FOR THE QUARTER ENDED SEPTEMBER 30, 2017in the United States (“Mesquite”), the Peak Mines in Australia (“Peak Mines”), which has been classified as a discontinued operation

Q3THIRD QUARTER

REPORT 2017 FOR THE QUARTER ENDED SEPTEMBER 30, 2017

1 WWW.NEWGOLD.COMTSX:NGDNYSEMKT:NGD

OPERATINGANDFINANCIALHIGHLIGHTSOPERATINGHIGHLIGHTSAlldollarfiguresareinUnitedStatesdollarsandtabulardollaramountsareinmillions,unlessotherwisenoted.

NewGoldInc.(“NewGold”orthe“Company”)isanintermediategoldproducerwithoperatingminesinCanada,theUnitedStates,AustraliaandMexico,anddevelopmentprojectsinCanada.ForthethreemonthsendedSeptember30,2017,theNewAftonMineinCanada(“NewAfton”),theMesquiteMinein the United States (“Mesquite”), the PeakMines in Australia (“PeakMines”), which has been classified as a discontinued operation during the thirdquarterof2017,and theCerroSanPedroMine inMexico (“CerroSanPedro”),which transitioned fromactivemining to residual leaching in June2016,combinedtoproduce82,027goldounces,26.0millionpoundsofcopperand0.3millionsilverounces.FortheninemonthsendedSeptember30,2017,theCompany’s operatingmines combined to produce 276,418 gold ounces, 76.2million pounds of copper and 0.9million silver ounces. NewGold’s RainyRiver project (“RainyRiver”) successfully achieved start-up on September 14, 2017with the first gold pour onOctober 6, 2017. Commercial productionwasachievedmid-October,2017.

New Gold’s production costs remained very competitive compared to the broader gold mining industry as New Gold had operating expenses(2) of$601per goldounce sold, all-in sustaining costs from continuingoperations(2) of $610per goldounce soldandall-in sustaining costs(2) of $792pergoldouncesoldinthethirdquarterof2017.WebelieveNewGoldcontinuestobealowcostproducerwithintheindustry.

Q32017GOLDPRODUCTIONBYOPERATINGMINE

1. AmountspresentedincludeproductionfromPeakMines,whichhasbeenclassifiedasadiscontinuedoperationinthethirdquarterof2017.2. TheCompanyusescertainnon-GAAPfinancialperformancemeasuresthroughoutthisManagement’sDiscussionandAnalysis(“MD&A”).Foradetaileddescriptionofeach

ofthenon-GAAPmeasuresusedinthisMD&Aandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

GOLDPRODUCTION(1)

(THOUSANDSOFOUNCES)

COPPERPRODUCTION(1)

(MILLIONSOFPOUNDS)

123

9682

0

50

100

Q32015 Q32016 Q32017

25 26 26

0

15

30

Q32015 Q32016 Q32017

26%

46%

18%

10% NewAFon

Mesquite

PeakMines

CerroSanPedro

82,027OUNCES

0.6

0.3 0.3

0.0

0.3

0.6

Q32015 Q32016 Q32017

SILVERPRODUCTION(1)(MILLIONSOFOUNCES)


FINANCIALHIGHLIGHTS

ThreemonthsendedSeptember30

NinemonthsendedSeptember30

2017 2016 2017 2016

OPERATINGINFORMATION Goldproductionfromcontinuingoperations(ounces) 67,653 57,565 207,659 196,918Goldproduction(ounces) 82,027 95,546 276,418 285,780Goldsalesfromcontinuingoperations(ounces) 67,052 56,038 200,672 198,956Goldsales(ounces) 79,904 96,452 266,443 284,303Goldrevenuefromcontinuingoperations($/ounce)(1) 1,250 1,283 1,245 1,217Goldaveragerealizedpricefromcontinuingoperations($/ounce)(1) 1,286 1,325 1,280 1,258Operatingexpensespergoldouncesoldfromcontinuingoperations($/ounce)(1) 601 586 603 566All-insustainingcostspergoldouncesoldfromcontinuingoperations($/ounce)(1) 610 718 614 710All-insustainingcostspergoldouncesold($/ounce)(1) 792 682 706 718FINANCIALINFORMATION Revenue 142.5 115.2 410.9 382.1Earningsfromcontinuingoperations 29.2 0.8 77.9 14.9Netearnings 27.0 4.1 87.6 15.5Adjustednetearningsfromcontinuingoperations(1) 5.1 10.0 15.1 18.1Adjustednetearnings(1) 3.8 12.4 26.4 19.5Operatingcashflowsgeneratedfromcontinuingoperations 65.5 54.0 183.9 176.1Cashgeneratedfromoperations 66.0 89.6 223.4 230.5Cashgeneratedfromoperationsbeforechangesinnon-cashoperatingworkingcapital(2) 60.6 88.6 206.3 233.3Cashandcashequivalents 207.1 151.2 207.1 151.2Totalcapitalexpenditures(sustainingcapital)(1) 22.7 22.4 60.9 71.9Totalcapitalexpenditures(growthcapital)(1) 135.6 134.2 429.2 330.3SHAREDATA Earningspersharefromcontinuingoperations($) 0.05 - 0.14 0.03Earningsperbasicshare($) 0.05 0.01 0.16 0.03Adjustednetearningsperbasicsharefromcontinuingoperations(1)($) 0.01 0.02 0.03 0.04Adjustednetearningsperbasicshare(1)($) 0.01 0.02 0.05 0.04

1. TheCompanyusescertainnon-GAAPfinancialperformancemeasuresthroughoutthisMD&A.Foradetaileddescriptionofeachofthenon-GAAPmeasuresusedinthisMD&Aandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

2. Ofthe$400millioncreditfacility,$200millionhasbeendrawnand$127millionhasbeenutilizedforlettersofcredit,bothasatSeptember30,2017.3. AmountspresentedincludeoperatingcashflowsfromPeakMines,whichhasbeenclassifiedasadiscontinuedoperationinthethirdquarterof2017.

OPERATINGCASHFLOW(MILLIONSOFU.S.DOLLARS)

$207

$73(2)

CashandCashEquivalents

UndrawnCreditFacilityatSeptember30,2017

$280MILLION

NewGoldhastotalavailableliquidityof$280million,comprisedof$207millionincashandcashequivalentsand$73millionavailablefordrawdownunderthe

Company’s$400millionrevolvingcreditfacility,eachasatSeptember30,2017.

90

66

89

61

20

40

60

80

100

Q32016 Q32017Cashgeneratedfromoperaeons

Cashgeneratedfromoperaeonsbeforechangesinnon-cashoperaengworkingcapital(1)(3)

(3)


Contents

OPERATINGHIGHLIGHTS....................................................................................................................................................1

FINANCIALHIGHLIGHTS......................................................................................................................................................2

OURBUSINESS....................................................................................................................................................................4

OPERATING,DEVELOPMENTANDFINANCIALHIGHLIGHTS...............................................................................................5

CORPORATEDEVELOPMENTS...........................................................................................................................................11

CORPORATESOCIALRESPONSIBILITY...............................................................................................................................11

OUTLOOKFOR2017.........................................................................................................................................................13

KEYPERFORMANCEDRIVERS...........................................................................................................................................13

FINANCIALRESULTS..........................................................................................................................................................17

REVIEWOFOPERATINGMINES........................................................................................................................................26

DISCONTINUEDOPERATIONS...........................................................................................................................................33

DEVELOPMENTANDEXPLORATIONREVIEW....................................................................................................................37

FINANCIALCONDITIONREVIEW.......................................................................................................................................40

NON-GAAPFINANCIALPERFORMANCEMEASURES.........................................................................................................47

ENTERPRISERISKMANAGEMENTANDRISKFACTORS.....................................................................................................70

CRITICALJUDGMENTSANDESTIMATIONUNCERTAINTIES..............................................................................................72

ACCOUNTINGPOLICIES.....................................................................................................................................................72

CONTROLSANDPROCEDURES..........................................................................................................................................73

CAUTIONARYNOTES.........................................................................................................................................................74


MANAGEMENT’SDISCUSSIONANDANALYSISForthethreeandninemonthsendedSeptember30,2017

The following Management’s Discussion and Analysis (“MD&A”) provides information that management believes isrelevanttoanassessmentandunderstandingoftheconsolidatedfinancialconditionandresultsofoperationsofNewGoldInc. and its subsidiaries (“New Gold” or the “Company”). This MD&A should be read in conjunction with New Gold’sunauditedcondensedconsolidatedinterimfinancialstatementsfortheninemonthsendedSeptember30,2017and2016andNewGold’sauditedconsolidatedfinancialstatementsfortheyearsendedDecember31,2016and2015andrelatednotes which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by theInternational Accounting Standards Board (“IASB”). ThisMD&A contains forward-looking statements that are subject torisksanduncertainties,asdiscussedinthecautionarynotecontainedinthisMD&A.Thereaderiscautionednottoplaceunduerelianceon forward-lookingstatements.Alldollar figuresare inUnited States dollars and tabulardollaramountsare inmillions, unless otherwise noted. ThisMD&A has been prepared as at October 25, 2017. Additional informationrelatingtotheCompany,includingtheCompany’sAnnualInformationForm,isavailableonSEDARatwww.sedar.com.

OURBUSINESSNew Gold is an intermediate gold producer with operating mines in Canada, the United States and Australia, anddevelopment projects in Canada. The Company’s operating properties consist of the New Afton gold-copper mine inCanada (“NewAfton”), theMesquitegoldmine in theUnitedStates (“Mesquite”)andthePeakMinesgold-coppermineinAustralia (“PeakMines”)whichhas been classified as a discontinuedoperationduring the third quarter of 2017. TheCompany’s Cerro San Pedro gold-silvermine inMexico (“Cerro San Pedro”) transitioned from activemining to residualleachinginJune2016.NewGold’sdevelopmentprojectsareits100%-ownedRainyRivergoldproject(“RainyRiver”),whichsuccessfully achieved start-up on September 14, 2017 and achieved commercial production subsequent to the quarterend,and theBlackwatergold-silverproject (“Blackwater”),both inCanada.OnFebruary17,2017, theCompany sold its4%streamonfuturegoldproductionfromtheElMorropropertylocatedinChile(“ElMorro”)toanaffiliateofGoldcorpInc.for$65millioncash.

NewGold’soperatingportfolioisdiverseintherangeofcommoditiesitproduces.Theassetsproducegoldwithcopperandsilverby-productsattotalcashcostsandall-insustainingcostsbelowtheindustryaverage.TheCompanybelievesithasasolidplatformtocontinuetoexecuteitsgrowthstrategy,bothorganicallyandthroughvalue-enhancingaccretiveacquisitions,tofurtherestablishitselfasanindustry-leadingintermediategoldproducer.

RainyRiver

NewAfton

Blackwater

CerroSanPedro(residualleaching)Mesquite

PeakMines(classifiedasadiscontinuedoperation)

• DEVELOPMENT• OPERATING


OPERATING,DEVELOPMENTANDFINANCIALHIGHLIGHTSOPERATING AND DEVELOPMENT HIGHLIGHTS



2017 2016 2017 2016

OPERATINGINFORMATION(5)

Gold(ounces): Producedfromcontinuingoperations(1) 67,653 57,565 207,659 196,918Produced(1) 82,027 95,546 276,418 285,780Soldfromcontinuingoperations(1) 67,052 56,038 200,672 198,956Sold(1) 79,904 96,452 266,443 284,303Copper(millionsofpounds): Producedfromcontinuingoperations1) 22.8 21.3 66.0 65.8Produced(1) 26.0 25.5 76.2 76.6Soldfromcontinuingoperations(1) 21.8 19.2 62.5 63.8Sold(1) 24.5 24.2 71.7 74.6Silver(millionsofounces): Producedfromcontinuingoperations(1) 0.2 0.2 0.7 0.9Produced(1) 0.3 0.3 0.9 1.0Soldfromcontinuingoperations(1) 0.2 0.3 0.7 0.9Sold(1) 0.3 0.3 0.8 1.0Revenuefromcontinuingoperations(1): Gold($/ounce) 1,250 1,283 1,245 1,217Copper($/pound) 2.53 1.99 2.40 1.96

Silver($/ounce) 16.05 19.78 16.62 16.81Averagerealizedpricefromcontinuingoperations(1)(2): Gold($/ounce) 1,286 1,325 1,280 1,258Copper($/pound) 2.78 2.18 2.64 2.15Silver($/ounce) 16.55 20.26 17.10 17.17Operatingexpensespergoldouncesoldfromcontinuingoperations($/ounce)(3) 601 586 603 566Operatingexpensespercopperpoundsoldfromcontinuingoperations($/pound)(3) 1.30 0.96 1.24 0.97Operatingexpensespersilverouncesoldfromcontinuingoperations($/ounce)(3) 7.73 8.96 8.05 7.73Totalcashcostspergoldouncesoldfromcontinuingoperations($/ounce)(2)(4) 204 226 245 248Totalcashcostspergoldouncesold($/ounce)(2)(4) 339 350 332 346All-insustainingcostspergoldouncesoldfromcontinuingoperations($/ounce)(2)(4) 610 718 614 710All-insustainingcostspergoldouncesold($/ounce)(2)(4) 792 682 706 718Totalcashcostspergoldouncesoldonaco-productbasis($/ounce)(2)(4) 712 640 668 630All-insustainingcostspergoldouncesoldonaco-productbasis($/ounce)(2)(4) 977 868 902 8791. Production is shown on a total contained basiswhile sales are shown on a net payable basis, including final product inventory and smelter payable adjustments,

whereapplicable.2. TheCompanyusescertainnon-GAAPfinancialperformancemeasuresthroughoutthisMD&A.Averagerealizedprice,totalcashcostsandall-insustainingcostspergold

ounce soldand total cash costs andall-in sustaining costs ona co-product basis arenon-GAAP financial performancemeasureswithno standardmeaningunder IFRS.Forfurtherinformationandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

3. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.


4. Thecalculationoftotalcashcostsandall-insustainingcostspergoldouncesoldisnetofby-productsilverandcopperrevenue.Totalcashcostsandall-insustainingcostsonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productoftheCompany’sgoldproductionandapportionsthecashcoststoeachmetal produced on a percentage of revenue basis. If silver and copper revenue were treated as co-products, co-product total cash costs for the threemonths endedSeptember30,2017fromcontinuingoperationswouldbe$8.19persilverouncesold(2016–$9.43)and$1.54percopperpoundsold(2016–$1.14)andco-productall-insustainingcostsforthethreemonthsendedSeptember30,2017wouldbe$11.18persilverouncesold(2016-$14.05)and$2.05percopperpoundsold(2016–$1.64).Co-producttotalcashcostsfortheninemonthsendedSeptember30,2017fromcontinuingoperationswouldbe$8.49persilverouncesold(2016–$8.09)and$1.48percopperpoundsold(2016–$1.16)andco-productall-insustainingcostsfortheninemonthsendedSeptember30,2017wouldbe$11.42persilverouncesold(2016–$12.01)and$1.93percopperpoundsold(2016–$1.65).

