Corruption of Foreign Public Officials Act and the U.S. Foreign Corrupt
Practices Act, as well as similar laws in the countries in which the Company conducts its business. In recent years, there has
been a general increase in both the frequency of enforcement and the severity of penalties under such laws, resulting in greater
scrutiny and punishment to companies convicted of violating anti-corruption and anti-bribery laws. Furthermore, a company may be
found liable for violations not only by its employees, but also by its contractors and third party agents. Although the Company
has adopted steps to mitigate such risks, such measures may not always be effective in ensuring that the Company, its employees,
contractors and third party agents will comply strictly with such laws. If the Company finds itself subject to an enforcement action
or is found to be in violation of such laws, this may result in significant penalties, fines and/or sanctions imposed on the Company
resulting in a material adverse effect on the Company’s reputation and results of its operations.



Foreign Operations



The Company’s mining operations are currently conducted
in Canada, the United States and Australia, and the Company owns a mine in Mexico that transitioned from active mining to residual
leaching in 2016. The Company also has the Blackwater Project in Canada. As a result of its activities in multiple jurisdictions,
the Company is exposed to various levels of political, economic and other risks and uncertainties. These risks and uncertainties
vary for each country and include, but are not limited to: fluctuations in currency exchange rates; high rates of inflation; labour
unrest; environmental controls and permitting; restrictions on the use of land and natural resources; renegotiation or nullification
of existing concessions, licenses, permits and contracts; delays in obtaining or the inability to obtain necessary governmental
licenses and permits; illegal mining; corruption; higher rates of criminality; unstable or unreliable legal systems; changes in
the taxation or royalty regimes; arbitrary changes in laws or policies; restrictions on foreign exchange and repatriation; limitations
on exports and imports; changing political conditions, social unrest, currency controls and governmental regulations that favour
or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies
from, a particular jurisdiction; and other risks arising out of foreign sovereignty issues.



Changes, if any, in mining or investment laws or policies or
shifts in political attitudes in these countries could adversely affect the Company’s operations or profitability. Operations
may be affected in varying degrees by:



| | · | government regulations including, but not limited to, restrictions on production, price controls, import or export controls,
currency remittance, income taxes and other taxes, royalties, expropriation of property, foreign investment, maintenance of claims,
environmental legislation, permit requirements, land use, land claims of local people, water use and mine safety; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the lack of certainty with respect to foreign legal systems, which may not be immune from the influence of political pressure,
corruption or other factors that are inconsistent with the rule of law.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Failure to comply strictly with applicable laws, regulations
and local practices relating to mineral right applications and tenure could result in loss, reduction or expropriation of entitlements.
The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on the
Company’s operations or profitability. Furthermore, in the event of a dispute arising from the Company’s activities,
it may be subject to the exclusive jurisdiction of courts outside of Canada and the United States or may not be successful in subjecting
persons to



55







the jurisdiction of courts in Canada and the United States,
either of which could unexpectedly and adversely affect the outcome of a dispute.



The Company faces challenges inherent in efficiently managing
employees over large geographical distances, including the challenge of staffing and managing operations in several international
locations and implementing appropriate systems, policies and compliance programs. These challenges may divert management’s
attention, to the detriment of the Company’s operations in Canada. There can be no assurance that difficulties associated
with the Company’s foreign operations can be successfully managed.



Information
Systems Security Threats



New Gold has entered into agreements with third parties for
hardware, software, telecommunications and other information technology (“IT”) services in connection with its
operations. New Gold’s operations depend, in part, on how well the Company and its suppliers protect networks, equipment,
IT systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical
plants, natural disasters, terrorism, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’s operations
also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive
expenses to mitigate the risks of failures. Any of these and other events could result in information systems failures, delays
and/or increases in capital expenses. The failure of information systems or a component of information systems could, depending
on the nature of any such failure, adversely impact the Company’s reputation and results of operations.



Although to date the Company has not experienced any material
losses relating to cyber attacks or other information security breaches, there can be no assurance that New Gold will not incur
such losses in the future. The Company’s risk and exposure to these matters cannot be fully mitigated because of, among other
things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls,
processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized
access remain a priority. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue
to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.



NOTES



6.25% Senior
Notes due 2022



In November 2012, the Company issued an aggregate principal
amount of $500 million 6.25% senior notes maturing on November 15, 2022 (“2022 Notes”). The 2022 Notes were
issued pursuant to an indenture dated November 14, 2012, between the Company and Computershare Trust Company, N.A., as trustee
(“2022 Note Indenture”). The 2022 Notes are direct, senior obligations of the Company and are not secured by
any mortgage, pledge or charge.



Interest on the 2022 Notes is payable in arrears in equal semi-annual
installments on May 15 and November 15 each year. The Company has the option to redeem the 2022 Notes at a price ranging from 103.125%
to 100% of face value, with the rate decreasing based on the length of time the 2022 Notes are outstanding.



The 2022 Note Indenture provides that in the event of a change
of control of the Company, as defined therein, each holder of the 2022 Notes will have the right to cause the Company to repurchase
some or all of its 2022 Notes at 101% of



56







their principal amount, plus accrued and unpaid interest to,
but not including, the repurchase date. In addition, the 2022 Note Indenture requires the Company to comply with certain reporting
and other covenants.



6.375% Senior
Notes due 2025



In May 2017, the Company issued an aggregate principal amount
of $300 million 6.375% senior notes maturing on May 15, 2025 (“2025 Notes”). The 2025 Notes were issued pursuant
to an indenture dated May 18, 2017, between the Company and Computershare Trust Company, N.A., as trustee (“2025 Note
Indenture”). The 2025 Notes are direct, senior obligations of the Company and are not secured by any mortgage, pledge
or charge.



Interest on the 2025 Notes is payable in arrears in equal semi-annual
installments on May 15 and November 15 each year. On or after May 15, 2020, the Company has the option to redeem the 2025 Notes
at a price ranging from 104.781% to 100% of face value, with the rate decreasing based on the length of time the 2025 Notes are
outstanding, and before May 15, 2020, the Company may redeem the 2025 Notes at 100% of face value plus a “make whole”
premium.



The 2025 Note Indenture provides that in the event of a change
of control of the Company, as defined therein, each holder of the 2025 Notes will have the right to cause the Company to repurchase
some or all of its 2025 Notes at 101% of their principal amount, plus accrued and unpaid interest to, but not including, the repurchase
date. In addition, the 2025 Note Indenture requires the Company to comply with certain reporting and other covenants.



DIVIDENDS



To date, New Gold has not paid dividends on its shares. The
Company currently intends to retain future earnings, if any, for use in its business and does not, at this time, anticipate paying
dividends on its shares. Any determination to pay any future dividends will remain at the discretion of the Company’s board
of directors and will be made taking into account its financial condition and other factors deemed relevant by the board. Further,
pursuant to debt instruments of the Company in place from time to time, the Company may, in certain circumstances, be required
to obtain consent from lenders prior to declaring dividends.



DESCRIPTION OF CAPITAL
STRUCTURE



Common Shares



The Company is authorized to issue an unlimited number of Common
Shares without par value, of which 578,748,338 Common Shares were issued and outstanding at the close of business March 26, 2018.
Holders of Common Shares are entitled to receive notice of any meetings of shareholders of the Company, and to attend and to cast
one vote per Common Share at all such meetings. Holders of Common Shares do not have cumulative voting rights with respect to the
election of directors and, accordingly, holders of a majority of the Common Shares entitled to vote in any election of directors
may elect all directors standing for election.



Holders of Common Shares are entitled to receive on a pro-rata
basis such dividends, if any, as and when declared by the Company’s board of directors at its discretion from funds legally
available therefor and, on the liquidation, dissolution or winding up of the Company, are entitled to receive on a pro-rata basis
the net assets of the Company after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions
and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro-rata basis with the holders
of common shares with



57







respect to dividends or liquidation. The common shares do not
carry any pre-emptive, subscription, redemption or conversion rights.



The Company also has options and notes outstanding. See the
notes to the Company’s audited consolidated financial statements for the year ended December 31, 2017 for additional information
regarding the Company’s convertible securities.



An amended and restated shareholder rights plan agreement was
approved by the shareholders of the Company on April 29, 2015 and is effective for a three-year period unless further extended.
The shareholder rights plan is presently scheduled to expire at the close of business on April 25, 2018.



Ratings



Below are the ratings for New Gold’s corporate debt as
at March 26, 2018:



| | · | Standard & Poor’s Ratings Services: B (Recovery Rating: 3)
| | - | ----------------------------------------------------------



| | · | Moody’s Investors Service: B3 (SGL-3)
| | - | -------------------------------------



Credit ratings are intended to provide investors with an independent
measure of the credit quality of an issue of securities; an indication of the likelihood of repayment for an issue of securities;
and an indication of the capacity and willingness of the issuer to meet its financial obligations in accordance with the terms
of those securities. Credit ratings are not assurances of credit quality or exact measures of the likelihood of default.



The information concerning our credit ratings relates to New
Gold’s financing costs, liquidity and operations. The availability of funding options may be affected by certain factors,
including the global capital market environment and outlook as well as the Company’s financial performance. New Gold’s
ability to access capital markets at competitive rates is dependent on its credit rating and rating outlook, as determined by credit
rating agencies such as S&P and Moody’s (both as defined below), and if the Company’s ratings were downgraded,
financing costs and future debt issuances could be unfavourably impacted. A description of the rating agencies’ credit ratings
listed above is set out below.



Standard & Poor’s Ratings Services (“S&P”)
credit ratings are on a rating scale ranging from AAA to D, which represents the range from highest to lowest quality. The ratings
from AA to CCC may be modified by the addition of a plus (+) or minus (–) sign to show relative standing within the major
rating categories. S&P’s rating is a forward looking opinion about credit risk and assesses the credit quality of the
individual debt issue and the relative likelihood that the issuer may default. The B rating is ranked sixth out of S&P’s
major rating categories. According to the S&P rating system, an obligor of debt securities rated B has the capacity to meet
its financial commitment on the debt security, however, adverse business, financial, or economic conditions will likely impair
the obligor's capacity or willingness to meet its financial commitment on the obligation. In addition, S&P uses a scale of
1+ to 6 for recovery ratings, which represent the range, from high to low, of the percentage of principal and unpaid accrued interest
that an investor may expect to receive in the case of default. A “3” recovery rating ranks fourth out of S&P’s
seven recovery rating categories, and indicates S&P’s expectation of meaningful (50% -70%) recovery in a default scenario.



Moody’s Investors Service (“Moody’s”)
credit ratings are on a rating scale that ranges from Aaa to C, which represents the range from highest to lowest quality, with
a rating of B being the sixth highest of nine major categories. The generic rating classifications from Aa through Caa may be modified
by the numerical modifiers 1, 2 and 3. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range



58







ranking; and the modifier 3 indicates a ranking in the lower
end of that generic category. According to Moody’s, obligations rated B3 are considered speculative and subject to high credit
risk. In addition, Moody’s uses a speculative-grade loss (“SGL”) assessment scale of 1 to 4, which represents
Moody’s opinion about issuers' relative abilities to generate cash from internal resources and external sources of committed
financing in relation to their cash obligations over the coming 12 months. A SGL-3 ranks third out of Moody’s four SGL assessment
categories. Issuers rated SGL-3 possess adequate liquidity. They are expected to rely on external sources of committed financing.
Based on Moody's evaluation of near term covenant compliance there is only a modest cushion, and the issuer may require covenant
relief in order to maintain orderly access to funding lines.



The credit ratings for New Gold’s corporate debt are
based on, among other things, information furnished to the above ratings agencies by the Company and information obtained by the
ratings agencies from publicly available sources. The credit ratings are not recommendations to buy, sell or hold securities since
such ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating
will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency
in the future if, in its judgment, circumstances so warrant. Credit ratings given to New Gold’s corporate debt may not reflect
the potential impact of all risks on the value of debt instruments, including risks related to market or other factors discussed
in this Annual Information Form. See also “Risk Factors”.



MARKET FOR SECURITIES



Trading Price
and Volume



Common Shares



The Common Shares of the Company are listed and posted for
trading on the TSX and NYSE American in each case under the symbol “NGD”. The following table contains information
relating to the trading of the Common Shares in Canadian dollars on the TSX for the months indicated.



|2017      | High (C$) | Low (C$) | Volume    
|--------- | --------- | -------- | ----------
|January   | 5.79      | 3.11     | 55,689,073
|February  | 4.24      | 3.34     | 53,074,229
|March     | 4.08      | 3.51     | 49,037,936
|April     | 4.58      | 3.73     | 34,675,225
|May       | 4.27      | 3.52     | 27,312,223
|June      | 4.21      | 3.76     | 29,581,282
|July      | 4.19      | 3.58     | 16,975,169
|August    | 4.70      | 4.16     | 21,932,022
|September | 5.16      | 4.40     | 21,613,463
|October   | 5.03      | 4.25     | 25,131,524
|November  | 4.41      | 3.90     | 15,411,100
|December  | 4.27      | 3.76     | 12,076,337



The price of the Common Shares as quoted by the TSX at the
close of business on December 29, 2017, the last trading day prior to year-end, was C$4.13 and on March 26, 2018 was C$3.33.



59







DIRECTORS AND OFFICERS



The names, positions or offices held with the Company, province/state
and country of residence, and principal occupation of the directors and executive officers of the Company as at March 26, 2018
are set out below. In addition, the principal occupations of each of the Company’s directors and executive officers within
the past five years are disclosed in their biographies.



As at March 26, 2018, directors and executive officers of the
Company, as a group, beneficially owned, directly or indirectly, or exercised control or direction over 8,213,645 common shares
of the Company, representing approximately 1.42% of its issued and outstanding shares.



The term of each director of the Company expires at the annual
general meeting of shareholders, where they can be nominated for re-election. The Company’s officers hold their respective
offices at the discretion of the board, but typically on an annual basis, after the annual general meeting, the directors pass
resolutions to appoint officers and committees.



|JAMES ESTEY
        Alberta, Canada
        Director since:
        July 8, 2008
        Independent         | James Estey is the retired Chairman of UBS Securities Canada
        Inc. and has over 30 years of experience in the financial markets. He is Chair of the Board of Gibson Energy Inc. and of PrairieSky
        Royalty Ltd. Mr. Estey also serves on the Advisory Board of the Edwards School of Business. Mr. Estey’s principal occupation
        is as a Corporate Director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|VAHAN KOLOLIAN
        Ontario, Canada
        Director since:
        June 1, 2009
        Independent      | Vahan Kololian is the founder and Managing Partner of TerraNova Partners LP, which invests in the industrial, services and resource sectors.  Mr. Kololian started his career in investment banking in 1980 with Burns Fry Limited (now BMO Nesbitt Burns).  From 1990 to 2000, he was co-founder and President of Polar Capital Corporation.  Mr. Kololian is co-founder and Chairman of the Mosaic Institute, a “think and do” tank that conducts research to create social initiatives designed to dismantle prejudice, promote respect and justice, and make it easier for Canadians to experience our differences as important benefits to us all. Mr. Kololian holds a Bachelor of Arts from the University of Western Ontario and a Bachelor of Laws from the University of Ottawa. Mr. Kololian’s principal occupation is Managing Partner of TerraNova Partners LP.
|                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|MARTYN KONIG
        Jersey, United Kingdom
        Director since:
        June 1, 2009
        Independent | Martyn Konig has over 35 years of experience in investment banking and the commodity markets as well as extensive experience in the natural resource sector. Mr. Konig’s principal occupation is Chief Investment Officer for T Wealth Management SA, a private multi-family office.  Mr. Konig is also the Chairman of Euromax Resources Ltd. and the Chairman of Nyrstar NV.  Previously, Mr. Konig was Executive Chairman and President of European Goldfields Limited until its acquisition by Eldorado Gold Corp. in February 2012 and was Chief Executive Officer of the Blackfish Capital Group from 2005 until August 2009. Mr. Konig was a main Board Director of NM Rothschild and Sons Ltd. for 15 years and held senior positions at Goldman Sachs and UBS. Mr. Konig is a Barrister and Fellow of the                                                          



60







|                                                                                                               | Chartered Institute of Bankers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|RANDALL OLIPHANT
        Ontario, Canada
        Director since:
        June 1, 2009
        Non- Independent | Randall Oliphant has worked in the mining industry in various capacities for 30 years.  From 1999 to 2003, Mr. Oliphant was the President and Chief Executive Officer of Barrick Gold Corporation, and since that time he has served on the boards of a number of public companies and not-for-profit organizations.  Mr. Oliphant was the Chairman of Western Goldfields Inc. from 2006 until its business combination with New Gold in 2009.  Mr. Oliphant served as the Executive Chairman of New Gold from the time of the business combination to January 2017.  Mr. Oliphant presently serves on the advisory board of Metalmark Capital LLC, a leading private equity firm, and the boards of directors of Franco-Nevada Corporation.  In addition, in 2013 Mr. Oliphant was elected as Chairman of the World Gold Council.  Mr. Oliphant is a Chartered Professional Accountant, FCPA, FCA. Mr. Oliphant’s principal occupation is as a Corporate Director.                                                                                                                                                                                                                                         
|                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|IAN PEARCE
        Ontario, Canada
        Director since:
        April 27, 2016
        Independent          | Ian Pearce is the Chair of the Board of New Gold.  Mr. Pearce has over 25 years of experience in the mining industry.  From 1993 to 2003, Mr. Pearce held progressively more senior engineering and project management roles with Fluor Inc., including managing numerous significant development projects in the extractive sector. From 2003 to 2006, Mr. Pearce held executive roles at Falconbridge Limited, including Chief Operating Officer, and he subsequently served as Chief Executive Officer of Xstrata Nickel, a subsidiary of Xstrata plc, from 2006 to 2013.  From 2013 to 2017, Mr. Pearce was a partner of X2 Resources, a private partnership focused on building a mid-tier diversified mining and metals group. Mr. Pearce currently serves as the Chair of the Board of Nevsun Resources Ltd. and MineSense Technologies Ltd., a technology company seeking to improve the ore extraction and recovery process, as well as a director of Outotec Oyj. He holds a Higher National Diploma in Engineering (Mineral Processing) and a Bachelor of Science degree from the University of the Witwatersrand in South Africa.  Mr. Pearce’s principal occupation is as a Corporate Director.
|                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|HANNES PORTMANN
        Ontario, Canada
        Director since:
        April 26, 2017
        Non-Independent | Hannes Portmann is President and Chief Executive Officer of New Gold. Mr. Portmann joined the Company in 2009 following its merger with Western Goldfields Inc. with the primary focus of leading New Gold’s corporate development and investor relations teams. Since that time, he has taken on progressively more responsibility for other facets of the business, and was appointed Executive Vice President of Business Development in December 2015 with added responsibility for human resources and exploration, and most recently was appointed President and Chief Executive Officer of New Gold in January 2017.  Previously, Mr. Portmann held roles in the Merrill Lynch Investment Banking Mining Group and in the assurance and advisory practices of PricewaterhouseCoopers LLP. Mr. Portmann holds a Bachelor of Science in Mining Engineering from Queen’s University, a Masters of Management and Professional Accounting from the Rotman School of Management, University of Toronto and is a Chartered Professional Accountant, CPA, CA.                                                                                                                                               