5. AstheCompanybeganaprocessforthesaleofPeakMinesduringthethirdquarterandexpectsasaleoftheassetwithinthenexttwelvemonths,PeakMineshasbeenclassifiedasadiscontinuedoperation.Operatinghighlightsaredisclosedonacontinuingandtotalbasis,whereappropriate.

Goldproductionfromcontinuingoperationsof67,653ouncesforthethreemonthsendedSeptember30,2017washigherwhen compared to the 57,565 ounces in the prior-year period. Higher production fromMesquite offset planned lowerproduction fromNewAftonandCerroSanPedro.CerroSanPedro’sproductiondecreasedas theminehas transitionedinto residual leaching.Goldproduction fromalloperationsof82,027ounces fromtotaloperationswasbelow theprior-yearperiodduetoplannedlowerproductionatPeakMines,NewAfton,andCerroSanPedro.

Forthenine-monthperiodendedSeptember30,2017,goldproductionfromcontinuingoperationswas207,659comparedwith196,918 in theprior-yearperiod.Goldproduction fromalloperationsof276,418ounceswasbelow2016ashigherproductionfromtheCompany’sMesquiteMinewasoffsetbyplannedlowerproductionfromNewAfton,PeakMinesandCerroSanPedro.

Goldsaleswere79,904ouncesforthethreemonthsendedSeptember30,2017,comparedto96,452ouncesintheprior-yearperiod.Timingofsalesattheendoftheperiodresultedinadifferencebetweenouncessoldandouncesproduced.Goldsaleswere266,443fortheninemonthsendedSeptember30,2017,comparedto284,303intheprior-yearperiod.

Copper production from continuing operations and total operations for the three months ended September 30, 2017increasedcomparedtotheprior-yearperiodduetohighercopperoretonnesprocessedatNewAfton.CopperproductionfortheninemonthsendedSeptember30,2017wasconsistentwiththeprior-yearperiod.

CoppersalesforthethreemonthsendedSeptember30,2017were24.5millionpounds,comparedto24.2millionpoundsintheprior-yearperiod.CoppersalesfortheninemonthsendedSeptember30,2017were71.7millionpounds,comparedto74.6millionpoundsintheprior-yearperiodduetotimingofshipments.

OperatingexpensesfromcontinuingoperationspergoldounceforthethreeandninemonthsendedSeptember30,2017were$601and$603respectively,anincreasefromprior-yearperiodof$586and$566duetoahigherproportionofsalesfromMesquite.

Total cash costs per gold ounce sold from continuing operations, net of by-product sales,were $204per ounce for thethreemonthsendedSeptember30,2017comparedto$226perounceintheprior-yearperiod.Thedecreaseincashcostsrelativetotheprior-yearperiodwasprimarilydrivenbytheeffectofhighercopperprices,partiallyoffsetbytheimpactofa greater proportion of the Company’s sales coming from itsMesquite operation. Total cash costs per gold ounce soldfromcontinuingoperations,netofby-productsalesfortheninemonthsendedSeptember30,2017wereconsistentwiththeprior-yearperiod.

Total cash costs per ounce of gold sold remained consistentwith the prior-year period for the three and ninemonthsendedSeptember30,2017.


All-in sustaining costs per gold ounce sold from continuing operations were $610 for the three months endedSeptember30,2017,comparedto$718intheprior-yearperiod.All-insustainingcostsfromalloperationswere$792forthethreemonthsendedSeptember30,2017,comparedto$682intheprior-yearperiod.Theincreaseinall-insustainingcostsfromalloperationsrelativetotheprior-yearperiodwasattributabletoa$4million,or$115perounce,increaseintheCompany’sconsolidatedsustainingcosts.

New Gold’s cumulative sustaining capital, exploration, general and administrative, and amortization of reclamationexpenditureswas$339perounce,andwaspartiallyoffsetbyan$11perouncedecreaseintotalcashcosts.All-insustainingcostspergoldouncesoldfromcontinuingoperationsispositivelyimpactedbytheexclusionofPeakMines.

All-insustainingcostspergoldouncesoldfromcontinuingoperationswere$614fortheninemonthsendedSeptember30,2017, compared to $710 in the prior-year period. All-in sustaining costs from all operations were $706 per ounce fortheninemonthsendedSeptember30,2017,comparedto$718perounceintheprior-yearperiod.All-insustainingcostsper gold ounce sold from continuing operations was positively impacted by the exclusion of Peak Mines consolidatedsustainingcosts.

ForadetailedreviewoftheCompany’soperatingmines,refertothe“ReviewofOperatingMines”sectionsofthisMD&A.

ForthethreemonthsendedSeptember30,2017,capitalexpendituresatRainyRivertotalled$129.5million,comparedto$130.7million in theprior-yearperiod. Start upof theprocessplantwas successfully achievedon September14, 2017.Subsequent to thequarter, theCompanyannounced its first goldpouronOctober6,2017, and commercialproductionwas achieved ahead of schedule, mid-October 2017. Mining activities at Rainy River progressed well during the thirdquarter.TheCompany’sminingrateduringthequarteraveragedapproximately130,000tonnesperday,whichwasinlinewithNewGold’splan.Thisrepresentsa13%increasecomparedtotheaverageminingrateof115,000tonnesperdayinthe second quarter of 2017. Importantly, themining rate in October averaged approximately 135,000 tonnes per day.Constructionoftheprocessplantisfullycompletewithoverallearthworks98%complete.TheamendmenttoSchedule2of the Metal Mining Effluent Regulations required to close two small creeks and deposit tailings became effective onSeptember27,2017.


FINANCIAL HIGHLIGHTS Threemonthsended

September30Ninemonthsended

September30

(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016

FINANCIALINFORMATION(3) Revenue 142.5 115.2 410.9 382.1Operatingmargin(1) 72.2 61.5 206.9 200.8Revenuelesscostofgoodssold(2) 21.5 18.2 57.1 57.8Earningsfromcontinuingoperations(2) 29.2 0.8 77.9 14.9Netearnings(2) 27.0 4.1 87.6 15.5Adjustednetearningsfromcontinuingoperations(1)(2) 5.1 10.0 15.1 18.1Adjustednetearnings(1)(2) 3.8 12.4 26.4 19.5Operatingcashflowsgeneratedfromcontinuingoperations 65.5 54.0 183.9 176.1Cashgeneratedfromcontinuingoperationsbeforechangesinnon-cashoperatingworkingcapital(1) 59.2 61.5 169.4 180.9Capitalexpenditures(sustainingcapital)(1) 22.7 22.4 60.9 71.9Capitalexpenditures(growthcapital)(1) 135.6 134.2 429.2 330.3Totalassets(2) 4,321.2 3,831.5 4,321.2 3,831.5Cashandcashequivalents 207.1 151.2 207.1 151.2Long-termdebt 977.0 789.0 977.0 789.0 SHAREDATA Earningspersharefromcontinuingoperations(2): Basic($) 0.05 - 0.14 0.03Diluted($) 0.05 - 0.14 0.03Earningspershare(2): Basic($) 0.05 0.01 0.16 0.03Diluted($) 0.05 0.01 0.16 0.03Adjustednetearningsperbasicshare($)(1)(2) 0.01 0.02 0.05 0.04Adjustednetearningsperbasicsharefromcontinuingoperations($)(1)(2) 0.01 0.02 0.03 0.04SharepriceasatSeptember30(TSX–Canadiandollars) 4.63 5.69 4.63 5.69Weightedaverageoutstandingshares(basic)(millions) 576.2 513.0 560.2 511.3

1. The Company uses certain non-GAAP financial performance measures throughout this MD&A. Operating margin, adjusted net loss, adjusted net loss per basic share,

capital expenditures (sustaining and growth) and cash generated from operations before changes in non-cash operating working capital are non-GAAP financialperformancemeasureswithnostandardmeaningunderIFRS.Forfurther informationandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

2. Prior-yearperiodcomparativeshavebeenrevised.Pleaserefertothe“KeyQuarterlyOperatingandFinancialInformation”sectionofthisMD&Aforfurtherinformation3. AstheCompanybeganaprocessforthesaleofPeakMinesandexpectsasaleoftheassetwithinthenexttwelvemonths,PeakMineshasbeenclassifiedasadiscontinued

operation.Financialhighlightsaredisclosedonacontinuingandtotalbasis,whereappropriate.

AstheCompanybeganaprocessforthesaleofPeakMinesduringthethirdquarterandexpectsasaleoftheassetwithinthenext twelvemonths, thisoperationhasbeen classifiedas adiscontinuedoperation. Thebelow financial results aredisclosedonacontinuingbasis(unlessotherwisenoted).


Revenuewas$142.5million for the threemonthsendedSeptember30, 2017, compared to$115.2million in theprior-yearperiod.Theincreaseisduetohighermetalsalesvolumesandhighercopperprices.Relativetotheprior-yearperiod,gold sales increased by 20%,mainly attributable toMesquite’s strong quarter. Copper sales atNewAfton increased by14% and the average realized copper price increased by $0.60 per pound, or 38% compared to the prior-year quarter.Revenuewas$410.9millionfortheninemonthsendedSeptember30,2017,comparedto$382.1millionintheprior-yearperiodduetohighermetalprices.Relativetotheprior-yearperiod,theaveragerealizedpriceincreasedby$22perounceofgold,or2%,and$0.49perpoundofcopper,or23%.

Revenue less cost of goods sold was $21.5 million for the three months ended September 30, 2017, compared to$18.2millionintheprior-yearperiod.Thisincreasewasdrivenbythehighergoldandcopperproductionandsales.RevenuelesscostofgoodssoldfortheninemonthsendedSeptember30,2017wasconsistentwiththeprior-yearperiod.

Earnings from continuing operationswas $29.2million for the threemonths ended September 30, 2017, compared to$0.8millionintheprior-yearperiod.Thirdquarterearningsfromcontinuingoperationsincludeda$30.6millionnon-cashforeign exchange gain, a $7.2million pre-tax loss on the revaluation of the Company’s gold price option contracts andcopper forward contracts, and a $3.3 million gain on the modification of long-term debt, while the prior-year quarterincludeda$11.3millionpre-taxforeignexchangeloss,anon-cashpre-taxlossof$8.9millionontherevaluationofthegoldstreamobligation,partiallyoffsetbyanon-cashpre-taxgainof$2.4millionontherevaluationoftheCompany’sgoldpriceoptioncontracts.Thedecreaseinnetearningsrelativetoearningsfromcontinuingoperationsrelatestoa$2.2millionlossfromdiscontinuedoperations(PeakMines).

FortheninemonthsendedSeptember30,2017,netearningsfromcontinuingoperationswas$77.9millioncomparedto$14.9milliontheprior-yearperiod.Currentperiodnetearningsincludeda$33.0millionpre-taxgainonthedisposaloftheElMorrostream,a$52.6millionnon-cashforeignexchangegain,a$3.3milliongainonthemodificationoflong-termdebt,andan$18.9millionpre-taxlossontherevaluationofCompany’sgoldpriceoptioncontractsandcopperforwardcontractsanda$4.8millionpre-taxlossontherevaluationoftheCompany’sgoldstreamobligation.Theprior-yearperiodincludeda$34.4millionpre-taxlossontherevaluationoftheCompany’sgoldstreamobligationanda$17.1millionnon-cashforeignexchange gain. The increase in net earnings relative to earnings from continuing operations relates to a $9.7 millionearningsfromdiscontinuedoperations(PeakMines)fortheninemonthsendedSeptember30,2017.

Adjustednetearnings fromcontinuingoperations for the threemonthsendedSeptember30,2017was$5.1million,or$0.01perbasicshare,comparedto$10.0millionor$0.02perbasicshareintheprior-yearperiod.Quarterlyadjustednetearnings fromcontinuingoperationswereprimarily impactedbya$5.0million increase inadjusted income taxexpenseanda$2.9millionincreaseinexploration,businessdevelopment,andcorporategeneralandadministrativeexpenses.Thiswas partially offset by a $27.3 million increase in revenues and a $24.0 million increase in operating expenses anddepreciation and depletion. The decrease in adjusted net earnings relative to adjusted net earnings from continuingoperationsrelatestoalossfromdiscontinuedoperations(PeakMines),partiallyoffsetbylowerincometaxexpense.

Adjustednetearnings fromcontinuingoperations for theninemonthsendedSeptember30,2017were$15.1millionor$0.03perbasicshare,comparedtoadjustednetearningsof$18.1millionor$0.04perbasicshareintheprior-yearperiod.Adjustednetearningswerenegativelyimpactedbythe$2.2millionincreaseinadjustedincometaxexpense,a$4.9millionincrease in exploration, business development, and corporate general and administrative expenses and a $0.7 milliondecrease in revenue lesscostofgoodssold.Thiswaspartiallyoffsetbya$4.6milliondecrease in financecostsasmoreinterest has been capitalized to Rainy River. The increase in net earnings from continuing operations is due to lowerdepreciation anddepletion at PeakMines. The increase in adjustednet earnings relative to adjustednet earnings fromcontinuingoperations is due toearnings fromdiscontinuedoperations (PeakMines), partiallyoffsetby ahigher incometaxexpense.


OperatingcashgeneratedfromcontinuingoperationsforthethreemonthsendedSeptember30,2017was$65.5million,comparedwith$54.0millionintheprior-yearperiod.Cashgeneratedfromcontinuingoperationsbeforechangesinnon-cash working capital for the threemonths ended September 30, 2017was consistent with the prior-year period. CashgeneratedfromoperationsbenefittedfromCerroSanPedrocontinuingtodrawdownitsleachpadinventory.

FortheninemonthsendedSeptember30,2017,operatingcashgeneratedfromcontinuingoperationswas$183.9million,compared to$176.1million.Cashgenerated fromcontinuingoperationsbefore changes innon-cashworking capital forthe ninemonths ended September 30, 2017was lower than the prior-year period primarily due to income taxes paid,whichwereonlypartiallyoffsetby the increase inoperatingmargin.Cashgenerated fromcontinuingoperations for thenine months ended September 30, 2017 was higher than the prior-year period, benefitting from the collection of aconcentratereceivableoutstandingatDecember31,2016.

For further informationon theCompany’s liquidityandcash flowposition,please refer to the“LiquidityandCashFlow”sectionof thisMD&A.For further informationon theCompany’s financial results,please refer to the“FinancialResults”sectionofthisMD&A.


CORPORATEDEVELOPMENTSNewGold’sstrategyinvolvesstrongoperationalexecutionatitscurrentassetsanddisciplinedgrowthboththroughorganicinitiativesandvalue-enhancingmergersandacquisitions.Since themiddleof2009,NewGoldhas focusedonenhancingthevalueofitsportfolioofassets,whilealsocontinuallylookingforcompellingexternalgrowthopportunities.NewGold’sobjectiveistopursuecorporatedevelopmentinitiativesthatwillmaximizelong-termshareholdervalue.