61







|KAY PRIESTLY
        Utah, United States
        Director since:
        June 3, 2015
        Independent              | Kay Priestly has over 35 years of experience in finance, accounting and executive management.  She spent 24 years with Arthur Andersen LLP as a Certified Public Accountant where she provided auditing, tax and consulting services and held various senior leadership positions.  She ultimately served on the firm’s global executive team as Managing Partner, People.  From 2006 to 2014, Ms. Priestly held various executive positions with Rio Tinto and its affiliates, including Chief Financial Officer, Copper for Rio Tinto’s global copper product group from 2008 to 2012 and Chief Executive Officer of Turquoise Hill Resources Ltd. from 2012 to 2014.   Ms. Priestly currently serves on the board of directors of TechnipFMC plc.  She holds a Bachelor of Science, Accounting from Louisiana State University.  Ms. Priestly’s principal occupation is as a Corporate Director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|MARILYN SCHONBERNER
        Alberta, Canada
        Director since:
        June 20, 2017
        Independent          | Marilyn Schonberner is the Chief Financial Officer and Senior Vice President, and an Executive Director, of Nexen Energy ULC. In that role, she is responsible for the overall financial management of Nexen, including accounting, audit, tax, planning, treasury and insurance. Ms. Schonberner joined Nexen in 1997 and since that time has held positions of increasing responsibility including General Manager of Human Resources Services; Director of Corporate Audit; Director of Business Services U.K.; and Treasurer and Vice President of Corporate Planning. Prior to joining Nexen, she spent over 15 years in finance, strategic planning and organization development in the energy sector and as a consultant. Ms. Schonberner holds a Bachelor of Commerce from the University of Alberta and a Master of Business Administration from the University of Calgary. She is a CPA, CMA and a Certified Internal Auditor. Ms. Schonberner completed the Senior Executive Development Programme at the London Business School and is currently enrolled in the Directors Education Program at the Institute of Directors.                                                                                                                                                                                                                                     
|                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|RAYMOND THRELKELD
        Virginia, United States
        Director since:
        June 1, 2009
        Non-Independent | Raymond Threlkeld has over 30 years of mineral industry experience.  He served as Interim Chief Operating Officer of New Gold from December 19, 2016 to September 1, 2017. From 2009 to 2013, Mr. Threlkeld was the President and Chief Executive Officer of Rainy River Resources Ltd. From 2005 to 2009, Mr. Threlkeld was the Chief Operating Officer of Silver Bear Resources Inc.  From 2006 to 2009, he was the President and Chief Executive Officer of Western Goldfields Inc. From 1996 to 2005, Mr. Threlkeld held various senior management positions in precious metal mine development with Barrick Gold Corporation and Coeur d’Alene Mines Corporation including in connection with the development of the Pierina Mine in Peru, the Bulyanhulu Mine in Tanzania and the Veladero Mine in Argentina. Mr. Threlkeld has had exploration acquisition success in the western United States in addition to his management and project development experience. Mr. Threlkeld currently serves on the boards of directors of Euromax Resources Ltd., Kirkland Lake Gold Ltd. and Northern Empire Resources Corp.  Mr. Threlkeld holds a Bachelor of Science in Geology from the University of Nevada Mackay School of Earth Sciences and Engineering.  Mr. Threlkeld’s principal occupation is a Corporate Director and consultant on natural resource development.



62







|PAULA MYSON
        Ontario, Canada
        Executive Vice President and Chief Financial Officer                                   | Ms. Myson has been the Executive Vice President and Chief Financial Officer since September 2017. Ms. Myson has over 25 years of experience in finance, treasury, corporate development, investor relations and risk management in public companies. During her 23 years working with the Sherritt International group of companies, Ms. Myson held multiple senior roles, including: CFO Oil and Gas, Corporate Treasurer, CFO Power, and Director, Corporate Development. Most recently, she was Vice President, Finance at Callidus Capital Corporation, a specialty lender. Ms. Myson is a Chartered Financial Analyst and a Certified Professional in Investor Relations, and has earned Master of Business Administration, Bachelor of Commerce and Bachelor of Arts degrees from the University of Alberta.                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|CORY ATIYEH
        Arizona, United States
        Vice President, Operations                                                      | Mr. Atiyeh has been the Vice President, Operations of New Gold since August 2016. Mr. Atiyeh has over 30 years of experience in the mining industry. He joined Western Goldfields in 2006 as Vice President and General Manager of the Mesquite Mine in California, where he was responsible for the management and successful re-start of mine operations. Western Goldfields merged with New Gold in 2009. Prior to Western Goldfields/New Gold, Mr. Atiyeh held progressively more senior roles with Gold Fields Limited, including General Manager of the St. Ives Gold Mine in Kambalda, Western Australia, one of Australia’s largest gold mines, producing over 500,000 ounces of gold annually. Mr. Atiyeh holds a Bachelor of Science degree in Mining Engineering from the Montana College of Mineral Science and Technology.                                                                                
|                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|LISA DAMIANI
        Ontario, Canada
        General Counsel, Vice President, Government Relations and Corporate
        Secretary | Ms. Damiani has been the Vice President, General Counsel and Corporate Secretary of New Gold since June 2013 and added government relations, including indigenous governments, to her portfolio in 2017.  Prior to joining New Gold, Ms. Damiani was engaged in the private practice of law at Davies Ward Phillips & Vineberg LLP from 2001 as a partner, and from 1999 to 2000 as an associate.  Mr. Damiani has over 20 years of experience in corporate and securities law and mergers and acquisitions with a focus on the mining sector and has received extensive recognition in the industry. Ms. Damiani holds a Bachelor of Arts, a Bachelor of Laws and a Masters of Business Administration, all from the University of Toronto.                                                                                                                                                                           
|                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|MARK PETERSEN
        Ontario, Canada
        Vice President, Exploration                                                          | Mr. Petersen is an economic geologist with over 30 years of mineral industry experience. He has been the Vice President, Exploration of New Gold since 2008.  Previously, Mr. Petersen held the position of Vice President of Exploration for Metallica Resources Inc., where he was responsible for directing the company’s exploration activities in the U.S. and Latin America. Prior to his role with Metallica, Mr. Petersen held positions as an exploration geologist with Lac Minerals Inc. and predecessor companies Bond Gold Inc. and St. Joe Gold Inc.  Mr. Petersen holds a Bachelor of Arts with a major in Geology from The College of Wooster, a Master of Science in Geology from Kent State University, and a Master of Business Administration from the University of Colorado. Mr. Petersen is also a Certified Professional Geologist with the American Institute of Professional Geologists and a



63







|                                                                                         | Registered Member of the Society for Mining, Metallurgy and Exploration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|JULIE RACHYNSKI
        British Columbia, Canada
        Vice President, Human Resources | Ms. Rachynski has been the Vice President, Human Resources of New Gold since November 2017. She has over 25 years of experience in the areas of human resources, organizational effectiveness, recruitment and selection, succession planning, and labour and employee relations. She joined New Gold in 2014 as the Manager, Human Resources for the New Afton Mine. From 2006 to 2014, Ms. Rachynski was Manager of Human Resources at Domtar Pulp and Paper Products, where she was responsible for labour relations, human resources, and health and safety. Prior to this, she held increasingly senior human resource positions at Weyerhaeuser Company Ltd. She has been a member of the Interior Forest Labour Relations Association, Trustee for Southern Interior Health and Welfare Plan, partner of BC Pulp & Paper Labour Market Committee, and Business Partner for Kamloops Region Success by Six Program. Ms. Rachynski has a Bachelor of Business Administration Degree from Simon Fraser University, and is a Chartered Professional in Human Resources (CPHR).                                                                  
|                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|PETER WOODHOUSE
        Ontario, Canada
        Vice President, Project Development      | Mr. Woodhouse has been the Vice President, Project Development since September 2017. He has over 30 years of experience in engineering and project management, dedicated mostly to the development of mining infrastructure. He has been responsible for all aspects of project management, team development and project execution, through all phases of a project, from scoping study through commissioning. From 2014, Mr. Woodhouse was Vice President, Projects at Centerra Gold Inc., where he was responsible for overall capital projects development, including the institution of a corporate project management team, a site project management team, as well as the establishment of a comprehensive set of project management tools. From 1997 to 2014, Mr. Woodhouse was the principal of Technology Management Group Inc., a project management services consultancy. He has also held senior project management roles for Canada Lithium, Hatch, SNC Lavalin, and Xstrata Nickel. Mr. Woodhouse has a Bachelor of Engineering (Mechanical) from McGill University, and is registered as a Professional Engineer in Ontario, Canada.