OnFebruary17,2017,NewGoldsoldits4%streamonfuturegoldproductionfromElMorrotoanaffiliateofGoldcorpInc.for $65 million cash. This transaction provided the Company with additional liquidity as the Company advanced theconstructionofRainyRiver.

OnFebruary22,2017,NewGoldannouncedthattheCompanyenteredintoanagreementwithasyndicateofunderwriterstopurchase,onaboughtdealbasis,53,600,000commonsharesofNewGold(plusanover-allotmentoption)atapriceofUS$2.80pershare.OnMarch10,2017,NewGoldclosedtheboughtdealfinancingof61,640,000commonshares(includingtheover-allotment)fornetproceedstoNewGoldofapproximately$165million(grossproceedsof$173millionlessequityissuancecosts).

OnJune27,2017,NewGoldenteredintogoldpriceoptioncontractscovering120,000ouncesofNewGold’ssecondhalf2017goldproduction.NewGoldpurchasedputoptionswithastrikepriceof$1,250perouncecovering120,000ouncesofgoldandsimultaneouslysoldcalloptionswithastrikepriceof$1,400perouncecoveringanequivalent120,000ounces.Thecontractswillcover20,000ouncesofgoldpermonthforsixmonthsbeginninginJuly2017.Thenetcostofenteringintotheoptioncontractswaslessthan$1million.

InJuly2017,theCompanyinitiatedaprocesstodivestthePeakMines,locatedinNewSouthWales,Australia.ThesaleofPeak Mines will further enable the Company to focus on its Americas-centric portfolio of operating mining anddevelopment projectswhile offering a prospective buyer an opportunity to fully leverage Peak’s strong track record ofperformance,andunlockitslongertermpotential.

CORPORATESOCIALRESPONSIBILITY

CORPORATESOCIALRESPONSIBILITYHIGHLIGHTSFORQ32017• ANewGoldindigenousrelationsstrategywasdevelopedtoaddressfivekeypillars:engagement,capacity

building,economicdevelopment,inclusionandenvironmentalstewardship.• A New Gold local procurement standard was established to optimize local procurement and business

opportunitiesandsupportsustainableeconomicdevelopmentinthecommunitieswhereweoperate.• TheTodosparCerrodeSanPedrofoundationlaunchedamicrofinancingprogramandprovidedamicroloan

toitsfirstlocalsmallbusinessowner.• The New Afton community and mine rescue teams provided critical support to a local indigenous

communitytoprepareforandprotectfromtheBCwildfires.• CerroSanPedroMinereforested12hectaresofwastepilesaspartofitsclosureandreclamationplan.


NewGoldiscommittedtoexcellenceincorporatesocialresponsibility.TheCompanyconsidersitsabilitytomakealastingandpositivecontributiontowardsustainabledevelopmentakeydrivertoachievingaproductiveandprofitablebusiness.New Gold aims to achieve this objective through the protection of the health and well-being of its people and hostcommunities aswell as employing industry-leadingpractices in the areas of environmental stewardship and communityengagementanddevelopment.

AsaparticipantoftheUnitedNationsGlobalCompact,NewGold’spoliciesandpracticesareguidedbyitsprincipleswithregard tohuman rights, labour,environmental stewardshipandanti-corruption.Asamemberof theMiningAssociationofCanada(“MAC”),NewGold’soperationsadopttheMAC’sTowardsSustainableMiningprotocols.

NewGold’sobjectivesincludeprotectingthewelfareofitsemployeesandcontractorsthroughsafety-firstworkpractices,upholdingfairemploymentpracticesandencouragingadiverseworkforce,wherepeoplearetreatedwithrespectandaresupportedtorealizetheirfullpotential.TheCompanystrivestocreateacultureofinclusivenessandtolerancethatbeginsatthetopandisreflectedinitshiring,promotionandoverallhumanresourcespractices.Ineachofitshostcommunities,theCompanystrivestobeanemployerofchoicethroughtheprovisionofcompetitivewagesandbenefits,andthroughthe implementation of policies of recognizing and rewarding employee performance and promoting from withinwhereverpossible.

The Company is committed to preserving the long-term health and viability of the natural environments that host itsoperations. Wherever New Gold operates – in all stages of mining activity, from early exploration and planning, tocommercialminingoperations through toeventual closure– theCompany is committed toexcellence inenvironmentalmanagement. From the earliest site investigations, New Gold carries out comprehensive environmental studies toestablish baselinemeasurements for flora, fauna, earth, air and water. During operations, the Company promotes theefficientuseofrawmaterialsandresourcesandworkstominimizeenvironmentalimpactsandmaintainrobustmonitoringprograms.Afterminingactivitiesarecomplete,NewGold’sobjectiveistorestorethelandtoasustainableendlanduse.

TheNewGold environmentalmanagement standards are based on internationally recognized standards. The standardsserve to guide site-level management systems to ensure that site operations identify and appropriately manage theirenvironmental aspects, adopt a consistent approach to identifying and controlling environmental risks, report progressthroughauditsandassessments,andadoptahigh levelofenvironmental stewardship.All sitesareexpected tohaveanexternalaudit,peerauditorself-assessmentannuallybasedonourauditschedule.

Aspartoftheimplementationprocess,eachoperationhasalsocompiledaregisterofSignificantEnvironmentalRisks.Thisregister contains the main environmental risks for each operation and allows corporate representatives to test theadequacyandeffectivenessofcontrolsaswellasemergencypreparednessandmitigationmeasuresassociatedwiththesegreatestpotentialrisks.

OnJuly13,2017,NewGoldwaschargedwithfivebreachesoftheEnvironmentalProtectionAct (Ontario) inconnectionwithallegedeffluentdischargesattheRainyRiverprojectinJuly2016inexcessofpermitlimits.OnJuly24,2017,NewGoldwas chargedwith two breaches of the Lakes and Rivers Improvement Act (Ontario) in connectionwithwater allegedlyovertoppingadamontheRainyRiverconstructionsitepriortocompletionofconstructionofthedam.NewGoldtakesallenvironmentalincidentsseriouslyandisintheprocessofevaluatingthesematters.

New Gold is committed to establishing relationships based on mutual benefit and active participation with its hostcommunitiestocontributetohealthyandsustainablecommunities.WherevertheCompany’soperations interactwithindigenouspeoples,NewGoldpromotesunderstandingof,andrespectfortraditionalvalues,customsandcultureand


takesmeaningfulactiontoconsidertheirintereststhroughcollaborativeagreementsaimedatcreatingjobs,trainingandotherlastingsocio-economicbenefits.

The New Gold community engagement and development standards provide guidance to our sites to identify ourcommunitiesofinterest,andeffectivelyengageandsustaindialogue,andtofindopportunitiestocontributetolong-termdevelopment within our host communities. They also drive us to monitor and continually improve our processes andperformance. The standards are based on several internationally recognized principles and values. At each site, thestandards are being progressively implemented to guide site-levelmanagement systems to ensure that site operationsappropriately identify and engage with local communities of interest, respect human rights, identify opportunities forsustainablecommunityinvestments,andmakescommerciallyreasonableeffortstomaximizelocalhiringandcontracting.

Ourstandardsalsoguideouroperationstoadoptaconsistentapproachtoidentifyingandcontrollingsocialrisksandtoreport progress through audits and assessments. All sites are expected to have an external audit, peer audit or self-assessmentannuallybasedonanauditschedule.

OUTLOOKFOR2017AsaresultoftheCompany’sstrongfirstnine-monthoperationalresults,NewGoldreiteratesitsguidanceforfull-yeargoldproduction of 380,000 to 430,000 ounces (includes Peak Mines). As PeakMines has been classified as a discontinuedoperation,theCompany’soperatingexpensesperounceofgoldsoldisprojectedtobeapproximately$40perouncelowerthanitsoriginalguidancerangeof$630to$670.TheCompanyexpectsanincreaseingoldproductiontooccurinthefourthquarter, as Rainy River continues to transition to nameplate production rates. Assuming current commodity prices andforeignexchangerates,NewGoldexpectstoachieveall-insustainingcostsatthehighendoftherange,ofthepreviouslydisclosedguidanceof$760to$800perounce.Duetotimingofcapitalexpendituresrelatedtothetailingsmanagementareaandone-timenon-cashshare-basedpaymentsrelatedtotheCompany’sparticipationagreementswithFirstNations,theCompanyexpectsRainyRiver’sall-insustainingcostguidancetoincreasebyapproximately$200perounce.

KEYPERFORMANCEDRIVERSThereisarangeofkeyperformancedriversthatarecriticaltothesuccessfulimplementationofNewGold’sstrategyandtheachievementofitsgoals.Thekeyinternaldriversareproductionvolumesandcosts.Thekeyexternaldriversaremarketpricesofgold,copperandsilver,aswellasforeignexchangerates.

Production Volumes and Costs NewGold’sportfolioofcontinuingoperatingminesproduced67,653goldouncesfromcontinuingoperationsforthethreemonthsendedSeptember30,2017and207,659goldouncesfortheninemonthsendedSeptember30,2017.

OperatingexpensespergoldouncesoldfromcontinuingoperationsforthethreemonthsendedSeptember30,2017was$601,comparedto$586intheprior-yearperiod.Operatingexpensespercopperpoundsoldfromcontinuingoperationsfor the three months ended September 30, 2017 was $1.30, compared to $0.96 in the prior-year period. Operatingexpensesper silverounce sold fromcontinuingoperations for the threemonthsendedSeptember30, 2017was$7.73,comparedto$8.96intheprior-yearperiod.

For the threemonthsendedSeptember30,2017 totalcashcostsandall-in sustainingcosts fromcontinuingoperations,netofby-productsales,were$204and$610pergoldouncesold,respectively. Intheprior-yearperiods,totalcashcostsandall-insustainingcostswere$226and$718pergoldouncesoldrespectively.


FortheninemonthsendedSeptember30,2017totalcashcostsandall-insustainingcostsfromcontinuingoperations,netofby-productsales,were$245and$614pergoldouncesold,respectively. Intheprior-yearperiodstotalcashcostsandall-insustainingcostswere$248and$710pergoldouncesoldrespectively.

Commodity Prices

Commodity Prices

GoldpricesThepriceofgoldisthesinglelargestfactoraffectingNewGold’sprofitabilityandoperatingcashflows.Assuch,thecurrentandfuture financialperformanceof theCompany isexpectedtobecloselyrelatedtotheprevailingpriceofgold. In thethirdquarterof2016,theCompanyenteredintogoldpriceoptioncontractsrelatedto itsproductionforthefirsthalfof2017. New Gold purchased put options with a strike price of $1,300 per ounce covering 120,000 ounces of gold andsimultaneouslysoldcalloptionswithastrikepriceof$1,400perouncecoveringanequivalent120,000ounces.

InJune2017theCompanyenteredintofurthergoldoptioncontractsfortheperiodsJuly2017toDecember2017withastrikepriceof$1,250perouncecovering120,000ouncesofgoldandsimultaneouslysoldcalloptionswithastrikepriceof$1,400perouncecoveringanequivalent120,000ounces.ForthethreeandninemonthsendedSeptember30,2017,theCompanyrecognized$0.2millionand$7.4millioninrevenuerespectivelyrelatedtothesegoldpriceoptioncontracts.

ForthethreemonthsendedSeptember30,2017,NewGold’sgoldrevenueperounceandaveragerealizedgoldpricefromcontinuingoperationsperouncewere$1,250and$1,286,respectively,comparedtotheLBMAp.m.averagegoldpriceof$1,278 per ounce. For the ninemonths ended September 30, 2017, New Gold’s gold revenue per ounce and averagerealized gold price per ouncewere $1,245 and $1,280, respectively, compared to the LBMAp.m. average gold price of$1,251perounce.ThedifferencebetweenNewGold’saveragerealizedgoldpriceandtheLBMAp.m.averagegoldpriceisprimarilyaresultofthegoldpriceoptioncontractsdescribedabove.

CopperpricesInNovember2016,theCompanyenteredcopperswapcontractsfor5.3millionpoundsofcopperpermonthfromJanuarythroughJune2017,atafixedpriceof$2.52perpoundsettlingagainsttheLMEmonthlyaverageprice.InFebruary2017,the Company entered into further copper swap contracts for 7.3 million pounds of copper per month from July 2017through December 2017 at a fixed price of $2.73 per pound. The copper forward contracts are treated as derivativefinancial instrumentsandmarkedtomarketateachreportingperiodontheconsolidatedstatementof financialpositionwithchangesinfairvaluerecognizedinothergainsandlosses.

GOLDPRICES(U.S.dollarsperounce)

SILVERPRICES(U.S.dollarsperounce)

COPPERPRICES(U.S.dollarsperpound)

$10

$15

$20

$25

Sep-15 Sep-16 Sep-17

Quarterlyaveragerealizedprice

Quarterlyaveragespotprice

$2.00

$2.50

$3.00




$1,100

$1,200

$1,300

$1,400





OnOctober18,2017,NewGoldentered intocopperpriceoptioncontractscoveringapproximately60millionpoundsofits2018production,withputoptionsata strikepriceof$3.00perpoundandcalloptionsata strikepriceof$3.37perpound,atanominalcosttotheCompany.

For the threemonths ended September 30, 2017, NewGold’s copper revenue per pound and average realized copperpriceperpoundfromcontinuingoperationsperpoundwere$2.53and$2.78,respectively,comparedtotheaverageLMEcopperpriceof$2.88perpound.FortheninemonthsendedSeptember30,2017,NewGold’scopperrevenueperpoundandaverage realized copperpriceperpoundwere$2.40and$2.64, respectively, compared to theaverage LMEcopperpriceof$2.70perpound.

SilverpricesFor thethreemonthsendedSeptember30,2017,NewGold’ssilver revenueperounceandaveragerealizedsilverpriceperouncewere$16.05and$16.55,respectively,comparedtotheLBMAp.m.averagesilverpriceof$16.84perounce.FortheninemonthsendedSeptember30, 2017,NewGold’s silver revenueperounceandaverage realized silverpriceperouncewere$16.62and$17.10,respectively,comparedtotheLBMAp.m.averagesilverpriceof$16.84perounce.

Foreign Exchange Rates TheCompanyoperates inCanada,theUnitedStates,AustraliaandMexico,whilerevenueisgeneratedinU.S.dollars.Asa result, theCompanyhas foreign currencyexposurewith respect to costsnotdenominated inU.S.dollars.NewGold’soperatingresultsandcashflowsareinfluencedbychangesinvariousexchangeratesagainsttheU.S.dollar.TheCompanyhas exposure to the Canadian dollar through New Afton, Rainy River and Blackwater, as well as through corporateadministration costs. The Company also has exposure to theAustralian dollar through PeakMines, and to theMexicanpesothroughCerroSanPedro.

TheCanadiandollarstrengthenedagainsttheU.S.dollarbyapproximately4%fromJune30,2017toSeptember30,2017.TheaverageCanadiandollaragainsttheaverageU.S.dollarforthethreemonthsendedSeptember30,2017strengthenedby approximately 4%when compared to the prior-year period. The strengthening orweakening of the Canadian dollarimpactscostsinU.S.dollartermsattheCompany’sCanadianoperations,aswellascapitalcostsattheCompany’sCanadiandevelopmentproperties,asasignificantportionofoperatingandcapitalcostsaredenominatedinCanadiandollars.

TheMexicanpesoweakenedagainsttheU.S.dollarbyapproximately1%fromJune30,2017toSeptember30,2017.TheaverageMexicanpesoagainst theaverageU.S.dollar for the threemonthsendedSeptember30,2017strengthenedbyapproximately5%whencomparedtotheprior-yearperiod.ThestrengtheningorweakeningoftheMexicanpesoimpactscosts in U.S. dollar terms at the Company’s Mexican operation, Cerro San Pedro, as a portion of operating costs aredenominatedinMexicanpesos.

TheAustraliandollarstrengthenedagainsttheU.S.dollarbyapproximately2%fromJune30,2017toSeptember30,2017.TheaverageAustraliandollaragainsttheaverageU.S.dollarforthethreemonthsendedSeptember30,2017strengthenedby approximately 4%when compared to theprior-yearperiod. The strengtheningorweakeningof theAustraliandollarimpactscostsinU.S.dollartermsattheCompany’sAustralianoperation,PeakMines,asasignificantportionofoperatingcostsaredenominatedinAustraliandollars.


For an analysis of the impactof foreignexchange fluctuationsonoperating costs for the three andninemonths endedSeptember30,2017relativetoprior-yearperiods,refertothe“ReviewofOperatingMines”sectionsforNewAfton,PeakMinesandCerroSanPedro.

Economic Outlook The LBMA p.m. gold price increased by 10% since the start of 2017, rising by 6% during the third quarter. The Trumppresidency continues to generate considerable uncertainty and unpredictability, and U.S. economic data has beendistinctlymixed.WhiletheFederalReserveisstillexpectedtoraise interestrates,thepaceof increaseshasbecomelessclearasthestrengthoftheeconomyisdebatedandinflationremainslow.Thisuncertaintyhashelpedtounderpingoldinthefaceofacertainamountofvolatility.

Prospectsforgoldareencouragedbyseveralstructuralfactors.Minesupplyhasbeenplateauingashighqualitydepositsbecomemoredifficulttofindandmoreexpensivetodevelopandmine.Explorationbudgetshavebeencutinrecentyears,increasingthelikelihoodthatsupplywillremainmuted,eveninthefaceofincreasinggoldprices.Goldheldinexchange-tradedproductsisdownsubstantiallyfromthepeakin2012,suggestingthatthebroadinvestmentcommunityhascapacitytoaddlengthtopositionsassentimentimproves.Asalowall-insustainingcostproducerwithapipelineofdevelopmentprojects,NewGoldbelievesitisparticularlywellpositionedbothtooperateinalowergoldpriceenvironmentandtotakeadvantageofhigherpricesinthegoldmarket.

Economiceventscanhavesignificanteffectsonthepriceofgold,throughcurrencyratefluctuations,therelativestrengthoftheU.S.dollar,goldsupplyanddemand,andmacroeconomicfactorssuchas interestratesandinflationexpectations.Management anticipates that the long-termeconomic environment should provide support for preciousmetals and forgoldinparticular,andbelievestheprospectsforthebusinessarefavourable.NewGold’sgrowthplanisfocusedonorganicandacquisition-ledgrowth,andtheCompanyplanstoremainflexibleinthecurrentenvironmenttobeabletorespondtoopportunitiesastheyarise.

AVERAGEMONTHLYUSDTOAUDEXCHANGERATES

AVERAGEMONTHLY USD TOMXNEXCHANGERATES

AVERAGEMONTHLYUSDTOCADEXCHANGERATES

1.20

1.30

1.40

1.50

Sep-15 Sep-16 Sep-171.20

1.30

1.40

1.50

Sep-15 Sep-16 Sep-1716.00

18.00

20.00

22.00



FINANCIALRESULTSSummary of Quarterly and Year-to-Date Financial Results



(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016FINANCIALRESULTS(3) Revenue 142.5 115.2 410.9 382.1

Operatingexpenses 70.3 53.7 204.0 181.3

Depreciationanddepletion(2) 50.7 43.3 149.8 143.0

Revenuelesscostofgoodssold(2) 21.5 18.2 57.1 57.8

Corporateadministration 5.4 4.9 18.8 16.5

Share-basedpaymentexpenses 3.1 2.0 6.9 7.8

Explorationandbusinessdevelopment 1.9 0.6 5.1 1.6

Earningsfromoperations(2) 11.1 10.7 26.3 31.9

Financeincome 0.3 0.2 0.9 0.7

Financecosts 1.9 (1.0) (0.5) (8.4)

Othergainsandlosses

Unrealized(loss)gainonsharepurchasewarrants - (0.8) 1.2 (1.3)

Gain(loss)onforeignexchange 30.6 (11.3) 52.6 17.1

OthergainondisposalofElMorrostream - - 33.0 -

Othergainondisposalofassets - 0.7 0.1 0.2

(Loss)gainonrevaluationofinvestments - - (0.1) 0.7

Unrealizedgain(loss)onrevaluationofgoldstreamobligation 0.2 (8.9) (4.8) (34.4)

Settlementand(loss)gainonrevaluationofgoldpriceoptioncontracts (1.3) 2.4 (14.2) (0.9)

Lossonrevaluationofcopperforwardcontracts (5.9) - (4.7) -

Other 0.2 0.4 1.1 0.3

Income(loss)beforetaxes(2) 37.1 (7.6) 90.9 5.9Incometax(expense)recovery(2) (7.9) 8.4 (13.0) 9.0Netearningsfromcontinuingoperations(2)

29.2 0.8 77.9 14.9

(Loss)earningsfromdiscontinuedoperations (2.2) 3.3 9.7 0.6

Netearnings 27.0 4.1 87.6 15.5

Adjustedearningsfromcontinuingoperations(1)(2) 5.1 10.0 15.1 18.1

Adjustednetearnings(1)(2) 3.8 12.4 26.4 19.51. TheCompanyusescertainnon-GAAPfinancialperformancemeasuresthroughoutthisMD&A.Foradetaileddescriptionofeachofthenon-GAAPmeasuresusedinthis

MD&Aandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.2. Prior-yearperiodcomparativeshavebeenrevised.Pleaserefertothe“KeyQuarterlyOperatingandFinancialInformation”sectionofthisMD&Aforfurtherinformation.3. As the Company began a process for the sale of PeakMines and expects a sale of the assetwithin the next twelvemonths, PeakMines has been classified as a

discontinuedoperation.Financialhighlightsaredisclosedonacontinuingandtotalbasis,whereappropriate.

RevenueFor the threemonths ended September 30, 2017, the $27.3million increase in revenuewas primarily driven by highermetalsalesandmetalprices.FortheninemonthsendedSeptember30,2017the$28.8million increase inrevenuewasprimarilydrivenbyhighermetalprices.Adetaileddiscussionofproductionisincludedinthe“ReviewofOperatingMines”sectionofthisMD&A.


OperatingexpensesFor the threeandninemonthsendedSeptember30,2017,operatingexpenses increasedcomparedwith theprior-yearperiod.HigheroperatingcostsatMesquitewasduetohigherprocesssolutionflowwhichdrovehigherproduction,whichwaspartiallyoffsetbyloweroperatingcostsatCerroSanPedro,astheminehasbeeninresidualleachingsinceJune2016.

DepreciationanddepletionForthethreeandninemonthsendedSeptember30,2017,depreciationanddepletionincreasedcomparedwithprior-yearperiods,duetohighergoldsalesfromtheMesquiteoperationscomparedtopriorperiods.

RevenuelesscostofgoodssoldFor the three months ended September 30, 2017, revenue less cost of goods sold increased primarily due to higherrevenues,partiallyoffsetbyhigheroperatingexpenses.FortheninemonthsendedSeptember30,2017,revenuelesscostofgoodssoldwasconsistentwithpriorperiod.

Corporateadministrationandshare-basedpaymentexpensesForthethreemonthsendedSeptember30,2017theincreaseinshare-basedpaymentexpenseswasprimarilyattributabletoanincreaseoftheCompany’ssharepriceintheperiod,whichresultedinanincreaseincostsfortheCompany’scash-settled share-based payment arrangements. For the ninemonths ended September 30, 2017 the increase in corporateadministrationcostswasattributabletoseverancecostsincurredintheperiod.

ExplorationandbusinessdevelopmentExpensed exploration in the current year was primarily incurred at PeakMines and Rainy River. The prior-year periodincludedexpensedexplorationcostsprimarilyatPeakMines.

Capitalizedexplorationcostswere$0.6millionforthethreemonthsendedSeptember30,2017,adecreaseof$0.1millionfromthepriorperiod.CapitalizedexplorationcostswereprimarilyincurredatandPeakMines.FortheninemonthsendedSeptember30,2017capitalizedexplorationcostswere$2.7millioncomparedwith$3.2million in theprior-yearperiod.ExpenditureswereprimarilyattheNewAftonC-zone,PeakMines,andRainyRiver.

Please refer to the “Development and Exploration review” section of thisMD&A for further details on the Company’sexplorationandbusinessdevelopmentactivities.

FinanceincomeandfinancecostsForthethreeandninemonthsendedSeptember30,2017,financecostsdecreasedastheCompanyhascapitalizedmoreinteresttoitsqualifyingdevelopmentpropertythanintheprior-yearperiod,andalsoincludesa$3.3milliongainonthemodificationoflong-termdebt.

OthergainsandlossesThefollowingothergainsandlossesareaddedbackforthepurposesofadjustednetearnings:

SharepurchasewarrantsFortheninemonthsendedSeptember30,2017,theCompanyrecordedagainonsharepurchasewarrants,comparedtoa loss in theprior-year period.As the traded valueof theNewGold sharepurchasewarrants increasesor decreases, arelatedlossorgainonthemark-to-marketoftheliabilityisreflectedinearnings.InJune2017allsharepurchasewarrantsexpired,unexercised.


GoldstreamobligationForthethreeandninemonthsendedSeptember30,2017,theunrealizedlossonrevaluationofthegoldstreamobligationderivativeinstrumentwasrelatedtotheincreaseingoldpricesandaccretion.ThegainorlossontherevaluationofthegoldstreamobligationasaresultofthechangeintheCompany’sowncreditriskisrecordedinothercomprehensiveincome.

Goldpriceoptioncontracts

In theprioryear, theCompanyentered intogoldpriceoptioncontractswhereby it solda seriesof calloptioncontractsandpurchasedaseriesofputoptioncontracts.Thesegoldpriceoptioncontractscover120,000ouncesofNewGold’sfirsthalf2017goldproduction.InJune2017theCompanyenteredintofurthergoldoptioncontractsfortheperiodsJuly2017toDecember2017withastrikepriceof$1,250perouncecovering120,000ouncesofgoldandsimultaneouslysoldcalloptionswithastrikepriceof$1,400perouncecoveringanequivalent120,000ounces.

Thesederivative instrumentsare fair valuedat theendofeach reportingperiod. For the threeandninemonthsendedSeptember30,2017,theCompanyrecognizeda lossontherevaluationofthegoldpriceoptioncontractsresultingfromoptionsexpiringunexercisedandthe increase ingoldprices.ForthethreeandninemonthsendedSeptember30,2017,theCompany recognized$0.2million and$7.5million in revenueandearnings fromdiscontinuedoperations related tothesegoldpriceoptioncontracts.

GainondisposalofElMorrogoldstreamDuringthefirstquarterof2017,theCompanysoldits4%streamonfuturegoldproductionfromElMorrofor$65millioncash.Asaresult,theCompanyrecordedagainondisposalof$33.0millionrepresentingthedifferencebetweenthenetproceedsreceivedandthecarryingvalueoftheasset.Pleaserefertothe“CorporateDevelopments”sectionofthisMD&Aformoreinformationonthistransaction.

ForeignexchangeMovements in foreign exchange are due to the revaluation of the non-monetary assets and liabilities at the balancesheetdateandtheappreciationordepreciationoftheCanadianandAustraliandollarscomparedtotheU.S.dollarinthecurrentperiod.

IncometaxIncome tax expense from continuing operations for the nine months ended September 30, 2017 was $13.0 millioncomparedtoanincometaxrecoveryof$9.0millionintheprior-yearperiod,reflectinganeffectivetaxrateof14.3%fortheperiod ended September 30, 2017 compared to 153.3% in the prior-year period. The primary reason for the change intheunadjustedeffectivetaxrateistheimpactoflowertaxrateapplicableonthedisposaloftheElMorrostreamandtheimpact of foreign exchangemovements on the deferred tax related to nonmonetary assets and liabilities. For the ninemonths ended September 30, 2017, the Company recorded a foreign exchange gain of $52.8million on non-monetaryassetsandliabilities,comparedtoagainof$16.9millionintheprior-yearperiod.Onanadjustednet(loss)earningsbasis,theadjustedtaxexpensefromcontinuingoperationsfortheninemonthsendedSeptember30,2017was$8.3million,comparedtoanadjustedtaxexpenseof$6.1million intheprior-yearperiod.Theadjustedtaxexpenseexcludestheimpactofforeignexchange,disposaloftheElMorrogoldstream,thelossonrevaluationofthegoldstreamobligationandthegainonrevaluationofthegoldpriceoptioncontracts.Pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.


NetearningsForthethreemonthsendedSeptember30,2017netearningswerepositivelyimpactedbyagainonforeignexchangeandhigherrevenues,partiallyoffsetbyhigheroperatingexpensesandahigherincometaxexpense.

PleaseseebelowforareconciliationofnetearningsforthethreemonthsendedSeptember30,2017fromtheprior-yearperiod.

RECONCILIATIONOFNETEARNINGS–Q32016TOQ32017(inmillionsofU.S.dollars)

4

27 (17)

(7)(2) (1)

41 3 (16)

(6)27

(20)

0

20

40

60

Q32016NETEAR

NINGS

REVE

NUES

OPERA

TINGEXPENSES

DEPR

ECIATIONANDDE

PLETION

CORP

ORA

TEADM

INISTR

ATIONAND

SHAR

EBA

SEDPA

YMEN

TEXPENSES

EXPLORA

TIONANDBU

SINESS

DEVE

LOPM

ENT

OTH

ERGAINSAN

DLO

SSES

FINAN

CECOSTS,NETOFFINAN

CE

INCO

ME

INCO

META

XEXPENSE

EARN

INGS

FRO

MDISCO

NTINUED

OPERA

TIONS,NETOFTA

X

Q32017NETEAR

NINGS


FortheninemonthsendedSeptember30,2017netearningswerepositivelyimpactedbyagainonforeignexchange,anincreaseinrevenuelesscostofgoodssold,andareductionoftheunrealizedlossontherevaluationofthegoldstreamobligation.