Standing Committees
of the Board



There are currently four standing committees of the board of
directors: the Audit Committee, the Compensation Committee; the Corporate Governance and Nominating Committee, and the Health,
Safety, Environment and Corporate Social Responsibility Committee. The following table identifies the members of each of these
committees and indicates whether each committee member is considered independent or non-independent:



|Board Committee        | Committee Members    | Status     
|---------------------- | -------------------- | -----------
|Audit Committee        | Kay Priestly (Chair) | Independent
|                       | Martyn Konig         | Independent
|Marilyn Schonberner    | Independent         
|Compensation Committee | Ian Pearce (Chair)   | Independent



64







|Board Committee                                                           | Committee Members                                              | Status                                             
|------------------------------------------------------------------------- | -------------------------------------------------------------- | ---------------------------------------------------
|                                                                          | James Estey                                                    | Independent                                        
|Kay Priestly                                                              | Independent                                                   
|Corporate Governance and Nominating Committee                             | Vahan Kololian (Chair)
        Martyn Konig
        Ian Pearce | Independent
        Independent
        Independent
|Marilyn Schonberner                                                       | Independent                                                   
|                                                                          |                                                               
|Health, Safety, Environment and Corporate Social Responsibility Committee | Raymond Threlkeld (Chair)                                      | Non-Independent                                    
|Vahan Kololian                                                            | Independent                                                   
|Ian Pearce                                                                | Independent                                                   



Corporate Cease
Trade Orders, Bankruptcies, Penalties or Sanctions



No director or executive officer of the Company is, or within
ten years prior to the date of this Annual Information Form has been, a director, chief executive officer or chief financial officer
of any company (including New Gold) that (i) was subject to a cease trade order, an order similar to a cease trade order or an
order that denied the relevant company access to any exemption under securities legislation, and that was in effect for a period
of more than 30 consecutive days, that was issued while the director or executive officer was acting in the capacity as director,
chief executive officer or chief financial officer of such company; or (ii) was subject to a cease trade order, an order similar
to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that
was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to
be a director, chief executive officer or chief financial officer of such company and which resulted from an event that occurred
while that person was acting in the capacity as director, chief executive officer or chief financial officer.



No director or executive officer of the Company, or a shareholder
holding a sufficient number of securities of the Company to materially affect the control of the Company, (i) is, or within ten
years prior to the date of this Annual Information Form has been, a director or executive officer of any company (including New
Gold) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became
bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, other than
(a) Mr. Kololian who was a board member (but had previously resigned from the board) of ClearPoint Business Resources Inc., which
filed for voluntary bankruptcy on or about June 23, 2010; and (b) Ms. Priestly who was a board member of Stone Energy Corporation,
which filed voluntary petitions under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for
the Southern District of Texas on December 14, 2016. On February 28, 2017, Stone Energy Corporation announced the completion of
the conditions precedent to emerging from Chapter 11 reorganization, and, accordingly, the Second Amended Joint Prepackaged Plan
of Reorganization of Stone Energy Corporation and its Debtor Affiliates, dated December 28, 2016, that was confirmed on February
15, 2017 by the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, became effective on February 28, 2017.
As a result of the Plan of Reorganization becoming effective, in accordance with its terms, the previous board of directors of
Stone Energy Corporation, of which Ms. Priestly was a member, was replaced by a new board of directors; or (ii) has, within ten
years prior to the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy
or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.



65







No director or executive officer of the Company, or a shareholder
holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to (i)
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has
entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by
a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.



Conflicts of
Interest



Certain directors and officers of the Company also serve as
directors or officers of other companies involved in natural resource exploration and development and consequently there exists
the possibility for such directors and officers to be in a position of conflict. Randall Oliphant is currently director of Franco-Nevada
Corporation which holds royalty interests in New Gold’s Mesquite Mine and Cerro San Pedro Mine. The Company has adopted a
Code of Business Conduct and Ethics that addresses potential conflicts of interest.



Audit Committee



Audit Committee Charter



The Company’s Audit Committee Charter is set out in full
in Schedule A.



Composition of the Audit Committee



The following directors are members of the Audit Committee
as at March 26, 2018:



|Kay Priestly (Chair) | Independent (1) | Financially literate (2)
|-------------------- | --------------- | ------------------------
|Martyn Konig         | Independent (1) | Financially literate (2)
|Marilyn Schonberner  | Independent (1) | Financially literate (2)



| | (1) | A member of an Audit Committee is independent if the member has no direct or indirect material relationship with the Company
which could, in the view of the Company’s board of directors, reasonably interfere with the exercise of the member’s
independent judgment.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | An individual is financially literate if he or she has the ability to read and understand a set of financial statements
that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues
that can reasonably be expected to be raised by the Company’s financial statements.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Relevant Education and Experience



The education and experience of each Audit Committee member
relevant to the performance of his responsibilities as a member of the Audit Committee is described in their respective biographies
set out under the heading “Directors and Officers” on page 60.



Pre-Approval Policies and Procedures



The Committee is responsible for the pre-approval of all audit,
audit-related and non-audit services provided by the independent auditor. The Committee has delegated to the Chair the authority
to pre-approve proposals for non-audit related services to be provided by the Company’s auditors up to a value of C$100,000
per engagement, and to report any such approvals to the Committee as a whole at the next Committee meeting. The Chair of the Committee
is responsible for proper implementation of and compliance with this policy. In accordance with this policy, 100% of external auditor
services described below were pre-approved by the Audit Committee or the Chair of the Audit Committee. None of the audit-related
services described below were approved by the Audit Committee pursuant to the de minimis exception provided by Section (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X.



66







External Auditor Service Fees (by category)



The aggregate fees billed by the Company’s external auditor
in each of the last two fiscal years are as follows:



|Financial Years EndingDecember 31 | Audit Fees (1) | Audit Related Fees (2) | Tax Fees (3) | All Other
    Fees(4)
|--------------------------------- | -------------- | ---------------------- | ------------ | ---------------------
|2017                              | C$1,989,435    | C$235,000              | C$35,505     | C$125,000            
|2016                              | C$1,803,972    | C$180,000              | C$68,895     | C$31,600             



| | (1) | The aggregate fees billed for the performance of the audit or review of the Company’s financial statements.
| | --- | -----------------------------------------------------------------------------------------------------------





| | (2) | The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit
or review of the Company’s financial statements which are not included under the heading “Audit Fees”, including
review of the Company’s short form prospectus in March 2017 and the Company’s offering memorandum in May 2017 –
see “Developments – Financial” on page 10.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.
| | --- | -------------------------------------------------------------------------------------------------------------



| | (4) | The aggregate fees billed for the performance of services not for or related to the audit or review of the Company’s
financial statements or for tax compliance, tax advice and tax planning, including providing a transition lab for the Company’s
new Chief Executive Officer and assistance with the Company’s strategic planning process.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Deloitte LLP is the independent registered public accounting
firm that has been appointed as the external auditor of New Gold, and is independent within the meaning of the Rules of Professional
Conduct of the Chartered Professional Accountants of Ontario.



LEGAL PROCEEDINGS
AND REGULATORY ACTIONS



The Company is, from time to time, involved in various claims,
legal proceedings and complaints arising in the ordinary course of business. As of the date hereof, there are no outstanding material
proceedings to which the Company is a party.



INTEREST OF MANAGEMENT
AND OTHERS IN MATERIAL TRANSACTIONS



Since January 1, 2014, no director, executive officer or 10%
shareholder of the Company or any associate or affiliate of any such person or company, has or had any material interest, direct
or indirect, in any transaction that has materially affected or is reasonably expected to materially affect the Company.



TRANSFER AGENT AND
REGISTRAR



The Company’s transfer agent and registrar is Computershare
Investor Services Inc. Transfers may be effected and registration facilities are maintained at each of the following offices: (i)
510 Burrard Street, Vancouver, British Columbia, V6C 2T5; and (ii) 100 University Avenue, Toronto, Ontario, M5J 2Y1.