PleaseseebelowforareconciliationofnetearningsfortheninemonthsendedSeptember30,2017fromtheprior-yearperiod.

RECONCILIATIONOFNETEARNINGS–Q32016YTDTOQ32017YTD(inmillionsofU.S.dollars)

16

29 (23)

(7)(1) (4)

838 (22)

9 88

(20)

0

20

40

60

80

100

120

Q32016YTD

NETEAR

NINGS

REVE

NUES

OPERA

TINGEXPENSES

DEPR

ECIATIONANDDE

PLETION

CORP

ORA

TEADM

INISTR

ATIONAND

SHAR

EBA

SEDPA

YMEN

TEXPENSES

EXPLORA

TIONANDBU

SINESS

DEVE

LOPM

ENT

OTH

ERGAINSAN

DLO

SSES

FINAN

CECOSTS,NETOFFINAN

CE

INCO

ME

INCO

META

XEXPENSE

EARN

INGS

FRO

MDISCO

NTINUED

OPERA

TIONS,NETOFTA

X

Q32017NETEAR

NINGS


AdjustednetearningsThenetearningshavebeenadjusted, includingtheassociatedtax impact, for inventorywrite-downs,asset impairments,gainsonthemodificationoflong-termdebtin“Othergainsandlosses”ontheunauditedcondensedconsolidatedinterimincomestatement.Keyentries inthisgroupingare:thefairvaluechangesforthegoldstreamobligation;sharepurchasewarrantsandthefairvaluechangesforgoldoptioncontracts;foreignexchangegainorloss;andlossondisposalofassets.The adjusted entries are also impacted for tax to the extent that the underlying entries are impacted for tax in theunadjustednetearnings.Pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

PleaseseebelowforareconciliationofadjustednetearningsforthethreemonthsendedSeptember30,2017fromtheprior-yearperiod.

RECONCILIATIONOFADJUSTEDNETEARNINGS–Q32016TOQ32017(inmillionsofU.S.dollars)

12

27 (17)

(7)

(2) (1) (3) (5)4

(10)

0

10

20

30

40

50

Q32016ADJUSTED

NETEAR

NINGS

REVE

NUES

OPERA

TINGEXPENSES

DEPR

ECIATIONANDDE

PLETION

CORP

ORA

TEADM

INISTR

ATIONAND

SHAR

EBA

SEDPA

YMEN

TEXPENSES

EXPLORA

TIONANDBU

SINESS

DEVE

LOPM

ENT

ADJUSTED

INCO

META

XEXPENSE

ADJUSTED

EAR

NINGS

FRO

M

DISCONTINUED

OPERA

TIONS,NETOF

TAX

Q32017ADJUSTED

NETEAR

NINGS


PleaseseebelowforareconciliationofadjustednetearningsfortheninemonthsendedSeptember30,2017fromtheprior-yearperiod.

RECONCILIATIONOFADJUSTEDNET(LOSS)EARNINGS–Q32016YTDTOQ32017YTD(inmillionsofU.S.dollars)

18

29 (23)

(7)(1) (4) 5 (6)

14 26

(20)

0

20

40

60

Q320

16YTD

ADJUSTED

NET

EARN

INGS

REVE

NUES

OPERA

TINGEXPENSES

DEPR

ECIATIONANDDE

PLETION

CORP

ORA

TEADM

INISTR

ATIONAND

SHAR

EBA

SEDPA

YMEN

TEXPENSES

EXPLORA

TIONANDBU

SINESS

DEVE

LOPM

ENT

FINAN

CECOSTS,NETOFFINAN

CE

INCO

MEAN

DGA

INONDEB

TMODIFICA

TION

ADJUSTED

INCO

META

XEXPENSE

ADJUSTED

EAR

NINGS

FRO

M

DISCONTINUED

OPERA

TIONS,NET

OFTA

X

Q320

17YTD

ADJUSTED

NET

EARN

INGS


Key Quarterly Operating and Financial Information Selectedfinancialandoperatinginformationforthecurrentandpreviousquartersisasfollows:

(inmillionsofU.S.dollars,exceptwherenoted)

Q32017

Q22017

Q12017

Q42016

Q32016

Q22016

Q12016

Q42015

Q32015

OPERATINGINFORMATION

Totalgoldproduction

(ounces)(1) 82,027 105,064 89,327 95,883 95,546 99,423 90,811 131,719 122,580Goldproductionfromcontinuingoperations(ounces)(1) 67,653 79,025 60,980 77,026 57,565 68,138 71,215 96,921 101,846

Totalgoldsales(ounces)(1) 79,904 99,235 87,304 93,936 96,452 101,820 86,031 133,005 115,695Goldsalesfromcontinuingoperations(ounces)(1) 67,052 73,707 59,913 75,887 56,038 74,036 68,882 98,315 94,685 Revenue 142.5 143.8 124.5 140.7 125.2 140.1 126.8 155.2 147.5 Earnings(loss)fromcontinuingoperations 29.2 17.8 30.9 (23.3) 0.8 (14.1) 28.5 1.7 (143.6)pershare: Basic($) 0.05 0.03 0.06 (0.05) $nil (0.03) 0.06 $nil (0.28)Diluted($) 0.05 0.03 0.06 (0.05) $nil (0.03) 0.06 $nil (0.28)(Loss)earningsfromdiscontinuedoperations,netoftax (2.2) 5.3 6.6 1.0 3.3 0.2 (2.9) (11.2) (14.2)Netearnings(loss) 27.0 23.1 37.5 (22.3) 4.1 (13.9) 25.6 (9.5) (157.8)pershare: Basic($) 0.05 0.04 0.07 (0.04) 0.01 (0.03) 0.05 (0.02) (0.31)Diluted($) 0.05 0.04 0.07 (0.04) 0.01 (0.03) 0.05 (0.02) (0.31) Adetaileddiscussionofproductionisincludedinthe“OperatingHighlights”sectionofthisMD&A.


In the firstquarterof2017 theCompany identifiedan immaterial error relating todepletionof itsNewAftonmininginterestfortheyearendedDecember31,2016resultinginareductionin2016netearningsof$9.7million.

Thequarterlyimpactonthecomparativecondensedconsolidatedincomestatementisoutlinedinthetablebelow.Theresulting overstatement of the mining interests balance of $15.4 million, overstatement of deferred tax liability of$5.3millionandunderstatementofinventoriestotalling$0.4millionasatDecember31,2016hasalsobeenrevisedinthe comparative condensed consolidated statement of financial position and the associated notes to the unauditedcondensed consolidated interim financial statements. There has been no change to the cash flows from operating,investingandfinancingactivitiesinthecomparativecondensedconsolidatedstatementofcashflow.

1. FortheperiodsinwhichtheCompanyrecordsaloss,dilutedlosspershareiscalculatedusingthebasicweightedaveragenumberofsharesoutstanding,asusingthedilutedweightedaveragenumberofsharesoutstandinginthecalculationwouldbeanti-dilutive.

Threemonths

endedThreemonths

endedThreemonths

endedThreemonths

ended

Yearended

(inmillionsofU.S.dollars)

March31,2016

September30,2016

September30,2016

December31,2016

December31,2016

IMPACTONNETEARNINGS(LOSS) Netearnings(loss)beforerevision 26.8 (8.8) 5.1 (19.9) 2.7

Depreciationanddepletion (3.4) (4.1) (3.4) (4.1) (15.0)

Incometaxrecovery 2.2 (1.0) 2.4 1.7 5.3

Revisiontonetearnings(loss) (1.2) (5.1) (1.0) (2.4) (9.7)

Revisednetearnings(loss) 25.6 (13.9) 4.1 (22.3) (7.0)Basicweightedaveragenumberofsharesoutstanding(inmillions) 509.6 511.2 513.0 513.3 511.8Dilutionofsecurities:

Stockoptions 1.1 - 2.8 - -Dilutedweightedaveragenumberofsharesoutstanding(inmillions) 510.7 511.2 515.8 513.3 511.8Netearnings(loss)persharebeforerevision:

Basic 0.05 (0.02) 0.01 (0.04) 0.01

Diluted(1) 0.05 (0.02) 0.01 (0.04) 0.01

Impactofrevisiontonetearnings(loss)pershare:

Basic - (0.01) - - (0.02)

Diluted(1) - (0.01) - - (0.02)

Revisednetearnings(loss)pershare:

Basic 0.05 (0.03) 0.01 (0.04) (0.01)

Diluted(1) 0.05 (0.03) 0.01 (0.04) (0.01)


REVIEWOFOPERATINGMINESNew Afton Mine, British Columbia, Canada TheNewAftonMineislocatednearKamloops,BritishColumbia.At December 31, 2016, the mine had 1.2 million ounces ofProven and Probable gold Mineral Reserves and 1.0 billionpoundsofProvenandProbable copperMineralReserves,with1.2 million ounces of Measured and Indicated gold MineralResources, exclusive of Mineral Reserves, and 950 millionpounds ofMeasured and Indicated copperMineral Resources,exclusive of Mineral Reserves. A summary of New Afton’soperatingresultsisprovidedbelow.

Threemonthsended


September30(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016

OPERATINGINFORMATION Oremined(thousandsoftonnes) 1,553 1,567 4,596 4,484Oreprocessed(thousandsoftonnes) 1,540 1,468 4,510 4,251Averagegrade: Gold(grams/tonne) 0.55 0.62 0.55 0.66Copper(%) 0.83 0.77 0.82 0.82Recoveryrate(%): Gold 79.6 81.9 79.9 82.2Copper 80.4 85.2 80.8 85.3Gold(ounces): Produced(1) 21,569 23,864 63,779 74,219Sold(1) 20,646 21,247 60,935 72,680Copper(millionsofpounds): Produced(1) 22.8 21.3 66.0 65.8Sold(1) 21.8 19.2 62.5 63.8Silver(millionsofounces): Produced(1) 0.1 0.1 0.2 0.2Sold(1) 0.1 0.1 0.2 0.2Revenue Gold($/ounce) 1,175 1,213 1,172 1,153Copper($/pound) 2.53 1.99 2.40 1.96Silver($/ounce) 14.70 21.00 15.50 17.10Averagerealizedprice(1)(2): Gold($/ounce) 1,292 1,324 1,288 1,264Copper($/pound) 2.78 2.18 2.64 2.15Silver($/ounce) 16.14 22.90 17.07 18.73

AT-A-GLANCE2017GUIDANCE:GOLD:70,000–80,000OUNCESCOPPER:85–95MILLIONPOUNDSOPERATINGEXPENSE/GOLDOZ:$405–$445ALL-INSUSTAININGCOSTS/OZ:($520)–($480)Q3YTD2017PRODUCTION:GOLD:63,779OUNCESCOPPER:66.0MILLIONPOUNDSOPERATINGEXPENSE/GOLDOZ:$430ALL-INSUSTAININGCOSTS/OZ:($505)


Threemonthsended


September30(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016OPERATINGINFORMATION

Operatingexpensespergoldouncesold($/ounce)(4) 407 441 430 415Operatingexpensespercopperpoundsold($/pound)(4) 0.88 0.72 0.88 0.71Totalcashcostspergoldouncesold($/ounce)(2)(3) (1,258) (633) (1,048) (605)All-insustainingcostspergoldouncesold($/ounce)(2)(3) (643) (211) (505) (202)Totalcashcostsonaco-productbasis(2)(3) Gold($/ounce) 524 552 546 526Copper($/pound) 1.13 0.91 1.12 0.90All-insustainingcostsonaco-productbasis(2)(3) Gold($/ounce) 709 719 718 685Copper($/pound) 1.53 1.18 1.47 1.17 FINANCIALINFORMATION Revenue 80.4 65.4 224.7 212.3Operatingmargin(2) 52.4 41.6 142.3 135.8Revenuelesscostofgoodssold(5) 17.3 8.0 38.8 22.8Capitalexpenditures(sustainingcapital)(2) 11.5 8.6 31.0 27.7Capitalexpenditures(growthcapital)(2) 0.5 0.8 2.6 2.81. Productionisshownonatotalcontainedbasiswhilesalesareshownonanetpayablebasis,includingfinalproductinventoryandsmelterpayableadjustments,where

applicable.2. Weusecertainnon-GAAPfinancialperformancemeasuresthroughoutourMD&A.Totalcashcostsandall-insustainingcostspergoldouncesold,totalcashcostsand

all-insustainingcostsonaco-productbasis,averagerealizedprice,operatingmargin,andcapitalexpenditures(sustainingcapitalandgrowthcapital)arenon-GAAPfinancialperformancemeasureswithnostandardmeaningunderIFRS.Forfurtherinformationandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

3. Thecalculationoftotalcashcostspergoldounceisnetofby-productrevenuewhiletotalcashcostsandall-insustainingcostsonaco-productbasisremovestheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcoststoeachmetalproducedonapercentageofrevenuebasis.

4. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.Forfurtherinformationandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

5. Prior-yearperiodcomparativeshavebeenrevised.Pleaserefertothe“KeyQuarterlyOperatingandFinancialInformation”sectionofthisMD&Aforfurtherinformation.

Operatingresults

ProductionFor the threemonths ended September 30, 2017, decrease in gold production at New Afton relative to the prior-yearquarterwasduetoanexpecteddecreaseingoldgradeandgoldrecovery,partiallyoffsetbyanincreaseinmillthroughput.Copperproductionwashigherthantheprior-yearquarterduetohigherthroughputandcoppergrade

FortheninemonthsendedSeptember30,2017,goldproductionwasbelowprior-yearperiodduetoanexpecteddecreaseingoldgradeandgoldrecovery.Copperproductionwasinlinewiththeprior-yearperiod.

RevenueForthethreeandninemonthsendedSeptember30,2017,revenueincreasedcomparedwiththepriorperiodsduetoincreasedcoppersold.

Attheendoftheperiod,NewAfton’sexposuretotheimpactofmovementsinmarketmetalpricesforprovisionallypricedcontracts was 11,866 ounces of gold and 21.2 million pounds of copper. Exposure to these movements in marketmetal prices was reduced by 9,750 ounces of gold swaps and 19.3 million pounds of copper swaps outstanding as atSeptember30,2017,withsettlementperiodsrangingfromOctober2017toDecember2017.


RevenuelesscostofgoodssoldForthethreeandninemonthsendedSeptember30,2017,theincreaseinrevenuelesscostofgoodssoldwasprimarilydrivenbyanincreaseincopperrevenuecomparedwiththeprior-yearperiod.