MATERIAL CONTRACTS



Except for contracts entered into in the ordinary course of
business, the Company has not entered into any material contracts during the most recently completed financial year or prior financial
year which are still in force and effect and which may reasonably be regarded as presently material other than as set out below:





| | · | Indenture dated as of November 14, 2012 between New Gold Inc., the Guarantors (Metallica Resources Inc., Minera San Xavier
S.A. de C.V., Peak Gold Ltd., Peak Gold Mines Pty Ltd., Rockcliff Group Limited, Western Goldfields Inc. and Western Mesquite Mines,
Inc.), and Computershare Trust Company, N.A. (as Trustee) relating to the 6.25% Senior Notes due 2022. See “Notes”
on page 56 for more information.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



67









| | · | Indenture dated as of May 18, 2017 between New Gold Inc., the Guarantors (Minera San Xavier S.A. de C.V., New Gold Mesquite
Inc., New Gold CSP Ltd., New Gold Finance Inc., Western Goldfields (USA) Inc., New Gold Netherlands Cooperatie U.A., Peak Gold
Asia Pacific Pty Ltd., Peak Gold Mines Pty Ltd. and Western Mesquite Mines, Inc.), and Computershare Trust Company, N.A. (as Trustee)
relating to the 6.375% Senior Notes due 2025. See “Notes” on page 56 for more information.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Credit Agreement dated as of August 14, 2014, as amended on November 4, 2015, February 17, 2016, October 4, 2016, May 3, 2017
and June 5, 2017 between New Gold Inc. (as borrower) and The Bank of Nova Scotia and RBC Capital Markets (as Co-Lead Arrangers
and Joint Book Runners) and The Bank of Nova Scotia (as Administrative Agent) and Royal Bank of Canada (as Syndication Agent) and
The Bank of Nova Scotia, Royal Bank of Canada, JPMorgan Chase Bank, N.A., The Toronto-Dominion Bank, Canadian Imperial Bank of
Commerce, Bank of Montreal, Export Development Canada and Bank of America, N.A., Canada Branch (as Lenders) described under the
heading “General Development of the Business - Developments - Financial” on page 10.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



TECHNICAL REPORTS



Below are the titles, authors and dates of the most recent
technical reports for each of New Gold’s material properties (as described under “Description of the Business”
on page 12), which are all filed in accordance with NI 43-101 and available under the Company’s profile on SEDAR at www.sedar.com.





| | · | The most recent technical report on the Rainy River Mine that is filed on SEDAR at www.sedar.com is titled “Feasibility
Study of the Rainy River Mine, Ontario, Canada dated February 14, 2014 with an effective date of February 22, 2014 by Colin Hardie,
P. Eng., David Runnels, Eng., and Patrice Live, Eng., for BBA Inc.; Sheila E. Daniel, M.Sc., P. Geo., David G. Ritchie, P. Eng.,
and Adam Coulson, PhD., P.Eng., for AMEC; Glen Cole, P. Geo., and Dorota El-Rassi, P.Eng., for SRK Consulting (Canada) Inc.; and
Colm Keogh, P.Eng., and Mo Molavi, P. Eng., for AMC Mining Consultants (Canada) Ltd.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The most recent technical report on the New Afton Mine that is filed on SEDAR at www.sedar.com is titled “Technical Report
on the New Afton Mine, British Columbia, Canada” dated March 23, 2015 by David W. Rennie, P. Eng, R. Dennis Bergen, P. Eng.,
and Holger Krutzelmann, P. Eng., for Roscoe Postle Associates Inc.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



None of the authors of the technical reports listed above held
any securities of the Company or of any associate or affiliate of the Company when they prepared the applicable technical report
or received any securities following the preparation of such report.



68







SCHEDULE
A

Audit
Committee Charter



| | 1. | Purpose and Authority
| | -- | ---------------------



The Audit Committee (“Committee”)
is a committee of the Board of Directors (“the Board”). Its primary function shall be to assist the Board in
fulfilling its oversight responsibilities with respect to accounting and financial reporting processes, the integrity of the financial
statements of New Gold Inc. (the “Company”), compliance with legal and regulatory requirements, the overall
adequacy and maintenance of the systems of internal controls that management has established and the overall responsibility for
the Company's external and internal audit processes including the external auditor’s qualifications, independence and performance.



The Committee shall have access to such
officers and employees of the Company, its external auditor and its legal counsel as the Committee considers to be necessary or
desirable in order to perform its duties and responsibilities. In addition, the Committee shall have the authority and funding
to retain independent legal, accounting and other consultants to advise the Committee. The Company shall provide for appropriate
funding, as determined by the Committee, for payment of compensation to any advisers retained by the Committee and to the external
auditor engaged by the Company for the purpose of rendering or issuing an audit report or performing other audit, review or attest
services and ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.



The Committee shall be accountable to
the Board. In the course of fulfilling its specific responsibilities, the Committee shall maintain open communication between the
Company's external auditor and the Board.



The responsibilities of a member of the
Committee shall be in addition to such member's duties as a member of the Board.



The Committee has the duty to review and
ensure that the Company's financial disclosures are complete and accurate, are in accordance with generally accepted accounting
principles and fairly present the financial position and risks of the organization. The Committee should, where it deems appropriate,
review compliance with laws and regulations and the Company's own policies.



The Committee will provide the Board with
such recommendations and reports with respect to the financial disclosures of the Company as it deems advisable.



| | 2. | Membership and Composition
| | -- | --------------------------



The Committee shall consist of at least
three independent directors who shall serve on behalf of the Board. The Board, at its organizational meeting held in conjunction
with each annual general meeting of the Shareholders, shall appoint the members of the Committee for the ensuing year. Each member
shall meet the independence, financial literacy and experience requirements of the TSX, the NYSE MKT and any other exchange upon
which the securities of the Company may be listed to the extent required by the rules of such exchange, National Instrument 52-110
– Audit Committees, the U.S. Sarbanes-Oxley Act of 2002, Rule 10A-3 under the Securities Exchange Act of 1934,
and any other applicable regulatory bodies, as required. Each member of the Committee must not have participated in the preparation
of the financial statements of the Company or any current subsidiary of the Company at any time in the preceding three years. The
Board may, at any time and from time to time, remove or replace any member of the Committee, fill any vacancy in the Committee
or add a member to the Committee.



Financial literacy requires that all members
of the Committee shall have the ability to read and understand a set of financial statements that present the breadth and level
of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be
expected to be raised by the Company’s financial statements. At least one member of the Committee shall be able to analyze
and interpret a full set of financial statements, including the related notes, in accordance with International Financial Reporting
Standards (“IFRS”) and at



A-1







least one member of the Committee shall
qualify and be designated as the Audit Committee Financial Expert as determined in the judgment of the Board with reference to
applicable law and stock exchange rules.



A majority of members of the Committee,
present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak
and to hear each other, will constitute a quorum for a meeting of the Committee.



The Board will appoint one member of the
Committee to act as the chair (“Chair”) of the Committee. In his or her absence, the Committee may appoint another
person to act as chair of a meeting of the Committee provided a quorum is present. The Chair will appoint a secretary of the meeting,
who need not be a member of the Committee and who will maintain the minutes of the meeting.



| | 3. | Meetings
| | -- | --------



At the request of the external auditor,
the Chair of the Board, the President and Chief Executive Officer (“CEO”) or the Chief Financial Officer (“CFO”)
of the Company or any member of the Committee, the Chair of the Committee will convene a meeting of the Committee. In advance of
every meeting of the Committee, the Chair, with the assistance of the CFO, will ensure that the agenda and meeting materials are
distributed in a timely manner.



The Committee shall meet regularly and
at least on a quarterly basis. The Committee shall hold in camera sessions without the presence of management after each meeting.



| | 4. | Duties and Responsibilities
| | -- | ---------------------------



The Committee shall take charge of all
responsibilities imparted on an audit committee of the Company, as they may apply from time to time, under the Business Corporations
Act(British Columbia), National Instrument 52-110 – Audit Committees, the U.S. Sarbanes Oxley Act of 2002,
Rule 10A-3 under the Securities Exchange Act of 1934, and stock exchange rules. The duties and responsibilities of the Committee
include the following:



| | 4.1 | Financial Reporting and Disclosure
| | --- | ----------------------------------



| | a. | Review and discuss with management and the external auditor at the completion of the annual examination:
| | -- | --------------------------------------------------------------------------------------------------------



| | i. | the Company's audited financial statements and related notes;
| | -- | -------------------------------------------------------------



| | ii. | the external auditor's audit of the financial statements and their report;
| | --- | --------------------------------------------------------------------------



| | iii. | any significant changes required in the external auditor's audit plan;
| | ---- | ----------------------------------------------------------------------



| | iv. | any serious difficulties or disputes with management encountered during the course of the audit;
and
| | --- | ----------------------------------------------------------------------------------------------------



| | v. | other matters related to the conduct of the audit which are to be communicated to the Committee under IFRS.
| | -- | -----------------------------------------------------------------------------------------------------------



| | b. | Review and discuss with management and the external auditor at the completion of any review engagement
or other examination, the Company's quarterly financial statements.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | Review and discuss with management, prior to their public disclosure, the annual reports, quarterly
reports, Management’s Discussion and Analysis (“MD&A”), earnings press releases and any other material
disclosure documents containing or incorporating by reference audited or unaudited financial statements
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A-2







of the Company and, if thought
advisable, provide their recommendations on such documents to the Board.