Operatingexpenses,totalcashcostsandall-insustainingcostspergoldouncesoldFor the three months ended September 30, 2017 operating expense per gold ounce decreased as expenses wereapportionedtoeachmetalonapercentageofrevenuebasiswithgoldrevenuerepresentingalowerportionoftotalsalesin the quarter versus the prior-year quarter. As a result, the operating expense per copper pound increased. All-insustainingcostsdecreasedasthebenefitofhigherby-productrevenueswasonlypartiallyoffsetbyhighersustainingcosts.By-productrevenuesbenefittedfromanincreaseintherealizedcopperpriceandhighercoppersalesvolumes.

FortheninemonthsendedSeptember30,2017operatingexpensesincreasedslightlywhencomparedtotheprioryearduetohigheroretonnesminedandprocessedatlowergrades.All-insustainingcostsdecreasedasthebenefitofhigherby-product revenueswas only partially offset by the increase in operating expenses and sustaining costs. By-productrevenuesbenefittedfromanincreaseintherealizedcopperprice.

CapitalexpendituresInboththecurrentandprior-yearperiods,sustainingcapitalexpenditureswereprimarilyrelatedtominedevelopmentcosts,andgrowthcapitalexpenditureswereprimarilyrelatedtocapitalizedexplorationattheNewAftonC-zone.

ImpactofforeignexchangeonoperationsNewAfton’soperationscontinuetobeimpactedbyfluctuationsinthevaluationoftheU.S.dollaragainsttheCanadiandollar.ForthethreemonthsendedSeptember30,2017,thevalueoftheU.S.dollaraveraged$1.25againsttheCanadiandollar compared to $1.30 in the prior-year period, resulting in a negative impact on total cash costs of $69 per goldouncesold.

For the ninemonths ended September 30, 2017, the value of the U.S. dollar was $1.30 against the Canadian dollarcomparedto$1.32intheprior-year,resultinginanegativeimpactontotalcashcostsof$32pergoldounce.

ExplorationactivitiesDuring the third quarter of 2017, results of a final campaign of infill drilling on the planned C-zone block cavewereincorporated into updated mineral resource and reserve estimates and life-of-mine operational plan. Additionally, asurfacedrillingcampaigntotestseveralsatellite targetswithinthegreatermine leaseareawascompletedduringthequarter,theresultsofwhichwillbeusedtosupportplansforpossiblefollowupworkinthefuture.


Mesquite Mine, California, USA The Company’s Mesquite Mine is located in ImperialCounty,California,approximately70kilometresnorthwestof Yuma, Arizona and 230 kilometres east of San Diego,California. It is an open pit, run-of-mine heap leach goldmining operation. Themine was operated between 1985and 2001 by GoldfieldsMining Corporation, subsequentlySanta Fe Minerals Corporation, and finally NewmontMiningCorporationwithWesternGoldfields Inc.acquiringthemine in 2003. Themine resumedproduction in 2008.New Gold acquired Mesquite as part of the businesscombination with Western Goldfields in mid-2009. AtDecember 31, 2016, themine had 1.2million ounces of Proven and Probable goldMineral Reserves and 1.0millionounces ofMeasured and Indicated goldMineral Resources, exclusive ofMineral Reserves. A summary ofMesquite’soperatingresultsisprovidedbelow.

Threemonthsended



OPERATINGINFORMATION Oreminedandplacedonleachpad(thousandsoftonnes) 5,050 3,700 14,960 13,207Wastemined(thousandsoftonnes) 10,994 13,534 32,205 34,761Ratioofwastetoore 2.18 3.66 2.15 2.63Averagegrade: Gold(grams/tonne) 0.32 0.45 0.34 0.40Gold(ounces): Produced(1)(2) 38,133 18,835 116,720 71,770Sold(1) 38,573 19,434 114,188 75,477Revenue Gold($/ounce) 1,283 1,326 1,276 1,258Averagerealizedprice(3): Gold($/ounce) 1,283 1,326 1,276 1,258Operatingexpensespergoldouncesold($/ounce)(4) 750 624 717 612Totalcashcostspergoldouncesold($/ounce)(3) 750 633 717 622All-insustainingcostspergoldouncesold($/ounce)(3) 866 1,202 809 1,085 FINANCIALINFORMATION Revenue 49.5 25.8 145.7 95.0Operatingmargin(3) 20.6 13.7 63.9 48.8Revenuelesscostofgoodssold 6.9 7.1 22.7 23.4Capitalexpenditures(sustainingcapital)(3) 4.0 10.4 8.9 33.71. Productionisshownonatotalcontainedbasiswhilesalesareshownonanetpayablebasis,includingfinalproductinventory,whereapplicable.2. Tonnesoforeprocessedeachperioddoesnotnecessarilycorrespondtoouncesproducedduringtheperiod,asthereisatimedelaybetweenplacingtonnesontheleach

padandpouringgoldounces.3. Weusecertainnon-GAAPfinancialperformancemeasuresthroughoutourMD&A.Totalcashcostsandall-insustainingcostspergoldouncesold,averagerealizedprice,

operating margin and capital expenditures (sustaining capital) are non-GAAP financial performance measures with no standard meaning under IFRS. For furtherinformationandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.


AT-A-GLANCE2017GUIDANCE:GOLD:140,000–150,000OUNCESOPERATINGEXPENSES/OZ:$675–$715ALL-INSUSTAININGCOSTS/OZ:$805–$845Q3YTD2017PRODUCTION:GOLD:116,720OUNCESOPERATINGEXPENSES/OZ:$717ALL-INSUSTAININGCOSTS/OZ:$809


Operatingresults

ProductionForthethreeandninemonthsendedSeptember30,2017,theincreaseingoldproductionatMesquiterelativetotheprior-yearperiodswasduetohigheroretonnesminedandplaced,andanincreaseofprocesssolutionflowontheheapleachpad,whichresultedinadrawdownofleachpadinventory.

RevenueForthethreeandninemonthsendedSeptember30,2017,theincreaseinrevenuewasattributabletohighergoldsalesvolumes.

RevenuelesscostofgoodssoldForthethreeandninemonthsendedSeptember30,2017,revenuelesscostofgoodssoldwasconsistentwiththeprior-year period. The increase in revenue described abovewas offset by higher operating expenses and depreciation anddepletioncomparedtotheprior-yearperiod.

Operatingexpenses,totalcashcostsandall-insustainingcostspergoldouncesoldForthethreemonthsendedSeptember30,2017operatingexpensesincreasedwhencomparedtotheprior-yearperiodduetoincreasedoretonnesminedandprocessed,nominingcostsbeingcapitalized,andhigherprocesssolutionflow.All-insustainingcostsduringthequarterdecreasedduetoa$7millionor$452perouncedecreaseinsustainingcostsprimarilyduetonowastestrippingbeingcapitalized,thebenefitofwhichwasonlypartiallyoffsetbyhigheroperatingexpenses.

FortheninemonthsendedSeptember30,2017,operatingexpenses increasedwhencomparedtotheprioryearduetohigheroretonnesminedresultingfromhigherprocesssolutionflow.All-insustainingcostsdecreasedduetoa$24millionor $371 per ounce decrease in sustaining costs primarily due to no waste stripping being capitalized, which was onlypartiallyoffsetbyhigheroperatingexpenses.

CapitalexpendituresForthethreeandninemonthsendedSeptember30,2017,thedecrease incapitalexpenditureswasaresultofwastestrippingexpendituresbeingcapitalizedintheprior-yearperiod.


Cerro San Pedro Mine, San Luis Potosí, México The Cerro San Pedro Mine is located in the state ofSan Luis Potosí in central Mexico, approximately20 kilometres east of the city of San Luis Potosí. Themineisagold-silver,openpit,run-of-mineheapleachoperation.CerroSanPedrofinishedactivemininglatein the second quarter of 2016 and has nowtransitioned into residual leaching. A summary ofCerroSanPedro’soperatingresultsisprovidedbelow:

Threemonthsended


September30(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016OPERATINGINFORMATION Gold(ounces) Produced(1)(2) 7,951 14,866 27,160 50,929Sold(1) 7,833 15,357 25,549 50,798Silver(millionsofounces) Produced(1)(2) 0.1 0.2 0.5 0.7Sold(1) 0.1 0.2 0.5 0.7Revenue Gold($/ounce) 1,285 1,325 1,278 1,249Silver($/ounce) 16.80 19.40 17.10 16.70Averagerealizedprice(3): Gold($/ounce) 1,285 1,325 1,278 1,249Silver($/ounce) 17.00 19.39 17.00 16.73Operatingexpensespergoldouncesold($/ounce)(5) 1,388 976 1,260 977Operatingexpensespersilverouncesold($/ounce)(5) 18.10 14.28 16.86 13.09Totalcashcostspergoldouncesold($/ounce)(3)(4) 1,370 897 1,219 911All-insustainingcostspergoldouncesold($/ounce)(3)(4) 1,532 912 1,389 936Totalcashcostsonaco-productbasis(2)(3) Gold($/ounce) 1,354 964 1,230 963Silver($/ounce) 17.65 14.11 16.47 12.89All-insustainingcostsonaco-productbasis(2)(3) Gold($/ounce) 1,484 976 1,367 984Silver($/ounce) 19.35 14.29 18.31 13.18 FINANCIALINFORMATION Revenue 12.6 24.0 40.5 74.8Operatingmargin(3) (0.8) 6.2 0.7 16.2Revenuelesscostofgoodssold (2.7) 3.1 (4.4) 11.6Capitalexpenditures(sustainingcapital)(3) - 0.1 0.7 0.81. Productionisshownonatotalcontainedbasiswhilesalesareshownonanetpayablebasis,includingfinalproductinventoryadjustments,whereapplicable.2. Tonnesoforeprocessedeachperioddoesnotnecessarilycorrespondtoouncesproducedduringtheperiod,asthereisatimedelaybetweenplacingtonnesontheleach

padandpouringgoldounces.3. Weusecertainnon-GAAPfinancialperformancemeasuresthroughoutourMD&A.Totalcashcostsandall-insustainingcostspergoldouncesold,totalcashcostsandall-

in sustainingcostsonaco-productbasis,average realizedprice,operatingmarginandcapitalexpenditures (sustainingandgrowth)arenon-GAAP financialperformancemeasureswithno standardmeaningunder IFRS. For further informationandadetailed reconciliation,please refer to the “Non-GAAPPerformanceMeasures” sectionofthisMD&A.

4. Thecalculationoftotalcashcostspergoldouncesoldandall-insustainingcostspergoldouncesoldisnetofby-productsilverrevenue.Totalcashcostsandall-insustainingcostsonaco-productbasisremovestheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcoststoeachmetalproducedonapercentageofrevenuebasis.


AT-A-GLANCE2017GUIDANCE:GOLD:35,000–45,000OUNCESOPERATINGEXPENSES/GOLDOZ:$1,080–$1,120ALL-INSUSTAININGCOSTS/OZ:$1,090–$1,130Q3YTD2017PRODUCTION:GOLD:27,160OUNCESOPERATINGEXPENSES/GOLDOZ:$1,203ALL-INSUSTAININGCOSTS/OZ:$1,316


Operatingresults

Production

CerroSanPedrofinishedactivemininglateinthesecondquarterof2016andhastransitionedtoresidualleaching.Asaresult, and consistent with expectations, for the three and nine months ended September 30, 2017 gold and silverproductiondecreasedcomparedtotheprior-yearperiods.

RevenueForthethreeandninemonthsendedSeptember30,2017,thedecreaseinrevenuewasattributabletothedecreaseinmetalsalesvolumesasCerroSanPedrohasenteredintotheresidualleachperiod.

RevenuelesscostofgoodssoldForthethreeandninemonthsendedSeptember30,2017,thedecreaseinrevenuelesscostofgoodssoldwasprimarilyattributabletothedecreaseinrevenuedescribedabove,partiallyoffsetbyloweroperatingexpenses.

Operatingexpenses,totalcashcostsandall-insustainingcostsForthethreeandninemonthsendedSeptember30,2017,operatingexpensesandall-insustainingcostsincreasedwhencomparedtotheprior-yearperiodsduetolowergoldsalesvolumes.AstheCompanyisdrawingdownleachpadinventoryduringtheresidualleachperiod,$355perounceinthethirdquarter,and$320perounceinthefirstninemonths,ofthereportedoperatingexpenseper goldounceand all-in sustaining costs are related tomining costs thatwere incurred inpriorperiods.

ImpactofForeignExchangeonOperationsCerroSanPedrowasimpactedbychangesinthevalueoftheMexicanpesoagainsttheU.S.dollar.Forthethreemonthsended September 30, 2017, the value of the Mexican peso averaged MXN17.8 against the U.S. dollar compared toMXN18.7intheprior-yearperiod.Thishadanegativeimpactontotalcashcostsof$21pergoldouncesold.

FortheninemonthsendedSeptember30,2017,thevalueoftheMexicanpesoaveragedMXN18.9againsttheU.S.dollarcomparedtoMXN18.3intheprior-yearperiod.Thishadapositiveimpactontotalcashcostsof$12pergoldouncesold.


DISCONTINUEDOPERATIONSIn July 2017, the Company began a process for the sale of PeakMines, its gold-coppermine located in Australia. TheCompany expects a sale within the next 12 months and upon commencement of the process met the criteria as adiscontinuedoperationunderIFRS5.ThetransactionisexpectedtoprovidetheCompanywiththeopportunitytoenhanceliquidityanddevelopandgrowitscoreassets.

ForthethreeandninemonthsendedSeptember30,2017,thenetearningsfromPeakMinesisreportedasearningsfromdiscontinuedoperations.Totalassetsand liabilitiesofPeakMines (excludinganyassetsand liabilitieswhichdonot formpart of the net assets being sold) are reported as assets and liabilities of discontinued operations, respectively, as atSeptember30,2017withoutrestatementoftheprior-yearperiodcomparativeamounts.

ThenetearningsfromPeakMinesforthethreeandninemonthsendedSeptember30,2017areasfollows:

ThreemonthsendedSeptember30 NinemonthsendedSeptember30

(inmillionsofU.S.dollars,exceptpershareamounts) 2017 2016 2017 2016Revenues 26.0 63.5 112.8 131.4Operatingexpenses 22.8 30.8 66.7 69.8


Revenuelesscostofgoodssold (0.3) 4.6 20.6 5.8


(Loss)earningsfromoperations (2.0) 3.6 15.7 1.2

Financecosts (0.2) (0.2) (0.6) (0.5)

Other(losses)gains (0.7) 1.7 (1.6) 1.5

(Loss)earningsbeforetaxes (2.9) 5.1 13.5 2.2Incometax(recovery)expense 0.7 (1.8) (3.8) (1.6)(Loss)earningsfromdiscontinuedoperations

(2.2) 3.3 9.7 0.61. DepreciationanddepletionrelatestothePeakMinespriortoreclassificationasadiscontinuedoperation.