| | d. | Review and discuss with management any guidance being provided to shareholders on the expected
earnings of the Company and, if thought advisable, provide their recommendations on such documents to the Board.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e. | Inquire of the auditors regarding the quality and acceptability of the Company's accounting principles
and estimates, including the clarity of financial disclosure and the degree of conservatism or aggressiveness of the accounting
policies and estimates.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f. | Review the Company's compliance with any policies and reports received from regulators. Discuss
with management and the external auditor the effect on the Company's financial statements of significant regulatory initiatives.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g. | Meet with the external auditor and management in separate executive sessions, as necessary or appropriate,
to discuss any matters that the Committee or any of these groups believe should be discussed privately with the Committee.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | h. | Ensure that management has the proper and adequate systems and procedures in place for the review
of the Company's financial statements, financial reports and other financial information including all Company disclosure of financial
information extracted or derived from the Company’s financial statements, and that they satisfy all legal and regulatory
requirements. The Committee shall periodically assess the adequacy of such procedures.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i. | Review with the Company's counsel, management and the external auditor any legal or regulatory
matter, including reports or correspondence, which could have a material impact on the Company's financial statements or compliance
policies.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | j. | Based on discussions with the external auditor concerning the audit, the financial statement review
and such other matters as the Committee deems appropriate, recommend to the Board the filing of the audited annual and unaudited
quarterly financial statements and MD&A on SEDAR and the inclusion of the audited financial statements in the Annual Report
on Form 40-F.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.2 | External Auditor
| | --- | ----------------



| | a. | Be responsible for recommending to the Board the appointment of the Company's external auditor
and for the compensation, retention and oversight of the work of the external auditor engaged by the Company. The external auditor
shall report directly to the Committee. The Committee shall be responsible to resolve disagreements, if any, between management
and the external auditor regarding financial reporting.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | Consider, in consultation with the external auditor, the audit scope and plan of the external auditor.
| | -- | ------------------------------------------------------------------------------------------------------



| | c. | Confirm with the external auditor and receive written confirmation at least once per year as to
the external auditor's internal processes and quality control and disclosure of any investigations or government enquiries, reviews
or investigations of the external auditor.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d. | Take reasonable steps to confirm at least annually the independence of the external auditor, which
shall include:
| | -- | -----------------------------------------------------------------------------------------------------------------



| | i. | ensuring receipt from the external auditor of a formal written statement delineating all relationships
between the external auditor and the Company, consistent with IFRS, and determine that they satisfy the requirements of all applicable
securities laws,
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A-3







| | ii. | considering and discussing with the external auditor any disclosed relationships or services, including
non-audit services, that may impact the objectivity and independence of the external auditor, and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | approving in advance any audit or permissible non-audit related services provided by the external
auditor to the Company with a view to ensuring independence of the external auditor, and in accordance with any applicable regulatory
requirements, including the requirements of all applicable securities laws with respect to approval of non-audit related serviced
performed by the external auditor.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e. | Approve the lead audit partner for the Company's external auditor, confirm that such lead partner
has not performed audit services for the Company for more than five previous fiscal years, and otherwise ensure the rotation of
the lead partner and other partners in accordance with all applicable securities laws.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f. | Review and approve the Company's hiring policies regarding partners, employees and former employees
of the present and former external auditors of the Company.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.3 | Internal Controls and Audit
| | --- | ---------------------------



| | a. | Review and assess the adequacy and effectiveness of the Company's systems of internal control and
management information systems through discussion with management and the external auditor to ensure that the Company maintains
appropriate systems, is able to assess the pertinent risks of the Company and that the risk of a material misstatement in the financial
disclosures can be detected.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | Assess the requirement for the appointment of an internal auditor for the Company.
| | -- | ----------------------------------------------------------------------------------



| | c. | Review disclosures made to the Committee by the Company's CEO and CFO during their certification
process required under applicable Canadian and United States securities laws. Review any significant deficiencies in the design
and operation of internal controls over financial reporting or disclosure controls and procedures and any fraud involving management
or other employees who have a significant role in the Company's internal controls.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.4 | General
| | --- | -------



| | a. | Unless otherwise delegated to another committee by the Board, conduct an ongoing review of any transaction now in effect, and
review and approve in advance any proposed transaction, that could be within the scope of "related party transactions"
as such term is defined in applicable securities laws, and establish appropriate procedures to receive material information about
and prior notice of any such transaction.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters; and for the confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | Conduct or authorize investigations into any matter within the scope of this Charter. The Committee may request that any officer
or employee of the Company, its external legal counsel or its external auditor attend a meeting of the Committee or meet with any
member(s) of the Committee.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d. | Review the qualifications of the senior accounting and financial personnel.
| | -- | ---------------------------------------------------------------------------



| | e. | Enquire of management and the external auditor regarding significant financial risks or exposures and the steps management
has taken to minimize such risks to the Company.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A-4







| | f. | Provide oversight of the Company’s policies, procedures and practices with respect to the maintenance of the books, records
and accounts, and the filing of reports, by the Company with respect to third party payments in compliance with the Foreign
Corrupt Practices Act (United States), Corruption of Foreign Public Officials Act (Canada), the Extractive Sector
Transparency Measures Act (Canada) and similar applicable laws.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g. | Perform any other activities consistent with this Charter, the Company's Articles and governing law, as the Committee or the
Board deems necessary or appropriate.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.5 | Oversight Function
| | --- | ------------------



While the Committee has the responsibilities
and powers set out in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s
financial statements are complete and accurate or are in accordance with IFRS and applicable rules and regulations. These are the
responsibilities of management and the external auditor. The Committee and the Chair and any members of the Committee identified
as having accounting or related financial expertise are members of the Board, appointed to the Committee to provide broad oversight
of the financial, risk and control related activities of the Company, and are not specifically accountable or responsible for the
day to day operation or performance of such activities. Although the designation of a member as having accounting or related financial
expertise for disclosure purposes is based on that individual's education and experience, which that individual will bring to bear
in carrying out his or her duties on the Committee, such designation does not impose on such person any duties, obligations or
liability that are greater than the duties, obligations and liability imposed on such person as a member of the Committee and the
Board in the absence of such designation. Rather, the role of a member of the Committee who is identified as having accounting
or related financial expertise, like the role of all members of the Committee, is to oversee the process, not to certify or guarantee
the internal or external audit of the Company’s financial information or public disclosure.



| | 5. | Chair of the Committee
| | -- | ----------------------



The Chair of the Committee:



| | a. | provides leadership to the Committee with respect to its functions as described in this Charter and as otherwise may be appropriate,
including overseeing the logistics of the operations of the Committee;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | chairs meetings of the Committee, unless not present, including in camera sessions, and reports to the Board following each
meeting of the Committee on the findings, activities and any recommendations of the Committee;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | ensures that the Committee meets on a regular basis and at least quarterly;
| | -- | ---------------------------------------------------------------------------



| | d. | in consultation with the Chair of the Board and the Committee members, establishes a calendar for holding meetings of the Committee;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------



| | e. | establishes the agenda for each meeting of the Committee, with input from other Committee members, the Chair of the Board and
any other parties as applicable;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f. | acts as liaison and maintains communication with the Chair of the Board and the Board to optimize and co-ordinate input from
Board members, and to optimize the effectiveness of the Committee. This includes reporting to the full Board on all proceedings
and deliberations of the Committee at the first meeting of the Board after each Committee meeting and at such other times and in
such manner as the Committee considers advisable;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g. | reports annually to the Board on the role of the Committee and the effectiveness of the Committee’s role in contributing
to the objectives and responsibilities of the Board as a whole;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A-5







| | h. | ensures that the members of the Committee understand and discharge their duties and obligations;
| | -- | ------------------------------------------------------------------------------------------------



| | i. | fosters ethical and responsible decision making by the Committee and its individual members;
| | -- | --------------------------------------------------------------------------------------------



| | j. | together with the Corporate Governance and Nominating Committee, oversees the structure, composition, membership and activities
delegated to the Committee from time to time;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | k. | ensures that resources and expertise are available to the Committee so that it may conduct its work effectively and efficiently
and pre-approves work to be done for the Committee by consultants;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | l. | facilitates effective communication between members of the Committee and management;
| | -- | ------------------------------------------------------------------------------------



| | m. | addresses, or causes to be addressed, all concerns communicated to him or her under the Company’s Whistleblower Policy
or Code of Conduct; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------



| | n. | performs such other duties and responsibilities as may be delegated to the Chair of the Committee by the Board from time to
time.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------



This Charter will be reviewed annually and any recommended
changes will be submitted to the Board for approval.



A-6







SCHEDULE
B

DEFINITIONS



Unless otherwise defined, technical terms used in this Annual
Information Form have the following meanings. CIM Standards definitions are marked with an asterisk (*).



|Term                   | Definition                                                                                                                                                                                                                                                                                                                                                                         
|---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|atomic absorption (AA) | A spectroanalytical procedure for the quantitative determination of chemical elements employing the absorption of optical radiation (light) by free atoms in the gaseous state.                                                                                                                                                                                                    
|andesite               | An extrusive igneous, volcanic rock of intermediate composition, with aphanitic to porphyritic texture.                                                                                                                                                                                                                                                                            
|assay                  | Analysis to determine the amount or proportion of the element of interest contained within a sample.                                                                                                                                                                                                                                                                               
|ball mill              | A horizontal rotating steel cylinder which grinds ore to fine particles. The grinding is carried out by the pounding and rolling of a charge of steel balls carried within the cylinder.                                                                                                                                                                                           
|batholith              | A very large igneous intrusion extending deep in the earth's crust.                                                                                                                                                                                                                                                                                                                
|block cave             | Used to mine massive, steeply-dipping ore bodies. An undercut with haulage access is driven under the ore body, with "drawbells" excavated between the top of the haulage level and the bottom of the undercut. The drawbells serve as a place for caving rock to fall into. The ore body is drilled and blasted above the undercut, and the ore is removed via the haulage access.
|block model            | A three-dimensional model that forms the basic framework of a mineral resource estimate.                                                                                                                                                                                                                                                                                           
|bornite                | A brittle reddish-brown crystalline mineral with an iridescent purple tarnish, consisting of a sulphide of copper and iron.                                                                                                                                                                                                                                                        
|breccia                | A coarse-grained clastic rock, composed of angular broken rock fragments held together by a mineral cement or in a fine-grained matrix; it differs from conglomerate in that the fragments have sharp edges and unworn corners.                                                                                                                                                    
|bullion                | Gold or silver in bulk before coining, or valued by weight.                                                                                                                                                                                                                                                                                                                        
|by-product             | A secondary metal or mineral product that is recovered along with the primary metal or mineral product during the ore concentration process.                                                                                                                                                                                                                                       
|calc-alkalic           | Rocks are rich in alkaline earths (magnesia and calcium oxide) and alkali metals and make up a major part of the crust of the earth's continents.                                                                                                                                                                                                                                  
|Cenozoic               | The current and most recent of the three Phanerozoic geological eras, following the Mesozoic Era and covering the period from about 65 million years ago to the present.                                                                                                                                                                                                           
|chalcocite             | A dark gray mineral that is an important ore of copper.                                                                                                                                                                                                                                                                                                                            
|chalcopyrite           | A copper mineral composed of copper, iron and sulphur. It tarnishes easily; going from bronze or brassy yellow to yellowish or grayish brown, has a dark streak, and is lighter in weight and harder than gold.                                                                                                                                                                    



B-1







|Term                   | Definition                                                                                                                                                                                                                                                                                          
|---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|CIM                    | The Canadian Institute of Mining, Metallurgy and Petroleum.                                                                                                                                                                                                                                         
|concentrate            | A processing product containing the valuable ore mineral from which most of the waste mineral has been eliminated.                                                                                                                                                                                  
|core                   | Cylindrical rock cores produced by diamond drilling method that uses a rotating barrel and an annular-shaped, diamond-impregnated rock-cutting bit to produce cores and lift them to the surface to be examined.                                                                                    
|Cretaceous             | A geologic period and system from circa 145 to 66 million years ago. The Cretaceous follows the Jurassic period and is followed by the Paleogene period of the Cenozoic era. It is the last period of the Mesozoic Era, and, spanning 80 million years, the longest period of the Phanerozoic Eon.  
|crushing               | Breaking of ore into smaller and more uniform fragments to be then fed to grinding mills or to a leach pad.                                                                                                                                                                                         
|crust                  | The outermost solid shell of a rocky planet, which is chemically distinct from the underlying mantle.                                                                                                                                                                                               
|cyanidation            | A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving the contained gold and silver in a weak cyanide solution.                                                                                                                                             
|decline                | A downward inclined underground tunnel.                                                                                                                                                                                                                                                             
|deformation            | Change in the form or in the dimensions of a body produced by stress.                                                                                                                                                                                                                               
|Devonian               | A geologic period and system of the Paleozoic Era spanning from the end of the Silurian Period, about 419 million years ago, to the beginning of the Carboniferous Period, about 359 million years ago.                                                                                             
|differential flotation | Process of separation of a complex ore into two or more mineral components and gangue by flotation.                                                                                                                                                                                                 
|dilution               | The effect of waste or low-grade ore being included unavoidably in the mine ore, lowering the recovered grade.                                                                                                                                                                                      
|doré                   | Unrefined gold and silver bullion bars, which will be further refined to almost pure metal.                                                                                                                                                                                                         
|ejido                  | In Mexico, a piece of land farmed communally under a system supported by the state.                                                                                                                                                                                                                 
|electrowinning         | Recovery of a metal from a solution by means of electro-chemical processes.                                                                                                                                                                                                                         
|Eocene                 | A major division of the geologic timescale and the second epoch of the Paleogene Period in the Cenozoic Era. The Eocene spans the time from the end of the Palaeocene Epoch to the beginning of the Oligocene Epoch. The start of the Eocene is marked by the emergence of the first modern mammals.
|epithermal             | A hydrothermal mineral deposit formed within about one kilometre of the Earth’s surface and in the temperature range of 50 to 200 degrees Celsius, occurring mainly as veins.                                                                                                                       
|fault                  | A fracture in the earth’s crust accompanied by a displacement of one side of the fracture with respect to the other and in a direction parallel to the fracture.                                                                                                                                    
|Feasibility Study      | A comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying                                                                                                                      



B-2







|Term                        | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                            | Factors together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study.                                                                                                                                                                                       
|felsic                      | Silicate minerals, magma, and rocks which are enriched in the lighter elements such as silicon, oxygen, aluminium, sodium, and potassium.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|fire assay                  | Analysis to determine the amount or proportion of the element of interest contained within a sample alloy by removal of other metals. Also known as gravimetric analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|flotation                   | A separation process in which valuable mineral particles are induced to become attached to bubbles and float, while the non-valuable minerals sink.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|formation                   | Unit of sedimentary rock of characteristic composition or genesis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|geophysical survey          | Exploration activity mapping an area showing the physics of the earth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|grade                       | The amount of metal in each tonne of ore, expressed as grams per tonne for precious metals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|granite                     | A very hard, granular, crystalline, igneous rock consisting mainly of quartz, mica, and feldspar and often used as a building stone.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|grinding (milling)          | Powdering or pulverizing of ore, by pressure or abrasion, to liberate valuable minerals for further metallurgical processing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|heap leaching               | A process whereby gold is extracted by “heaping” broken ore on sloping impermeable pads and repeatedly spraying the heaps with a weak cyanide solution which dissolves the gold content. The gold-laden solution is collected for gold recovery.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|hectares                    | A metric unit of area measuring 100 metres by 100 metres.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|hedging                     | Taking a buy or sell position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Indicated Mineral Resource* | The part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.  Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.
|Inferred Mineral Resource*  | The part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that                                                                                                                                                                                                                                        



B-3







|Term                                  | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                      | the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|infill                                | The collection of additional samples between existing samples, used to provide greater geological detail and to provide more closely-spaced assay data.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|intrusive                             | Igneous rock which, while molten, penetrated into or between other rocks and solidified before reaching the surface.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|lode                                  | A mineral deposit, consisting of a zone of veins, veinlets or disseminations, in consolidated rock as opposed to a placer deposit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|low-grade                             | Descriptive of ores relatively poor in the metal they are mined for; lean ore.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|mafic                                 | A group of dark-colored minerals, composed chiefly of magnesium and iron, that occur in igneous rocks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Measured Mineral Resource*            | The part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.
|metamorphism                          | The process by which the form or structure of rocks is changed by heat and pressure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|mill                                  | A processing facility where ore is finely ground and then undergoes physical or chemical treatment to extract the valuable metals. Also, the device used to perform grinding (milling).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|mineral claim / property / concession | Authorizes the holder to prospect and mine for minerals and to carry out works in connection with prospecting and mining.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Mineral Reserve*                      | The economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.                                                                                            
|Mineral Resource*                     | A concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.  Mineral Resources are sub-divided, in order of increasing geological confidence, into                                                                                                                                                                                                                        



B-4







|Term                                  | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                      | Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource.                                                                                                                                                                                                                                                                                                                                                                                                                        
|Modifying Factors                     | Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|muscovite                             | A phyllosilicate mineral of aluminium and potassium. It has a highly-perfect basal cleavage yielding very thin sheets, which are often highly elastic.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|NI 43-101                             | Canadian National Instrument NI 43-101 - Standards of Disclosure for Mineral Projects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|open pit mine                         | A mine where materials are removed entirely from a working that is open to the surface.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|ore                                   | Rock, generally containing metallic or non-metallic minerals, which can be mined and processed at a profit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|oxidation                             | Reaction of a material with an oxidizer such as pure oxygen or air in order to alter the state of the material.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|oxide ore                             | Mineralized rock in which some of the original minerals have been oxidized. Oxidation tends to make the ore more amenable to cyanide solutions so that minute particles of gold will be readily dissolved.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Paleozoic                             | An era of geologic time that includes the Cambrian, Ordovician, Silurian, Devonian, Mississippian, Pennsylvanian and Permian periods and is characterized by the appearance of marine invertebrates, primitive fishes, land plants and primitive reptiles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|preliminary economic assessment (PEA) | A study, other than a Pre-Feasibility Study or Feasibility Study, which includes an economic analysis of the potential viability of Mineral Resources.  The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the PEA based on these Mineral Resources will be realized.  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.                                                                                                                                                                  
|porphyry                              | A variety of igneous rock consisting of large-grained crystals, such as feldspar or quartz, dispersed in a fine-grained feldspathic matrix or groundmass.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Pre-Feasibility Study                 | A comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study.