Peak Mines, New South Wales, Australia TheCompany’sPeakMinesgold-copperminingoperationis an underground mine/mill operation located in theCobar Mineral Field near Cobar, New South Wales,Australia. At December 31, 2016, the mine had251,000 ounces of Proven and Probable gold MineralReserves and 80million pounds of Proven and Probablecopper Mineral Reserves, with 378,000 ounces ofMeasured and Indicated gold Mineral Resources,exclusiveofMineralReserves,and171millionpoundsofMeasured and Indicated copper Mineral Resources,exclusiveofMineralReserves.Duringthethirdquarterof2017, theCompanybeganaprocess for the saleof thePeakMinesandexpects the saleof theassetwithin thenexttwelvemonths.Accordingly, PeakMineshasbeen classified as adiscontinuedoperation. A summaryof PeakMines’operatingresultsisprovidedbelow:

Threemonthsended



OPERATINGINFORMATION Oremined(thousandsoftonnes) 134 175 408 536Oreprocessed(thousandsoftonnes) 143 219 468 545Averagegrade: Gold(grams/tonne) 3.04 5.46 5.00 5.40Copper(%) 1.17 0.99 1.00 1.00Recoveryrate(%): Gold 94.8 92.5 93.0 93.6Copper 84.3 88.8 89.0 89.8Gold(ounces): Produced(1) 14,374 37,981 68,760 88,862Sold(1) 12,852 40,414 65,771 85,347Copper(millionsofpounds): Produced(1) 3.2 4.2 10.2 10.8Sold(1) 2.7 5.0 9.1 10.7Revenue Gold($/ounce) 1,288 1,297 1,276 1,265Copper($/pound) 2.58 2.07 2.45 2.02Averagerealizedprice(2): Gold($/ounce) 1,310 1,332 1,298 1,296Copper($/pound) 2.96 2.15 2.74 2.16Totalcashcostspergoldouncesold(2)(3) 1,043 522 600 575All-insustainingcostspergoldouncesold(2)(3) 1,739 632 988 736Totalcashcostsonaco-productbasis(2)(3) Gold($/ounce) 1,182 662 794 699Copper($/pound) 2.99 1.09 1.92 1.24All-insustainingcostsonaco-productbasis(2)(3) Gold($/ounce) 1,642 753 1,089 830Copper($/pound) 4.03 1.24 2.54 1.46

AT-A-GLANCE2017GUIDANCE:GOLD:85,000–95,000OUNCESCOPPER:~15MILLIONPOUNDSALL-INSUSTAININGCOSTS/OZ:$975–$1,015Q3YTD2017PRODUCTION:GOLD:68,760OUNCESCOPPER:10.2MILLIONPOUNDSALL-INSUSTAININGCOSTS/OZ:$988


Threemonthsended



FINANCIALINFORMATION Revenue 26.0 63.5 112.8 131.4Operatingmargin(2) 3.2 32.7 46.1 61.6Revenuelesscostofgoodssold (0.3) 4.6 20.6 5.8Capitalexpenditures(sustainingcapital)(2) 7.1 3.1 20.0 8.0Capitalexpenditures(growthcapital)(2) 0.6 - 1.6 -1. Productionisshownonatotalcontainedbasiswhilesalesareshownonanetpayablebasis,includingfinalproductinventoryandsmelterpayableadjustments,where

applicable.2. Weusecertainnon-GAAPfinancialperformancemeasuresthroughoutourMD&A.Totalcashcostsandall-insustainingcostspergoldouncesold,totalcashcostsand

all-insustainingcostsonaco-productbasis,averagerealizedprice,operatingmarginandcapitalexpenditures(sustainingcapital)arenon-GAAPfinancialperformancemeasureswithnostandardmeaningunderIFRS.Forfurtherinformationandadetailedreconciliation,pleaserefertothe“Non-GAAPFinancialPerformanceMeasures”sectionofthisMD&A.

3. Thecalculationoftotalcashcostspergoldounceisnetofby-productcopperrevenue.Totalcashcostsandall-insustainingcostsonaco-productbasisremovestheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcoststoeachmetalproducedonapercentageofrevenuebasis.


Operatingresults

ProductionForthethreemonthsendedSeptember30,2017,thedecreaseingoldproductionatPeakMinesrelativetotheprior-yearperiodwasduetoanexpecteddecreaseingoldgradeandtonnesprocessed.Copperproductiondecreasedcomparedtotheprior-yearperiodduetoanexpecteddecreaseincopperrecoveriesandtonnesprocessed.

FortheninemonthsendedSeptember30,2017goldproductiondecreasedrelativetotheprior-yearperiodduetoanexpecteddecreaseingoldgradeandtonnesprocessed.

RevenueFor thethreeandninemonthsendedSeptember30,2017, thedecrease inrevenuewasattributable toadecrease insalesvolumes.

RevenuelesscostofgoodssoldForthethreemonthsendedSeptember30,2017thedecreaseinrevenuelesscostofgoodssoldcomparedwiththeprior-yearquarterwasduetolowergoldandcoppersalesasaresultoflowerproduction.

FortheninemonthsendedSeptember30,2017,theincreaseinrevenuelesscostofgoodssoldwasprimarilyattributablehighergoldandcopperpricesand lowerdepreciationanddepletion in the thirdquarteras theminewasclassifiedasadiscontinuedoperationduringthethirdquarterof2017.

Operatingexpenses,totalcashcostsandall-insustainingcostsAs the Peak Mines has been classified as a discontinued operation and is presented separately on the condensedconsolidatedincomestatementforthethreeandninemonthsendedSeptember30,2017,theasset’soperatingexpensesperounceofgoldsoldisnolongerdisclosed.

ForthethreemonthsendedSeptember30,2017,all-insustainingcostsincreasedduetoanincreaseinsustainingcostsandlowergoldsalesvolumes.FortheninemonthsendedSeptember30,2017all-insustainingcostsincreased,primarilyduetolowergoldsalesvolumes.


CapitalexpendituresForthethreeandninemonthsendedSeptember30,2017,theincreaseincapitalexpenditureswasaresultofincreasesin capital development and increased capitalized exploration activities. Capital development is related to mine andinfrastructuredevelopment.

ImpactofForeignExchangeonOperationsPeakMines’operationscontinuetobe impactedby fluctuations in thevaluationof theU.S.dollaragainst theAustraliandollar.ForthethreemonthsendedSeptember30,2017,thevalueoftheU.S.dollaraveraged$1.27againsttheAustraliandollarcomparedto$1.32intheprior-yearperiod,resultinginanegativeimpactontotalcashcostsof$71pergoldounce.FortheninemonthsendedSeptember30,2017,thevalueoftheU.S.dollaraveraged$1.30againsttheAustraliandollarcomparedto$1.35intheprior-yearperiod,resultinginanegativeimpactontotalcashcostsof$32pergoldouncesold.

ExplorationActivitiesDuring the third quarter of 2017, exploration at the Company’s Peak Mines operation focused on the delineation ofadditionalgoldresourcesextending fromthePerseveranceZoneDdepositandconversionofcopperandgoldresourcesattheJubileedepositthatsitsadjacenttotheNewCobarmine.Additionally,thesurfacedrillingandreconnaissanceworkto testprospective targets identifiedalongthePeakMineCorridorandgreater regional tenementholdingscontinuedtoreturnencouragingresultsthatmeritfurtherfollowupgoingforwardinto2018.

PeaksalesprocessTheCompanyhas initiatedaprocess todivest thePeakMines, located inNewSouthWales,Australia. The saleofPeakMineswill furtherenable theCompany to focuson itsAmerica’s centricportfolioofoperatingmininganddevelopmentprojectswhileofferingaprospectivebuyeranopportunitytofullyleveragePeak’sstrongtrackrecordofperformance,andunlockitslongertermpotential.


DEVELOPMENTANDEXPLORATIONREVIEWRainy River Project, Ontario, Canada RainyRiver isagoldproject locatedapproximately50kilometresnorthwestofFortFrances,atownofapproximately8,000people,innorthwesternOntario,Canada.Theprojectpropertyis locatednearinfrastructureandiscomprisedofapproximately192squarekilometresoffreeholdandleaseholdpatentedsurfacerightsandminingrights,propertiesandunpatentedminingclaims.

Rainy River enhances New Gold’s growth pipeline through itssignificantproductionscaleandexcitinglonger-termexplorationpotentialinagreatminingjurisdiction.

Projectadvancement

Asplanned,NewGold’sRainyRiverminecommencedprocessingoreonSeptember14,2017andsubsequentlyannouncedits first gold pour on October 6, 2017. Commercial production was achieved mid-October, 2017. From an accountingperspective, the Company recognizes commercial production effective November 1, 2017. The capital cost estimateremainsinlinewithNewGold’supdatedplanannouncedonJanuary30,2017.

Miningactivities atRainyRiverprogressedwell during the thirdquarter. TheCompany’smining rateduring thequarteraveragedapproximately130,000tonnesperday,whichwasin linewithNewGold’splan.Thisrepresentsa13%increasecomparedtotheaverageminingrateof115,000tonnesperdayinthesecondquarterof2017andmoreimportantly,theminingrateinOctobertodatehasaveragedapproximately140,000tonnesperday.

Installation of mechanical, piping, electrical and instrumentation in processing facilities has been fully completed, withstart-upoftheprocessplantsuccessfullyachievedonSeptember14,2017.Allconstructionrelatedactivityintheprocessplantiscomplete.

Overallearthworksareover98%completeandaretracking in linewithNewGold’splan.Thestart-upcellofthetailingsmanagement area has been fully completed. Based on its location and scale, the start-up cell provides capacity forapproximatelysixmonthsofproductiontailingswiththemilloperatingatfullcapacity.

AT-A-GLANCEASATDECEMBER31,2016

2017GUIDANCE:GOLD:50,000–60,000OUNCESOPERATINGEXPENSES/OZ:$935–$975ALL-INSUSTAININGCOSTS/OZ:$1,400–$1,440PROVENANDPROBABLERESERVES:GOLD:3.9MILLIONOUNCESSILVER:10.0MILLIONOUNCES

RAINYRIVER–Q32017KEYPROJECTUPDATES§ RainyRiversuccessfullyachievedstart-uponSeptember14,2017withthefirstgoldpour§ announcedonOctober6,2017§ Commercialproductionachievedaheadofscheduleinmid-October§ Projectspendingduringthethirdquartertotalled$130million,withestimatedremainingdevelopmentcapital

in 2017 of approximately $100 million, which includes project working capital to be paid post commercialproduction

§ AmendmenttoSchedule2oftheMetalMiningEffluentRegulationsrequiredtoclosetwosmallcreeksanddeposittailings,becameeffectiveonSeptember27,2017

§ Miningrateduringthequarteraveragedapproximately130,000tonnesperday§ Miningrateaveragedapproximately135,000tonnesperdayinthemonthofOctober§ Constructionoftheprocessplantisfullycomplete§ Overallearthworkssubstantiallycomplete


PermittingactivitiesTheamendment toSchedule2of theMetalMiningEffluentRegulations required to close twosmall creeksanddeposittailingsbecameeffectiveonSeptember27,2017.Inaddition,NewGoldhasfinalizedtheengineeringdesigntoconstructthecreekclosuresusingsheetpileatthecentreoftheportionofthedamwhichwillcoverthecreeks.Thepurposeofthisapproach isboth to reduce theconstruction timeand,most importantly, tobeable tocomplete thework regardlessofweatherconditions.NewGoldmetwiththeOntarioMinistryofNaturalResourcesandForestrytoreviewthedesignandthepermitamendmentandsupportofthedesignwasreceivedinthethirdquarterof2017.ExplorationDuring the third quarter of 2017, results of drilling completed earlier this yearwere incorporated into updatedmineralresourceandreserveestimatesandthelife-of-mineoperationalplan.Additionally,anairbornereconnaissancegeophysicalsurveywas conducted over portions of the Company’s regionalmineral tenements to evaluate less explored areas thatmaybeconsideredprospectiveformoredetailedfollowupinthefuture.

EnvironmentalandcommunityactivitiesNewGoldhasentered intoParticipationAgreementsor ImpactBenefitAgreementswith theNaicatcheweninandRainyRiverFirstNations,BigGrassyFirstNation,NaotkamegwanningFirstNation, fourofthecommunitiesoftheFortFrancesChiefsSecretariatandtheMétísNationofOntario.TheParticipationAgreementsandImpactBenefitAgreementsprovideforhowtheFirstNationandMétiscommunitieswillbenefitfromthedevelopmentofRainyRiverandthroughoutthelifeof themine. NewGold continues tomeetwith other local Indigenous communities aswell. NewGold also sends outregular newsletters onRainyRiver to all communities in theRainyRiverDistrict andparts of the KenoraDistrict.Otherengagementactivitiesincludecommunityvisits,publicsitetour,communicationandtourswithneighboursthatarecloseto the project area and regular communication with the local municipality. New Gold continues to engage localcommunitiesinkeyareasofemployment,contractingandprocurementwheneverpossible.

ProjectcostsandoutlookProjectspendingatRainyRiverduringthethreeandninemonthsendedSeptember30,2017totalled$129.5millionand$415.3 million with estimated remaining development capital of approximately $100 million, which includes projectworkingcapitaltobepaidpostcommercialproduction.

Blackwater Project, British Columbia, Canada Blackwater is a bulk-tonnage gold-silver project locatedapproximately160kilometressouthwestofPrinceGeorge,acityof approximately 80,000 people, in central British Columbia,Canada. The project property position covers over 1,000 squarekilometresandislocatednearinfrastructure.

ExplorationDuring the thirdquarterof2017,a reconnaissancemappingandsampling survey was conducted over the 445 km2 of mineralclaims recently acquired from Parlane Resource Corp. and RJKExplorations Ltd. Results of this survey will be used to supportpossibleplansforfollowupexplorationduring2018.ExplorationactivityatBlackwaterremainedotherwisesuspendedwhiletheCompanymaintaineditsfocusondevelopmentandcommercialstart-upatRainyRiver.


PROVENANDPROBABLERESERVES:GOLD:8.2MILLIONOUNCESSILVER:60.8MILLIONOUNCESMEASUREDANDINDICATEDRESOURCES:(exclusiveofReserves)

GOLD:1.3MILLIONOUNCESSILVER:8.2MILLIONOUNCES


EnvironmentalandpermittingactivitiesThefollowingenvironmentalandpermittingrelatedactivitiesoccurredatBlackwaterduringthethirdquarterof2017:

• The Provincial and Federal environmental assessment technical review stage continued, with approvalsanticipatedinearly2018.

• Continuedkeyengineeringstudiesforadvancementofpost-environmentalassessmentapprovalpermits.• ContinueddiscussionswithkeyFirstNationsonParticipationAgreements.• Continuedprojectoptimizationstudies.