B-5







|Term                                          | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Probable Mineral Reserve*                     | The economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Proven Mineral Reserve*                       | The economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the Modifying Factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|pyrite                                        | A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as “fool’s gold.”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|pyroclastic                                   | Rocks produced by explosive or aerial ejection of ash, fragments, and glassy material from a volcanic vent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|pyrrhotite                                    | A brownish yellow iron sulphide mineral.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Qualified Person*                             | An individual who (i) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geosciences, or engineering, relating to mineral exploration or mining; (ii) has at least five years’ experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these, that is relevant to his or her professional degree or area of practice; (iii) has experience relevant to the subject matter of the mineral project and the technical report; (iv) is in good standing with a professional association; (v) and in the case of a professional association in a foreign jurisdiction, has a membership designation that (a) requires attainment of a position of responsibility in their profession that requires the exercise of independent judgment; and (ii) requires (1) a favourable confidential peer evaluation of the individual’s character, professional judgment, experience, and ethical fitness; or (2) a recommendation for membership by at least two peers, and demonstrated prominence or expertise in the field of mineral exploration or mining.
|quality assurance and quality control (QA/QC) | The process of measuring and assuring product quality to meet consumer expectations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|reclamation                                   | The restoration of a site after mining or exploration activity is completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|reclamation and closure costs                 | The cost of reclamation plus other costs, including without limitation certain personnel costs, insurance, property holding costs such as taxes, rental and claim fees, and community programs associated with closing an operating mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|recovered grade                               | Actual metal grade realized by the metallurgical process and treatment or ore, based on actual experience or laboratory testing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|recovery                                      | A term used in process metallurgy to indicate the proportion of valuable material obtained in the processing of an ore. It is generally stated as a percentage of valuable metal in the ore that is recovered compared to the total valuable metal present in the ore.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|refining                                      | The final stage of metal production in which impurities are removed from the molten metal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|reverse circulation                           | A drilling method that uses a rotating cutting bit within a double-walled drill pipe and produces rock chips rather than core. Air or water is circulated down to the bit between                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



B-6







|Term                       | Definition                                                                                                                                                                                               
|-------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           | the inner and outer wall of the drill pipe. The chips are forced to the surface through the centre of the drill pipe and are collected, examined and assayed.                                            
|run-of-mine (ROM)          | Ore in its natural, unprocessed state; pertaining to ore just as it is mined.                                                                                                                            
|sample                     | A small portion of rock, or a mineral deposit, taken so that the metal content can be determined by assaying.                                                                                            
|scoping study              | A technical and economic study conducted to investigate the approximate economics and viability of various development options for the mining and treatment of a mineral deposit.                        
|sedimentary rocks          | Secondary rocks formed from material derived from other rocks and laid down under water. Examples are limestone, shale and sandstone.                                                                    
|semi-autogenous (SAG) mill | A steel cylinder with steel balls into which run-of-mine material is fed. The ore is ground with the action of large lumps of rock and steel balls.                                                      
|shear zone                 | A geological term used to describe a geological area in which shearing has occurred on a large scale.                                                                                                    
|silica                     | The dioxide of silicon occurring in crystalline, amorphous, and impure forms (as in quartz, opal, and sand respectively). Used to manufacture a wide variety of materials, especially glass and concrete.
|sphalerite                 | A zinc mineral which is composed of zinc and sulphur.                                                                                                                                                    
|stock                      | A magma that has intruded into pre-existing rock in a columnar shape, typically a kilometre or more in diameter.                                                                                         
|stockpile                  | Broken ore heaped on the surface, pending treatment or shipment.                                                                                                                                         
|tailings                   | The material that remains after all metals considered economic have been removed from ore during milling.                                                                                                
|tailings facility          | A natural or man-made confined area suitable for depositing the material that remains after the treatment of ore.                                                                                        
|terrane                    | Area of land of a particular character, e.g., mountainous, swampy.                                                                                                                                       
|tonne                      | Metric unit of mass equaling 1,000 kilograms or 2,240 pounds. Called a "long ton."                                                                                                                       
|ton                        | Unit of weight equaling 2,000 pounds. Called a "short ton."                                                                                                                                              
|tuff                       | Rock composed of fine volcanic ash.                                                                                                                                                                      
|vein                       | A fissure, fault or crack in a rock filled by minerals that have traveled upwards from some deep source.                                                                                                 
|volcanics                  | A general collective term for extrusive igneous and pyroclastic material and rocks.                                                                                                                      



B-7







SCHEDULE
C

ABBREVIATIONS
AND MEASUREMENT CONVERSION



Unless otherwise defined, abbreviations used in this Annual
Information Form have the following meanings:



|m    | micron                                                                
|---- | ----------------------------------------------------------------------
|AA   | Atomic Absorption                                                     
|Ag   | Silver                                                                
|Au   | Gold                                                                  
|°C   | degree Celsius                                                        
|°F   | degree Fahrenheit                                                     
|mg   | microgram                                                             
|cm   | centimetre                                                            
|cm2  | square centimetre                                                     
|Cu   | Copper                                                                
|ft   | foot                                                                  
|g    | gram                                                                  
|G    | giga (billion)                                                        
|HQ   | diamond drill core measuring 2.5 inches in diameter (6.35 centimetres)
|ICP  | Induction Coupled Plasmaspectrometry                                  
|in   | inch                                                                  
|IRR  | internal rate of return                                               
|K    | kilo (thousand)                                                       
|KWh  | kilowatt-hour                                                         
|kg   | kilogram                                                              
|km   | kilometre                                                             
|km2  | kilometres squared                                                    
|L    | litre                                                                 
|lb   | pound                                                                 
|m    | metre                                                                 
|m2   | metres squared                                                        
|M    | mega (million)                                                        
|mm   | millimetre                                                            
|NPV  | net present value.                                                    
|NQ   | diamond drill core measuring 1.78 inches in diameter (4.5 centimetres)
|NSR  | net smelter return                                                    
|oz/t | ounce per ton                                                         
|oz   | Troy ounce/ounce (31.1035g)                                           
|Pb   | Lead                                                                  
|PQ   | diamond drill core measuring 3.35 inches in diameter (8.5 centimetres)
|RC   | reverse circulation                                                   
|s    | second                                                                
|st   | short ton (one short ton equals 0.907 metric tonnes)                  
|t    | metric tonne (one metric tonne equals 1.102 short tons)               



C-1







|tpa | metric tonne per year
|--- | ---------------------
|tpd | metric tonne per day 
|W   | watt                 
|yd  | yard                 
|Zn  | Zinc                 



The following table lists Imperial measurements and their equivalent
value under the Metric system:



|Imperial                  | Converts to | Metric             
|------------------------- | ----------- | -------------------
|1 in                      | =           | 2.54 cm            
|1 ft (12 in)              | =           | 0.3048 m           
|1 yd (3ft)                | =           | 0.9144 m           
|1 mile (1760 yd)          | =           | 1.6093 km          
|1 square in (in2)         | =           | 6.4516 cm2         
|1 square ft (ft2)         | =           | 0.0929 m2          
|1 square yd (yd2)         | =           | 0.8361 m2          
|1 acre (4840 yd2)         | =           | 4046.9 m2          
|1 square mile (640 acres) | =           | 2.59 km2           
|short ton                 | =           | 0.907 metric tonnes



C-2







SCHEDULE
D

EXCHANGE
RATE AND METAL PRICE INFORMATION



Exchange Rate



The high, low, average and closing exchange rates for Canadian
dollars in terms of the United States dollar (noon) for each of the three years ended December 31, 2017, 2016 and 2015, as quoted
by the Bank of Canada, were as follows:



|            | 2017   | 2016   | 2015  
|----------- | ------ | ------ | ------
|High        | 1.3743 | 1.4589 | 1.3990
|Low         | 1.2128 | 1.2544 | 1.1728
|Average (1) | 1.2986 | 1.3248 | 1.2767
|Closing     | 1.2545 | 1.3427 | 1.3825



(1) Calculated as an average of the
daily noon rates for each period.



On March 26, 2018, the average exchange rate for Canadian dollars
in terms of the United States dollar, as quoted by the Bank of Canada, was US$1 = C$1.2886 and C$1= US$0.7760.



Gold Prices



The high, low, average and closing afternoon fixing gold prices
per troy ounce for each of the three years ended December 31, 2017, 2016 and 2015, as quoted by the London Bullion Market Association
(“LBMA”), were as follows:



|        | 2017($) | 2016($) | 2015($)
|------- | ------- | ------- | -------
|High    | 1,346   | 1,366   | 1,296  
|Low     | 1,151   | 1,077   | 1,049  
|Average | 1,257   | 1,251   | 1,160  
|Closing | 1,291   | 1,146   | 1,060  



On March 26, 2018, the closing afternoon LBMA gold price per
troy ounce, as quoted by the London Bullion Market Association, was $1,352.40.



Silver Prices



The high, low, average and closing silver prices per troy ounce
for each of the three years ended December 31, 2017, 2016 and 2015, as quoted by the London Bullion Market Association, were as
follows:



|        | 2017($) | 2016($) | 2015($)
|------- | ------- | ------- | -------
|High    | 18.56   | 20.71   | 18.23  
|Low     | 15.22   | 13.58   | 13.71  
|Average | 17.05   | 17.14   | 15.68  
|Closing | 16.87   | 16.24   | 13.82  



On March 26, 2018, the closing LBMA silver price per troy
ounce, as quoted by the London Bullion Market Association, was $16.61.



D-1







Copper Prices



The high, low, average and closing official cash settlement
copper prices per pound for each of the three years ended December 31, 2017, 2016 and 2015, as quoted by the London Metal Exchange,
were as follows:



|        | 2017($) | 2016($) | 2015($)
|------- | ------- | ------- | -------
|High    | 3.27    | 2.69    | 2.92   
|Low     | 2.48    | 1.96    | 2.05   
|Average | 2.80    | 2.21    | 2.49   
|Closing | 3.25    | 2.50    | 2.13   



On March 26, 2018, the closing official cash settlement copper
price per pound, as quoted by the London Metal Exchange, was $2.95.







D-2