ProjectcostsandoutlookForthethreemonthsendedSeptember30,2017,capitalexpenditurestotalled$4.6million,comparedwith$2.7millionin the prior-year quarter. Expenditures in the current period related to the acquisition of mineral claims, continuedadvancementoftheenvironmentalassessmentprocessincludingworktoresolveremainingregulatoryandFirstNationscommentsandrelatedenvironmentalandengineeringstudies,aswellasdiscussionswithFirstNationsonParticipationAgreements.

Blackwater’s 2017 non-sustaining capital expenditures related to the continued advancement of the EnvironmentalAssessmentprocessareexpectedtobeapproximately$10million,whichisinadditiontomineralclaimsacquiredduringtheyearof$2.8million.

New Afton C-zone, British Columbia, Canada TheC-zone is thedownplungeextensionoftheB-zoneblockcavecurrentlybeingminedatNewAfton. In2016,NewGoldcompletedafeasibilitystudywhichconfirmedtheviabilityandpositive economics for the C-zone deposit. The feasibilitystudy relates to the C-zone Mineral Reserves which havedemonstrated economic viability at the New Afton propertyand is not part of, and should be distinguished from, thecurrentminingoftheB-zonereserves.Workcompletedin2016includedadditionalexplorationdrilling,mineoptimizationsandplanningreviews,anddevelopmentofaProject ImplementationPlan.Thedetailedresults fromthe feasibilitystudycanbefoundintheCompany’sManagement’sDiscussionandAnalysisfortheyearendedDecember31,2015.

Projectupdateandcosts

During the thirdquarterof2017,workon theC-zone focusedon tailingsmanagementoptimization studies. Thepermitapplication to commence decline development was submitted to the Stk’emlupemc te Secwepemc Nation in the thirdquarterof2017foradvancereviewasrequiredundertheParticipationAgreement. Miningstudiestoadvancedesignofthe conveyor systemwere initiatedduring the thirdquarterof2017aswell as studies toevaluate sub-level cavingasaminingmethodforthedeposit.Workonanupdatedblockmodelbasedon2017drillingresultswascompletedinthethirdquarterof2017andthemodel iscurrentlybeingevaluated.For the threeandninemonthsendedSeptember30,2017,projectcapitalexpenditurestotalled$0.5millionand$2.6millionrespectively.

ExplorationactivitiesDuring the third quarter of 2017, results of a final campaign of infill drilling on the planned C-zone block cave wereincorporatedintoupdatedmineralresourceandreserveestimatesandlife-of-mineoperationalplan.Additionallyasurfacedrillingcampaigntotestseveralsatellitetargetswithinthegreatermineleaseareawascompletedduringthequarter,theresultsofwhichwillbeusedtosupportplansforpossiblefollowupworkinthefuture.


MEASUREDANDINDICATEDRESOURCES:(includedinNewAftonMeasuredandIndicatedResources)

GOLD:483,000OUNCESCOPPER:385MILLIONPOUNDS


FINANCIALCONDITIONREVIEWBalance Sheet Review

AsatSeptember30 AsatDecember31

(inmillionsofU.S.dollars) 2017 2016

BALANCESHEETINFORMATION Cashandcashequivalents 207.1 185.9Othercurrentassets 198.7 224.1Non-currentassets 3,769.7 3,523.0Assetsheldforsale 145.7 -Totalassets 4,321.2 3,933.0 Currentliabilities 177.9 175.4Non-currentliabilitiesexcludinglong-termdebt 763.7 794.9Long-termdebt 977.0 889.5Liabilitiesheldforsale 69.1 -Totalliabilities 1,987.7 1,859.8Totalequity 2,333.5 2,073.2Totalliabilitiesandequity 4,321.2 3,933.0

AssetsTheincreaseintotalassetsisprimarilyattributabletogrowthcapitalexpendituresatRainyRiver.

CashandcashequivalentsTheincreaseincashandcashequivalentswasprimarilydrivenbytheCompany’sboughtdealfinancingofcommonsharesresultinginnetproceedsof$165.7million,thesaleoftheElMorrostreamfor$65.0million,drawdownof$100.0millionfromtheCompany’srevolvingcreditfacilityinAugust2017andtheCompany’soperatingcashflowsgeneratedduringthecurrentperiod.ThiswaspartiallyoffsetbygrowthcapitalexpendituresatRainyRiver,as$416.0millionwasspentduringtheninemonthsendedSeptember30,2017,othercapitalexpenditureandfinancingpayments.Pleaseseethe“CorporateDevelopments”sectionofthisMD&AforfurtherinformationontheCompany’sboughtdealfinancingofcommonsharesandthesaleoftheElMorrostream.

OthercurrentassetsOthercurrentassetsprimarilyconsistoftradeandotherreceivables,inventoriesandprepaidexpenses.Thedecreaseinothercurrentassetsisprimarilyattributabletoadecreaseintradeandotherreceivables.

Non-currentassetsNon-current assets primarily consist of mining interests which include the Company’s mining properties, developmentprojectsandproperty,plantandequipment.Theincreaseinnon-currentassetsisprimarilyattributabletotheCompany’sinvestments in itsmining interests lessdepreciationanddepletion.For theninemonthsendedSeptember30,2017, theCompanyspent$490.1million,primarilyfocusedoncontinuedprojectadvancementatRainyRiver,andsustainingcapitalexpendituresattheCompany’soperatingsites.

Liabilities

CurrentliabilitiesAsatSeptember30,2017,currentliabilitiesincreasedcomparedtotheprioryearasaportionofthegoldstreamobligationbecamecurrent.Currentliabilitiesprimarilyconsistoftradeandotherpayables.


Non-currentliabilitiesexcludinglong-termdebtNon-currentliabilitiesconsistprimarilyofreclamationandclosurecostobligations,thegoldstreamobligation,long-termdebtanddeferredtaxliabilities.

TheCompany’sassetretirementobligationsconsistofreclamationandclosurecostsforNewAfton,Mesquite,PeakMines,Cerro San Pedro, Blackwater, and Rainy River. Significant reclamation and closure activities include land rehabilitation,demolitionofbuildingsandminefacilities,ongoingmonitoringandothercosts.

Thelong-termdiscountedportionoftheliabilityasatSeptember30,2017was$121.3millioncomparedto$81.0millionas atDecember 31, 2016. For theninemonths ended September30, 2017, theCompanyupdated the reclamation andclosure cost obligations for each of its mine sites. The impact of these assessments was an increase to the long-termdiscounted value of the liability primarily related toNewAfton, Rainy River andMesquite. NewAfton’s increasewas aresultofanacquisitionofahistoricaltailingsfacilityadjacenttothesite,andadecreaseinthediscountrate.Keydriversof the Rainy River liability increase include advancement of the processing plant site area, construction of tailingsmanagement area, placement ofmine rock and other additional obligations related to significant project advancementachievedduringtheperiodastheprojectcontinuedtoadvancetocommercialproduction.TheCompanyintendstospend$0.6millioninthenextyearonreclamationactivities,andtheremainderinfutureperiods.

The net deferred income tax liability decreased from $230.3 million at December 31, 2016 to $151.8 million atSeptember 30, 2017. The decrease is mainly driven by the impact of discontinued operations and foreign exchangemovementsonthedeferredtaxrelatedtonon-monetaryassetsandliabilities.FortheninemonthsendedSeptember30,2017, the Company recorded a foreign exchange gain of $52.8million on non-monetary assets and liabilities. Thiswasprimarily due to the deferred tax liabilities being denominated in currencies other than the U.S. dollar and has notaximpact.

Long-termdebtandotherfinancialliabilitiescontainingfinancialcovenantsThemajorityoftheCompany’scontractualobligationsconsistoflong-termdebtandinterestpayable.Long-termdebtasatSeptember30,2017includesseniorunsecurednotesandtheamountsdrawnontheCompany’srevolvingcreditfacility.

In2015theCompanyenteredintoa$175millionstreamingtransactionwithRGLDGoldAG,awholly-ownedsubsidiaryofRoyalGold Inc. (“RoyalGold”). TheCompanyhasdesignated thegold streamobligationas a financial liabilityunder thescopeofIFRS9.Accordingly,theCompanyvaluestheliabilityatthepresentvalueofitsexpectedfuturecashflowsattheend of each reporting period, with the changes in fair value reflected in the consolidated income statements and theconsolidated statements of comprehensive income. The gold stream obligation contains a maximum leverage ratiocovenant(netdebttoearningsbeforeinterest,taxes,depreciation,amortization,exploration,impairmentandothernon-cashadjustments“AdjustedEBITDA”)of3.5:1.0,withtheexceptionthatthenetleveragecovenantlimitmayincreaseto4.0:1.0fortwoconsecutivequarters,providedthatitthereafterreturnstoamaximumof3.5:1.0.However,inordertoprovideadditional flexibility,RoyalGoldhasagreedtoadjustthis leverageratiotomatchtherevisedmaximumleverageratioundertherevolvingcreditfacilityforthequartersendingMarch31,2018.

OnNovember15,2012, theCompany issued$500.0millionof seniorunsecurednotes (“2022UnsecuredNotes”).AsatSeptember30,2017thefacevaluewas$500.0million.The2022UnsecuredNotesaredenominatedinU.S.dollars,matureandbecomedueandpayableonNovember15,2022,andbearinterestattherateof6.25%perannum.Interestispayableinarrearsinequalsemi-annualinstalmentsonMay15andNovember15ofeachyear.

OnMay18,2017,theCompanyissued$300.0millionofseniorunsecurednotes(“2025UnsecuredNotes”)fornetcashproceeds of $295.1million after a banker’s fee and other transaction costs. The proceedswere used to redeem and


purchaseforcancellationthe$300.0millionprincipalamountofthepreviouslyoutstandingseniorunsecurednotes(“2020UnsecuredNotes”) forwhichtheCompanywasrequiredtopayaredemptionpremiumof$5.3million.Asaresult, totalcostspaid relating to this refinancingwere$10.2million.Additionally, theCompanywas required topay$2.8millionofaccruedinterestonthe2020UnsecuredNotesonredemptionandcancellation.

The2025UnsecuredNotesbear interest at the rateof 6.375%per annum. Interest is payable in arrears in equal semi-annualinstallmentsonMay15andNovember15ofeachyear.AsatSeptember30,2017thefacevaluewas$300.0million.

The2022and2025UnsecuredNotesaresubjecttoaminimuminterestcoverageincurrencecovenant(earningsbeforeinteresttaxesdepreciation,amortization,impairmentandothernon-cashadjustmentstointerest)of2.0:1.0.Thetestisapplied on a pro-forma basis prior to the Company incurring additional debt, entering into business combinations oracquiringsignificantassets,orcertainothercorporateactions.

InJune2017,theCompanyamendedits$400.0millionrevolvingcreditfacility(the“CreditFacility”)toextendthematuritydateoftheagreementbyoneyeartoAugust2020.

Net debt is used to calculate leverage for the purpose of covenant tests and pricing levels. The Credit Facility containsvariouscovenantscustomaryfora loanfacilityofthisnature, including limitson indebtedness,assetsalesand liens.TheCredit Facility contains two covenant tests, the minimum interest coverage ratio, earnings before interest, taxes,depreciation,amortization,exploration,impairment,andothernon-cashadjustments(“AdjustedEBITDA”)tointerestandthemaximumleverageratio(netdebttoAdjustedEBITDA),bothofwhicharemeasuredonarollingfour-quarterbasisattheendofeveryquarter.

In June 2017, the Company amended the Credit Facility’sNetDebt toAdjusted EBITDA ("Leverage Ratio") covenant, toincrease the maximum Leverage Ratio to 4.0 to 1.0 from January 1, 2018 to March 31, 2018 (previously 3.5 to 1.0).Followingthatperiod,themaximumleverageratiowillbe3.5to1.0.ThemaximumLeverageRatiofromOctober1,2017toDecember31,2017willbe4.0to1.0.

Significantfinancialcovenantsareasfollows:

TwelvemonthsendedSeptember30

TwelvemonthsendedDecember31

Financialcovenant

2017 2016FINANCIALCOVENANTS Minimuminterestcoverageratio(EBITDAtointerest) >3.0:1 4.9:1 5.7:1

Maximumleverageratio(netdebttoEBITDA) <4.5:1 3.0:1 2.6:1

TheinterestmarginondrawingsundertheCreditFacilityrangesfrom1.00%to3.25%overLIBOR,thePrimeRateortheBaseRate,basedontheCompany’snetdebttoadjustedEBITDAratioandthecurrencyandtypeofcreditselectedbytheCompany.BasedontheCompany’snetdebttoadjustedEBITDAratio,therateis3.25%overLIBORasatSeptember30,2017(December31,2016–3.25%).ThestandbyfeesonundrawnamountsundertheCreditFacilityrangefrom0.45%to0.73%,dependingontheCompany’snetdebttoadjustedEBITDAratio.BasedontheCompany’snetdebttoadjustedEBITDAratio,therateis0.73%asatSeptember30,2017(December31,2016–0.73%).

AsatSeptember30,2017,theCompanyhaddrawn$200millionundertheCreditFacilityandtheCreditFacilityhasbeenusedtoissuelettersofcreditof$127.3millionasatSeptember30,2017(December31,2016-$122.1million).Lettersofcreditrelatetoreclamationbonds,worker’scompensationsecurityandotherfinancialassurancesrequiredwithvariousgovernmentagencies.


Liquidity and Cash Flow AsatSeptember30,2017, theCompanyhadcashandcashequivalentsof$207.1millioncomparedto$185.9millionatDecember31,2016.TheCompany’sinvestmentpolicyistoinvestitssurplusfundsinpermittedinvestmentsconsistingoftreasurybills,bonds,notesandotherevidencesofindebtednessofCanada,theU.S.oranyoftheCanadianprovinceswithaminimumcredit ratingofR-1midfromtheDBRSoranequivalentratingfromStandard&Poor’sorMoody’sandwithmaturities of 12months or less at the original date of acquisition. In addition, the Company is permitted to invest inbankers’ acceptances and other evidences of indebtedness of certain financial institutions. Surplus corporate funds areonlyinvestedwithapprovedgovernmentorbankcounterparties.

TheCompany’sliquidityisimpactedbyseveralfactorswhichinclude,butarenotlimitedto,goldandcoppermarketprices,capital expenditures, operating costs, interest rates and foreign exchange rates. These factors are monitored by theCompanyonaregularbasisandwillcontinuetobereviewed.

TheCompany’scashflowsfromoperating, investingandfinancingactivities,aspresented intheunauditedcondensedconsolidated interim statements of cash flows, are summarized in the following table for the three months endedSeptember302017:



(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016CASHFLOWINFORMATION Cashgeneratedfromoperations 66.0 89.6 223.4 230.5

Cashusedbyinvestingactivities(capitalexpendituresandother) (158.0) (157.5) (490.0) (403.8)

Cashgeneratedfrominvestingactivities(saleofElMorrostream) - - 65.0 -

Cashgeneratedfrom(usedby)financingactivities 97.5 0.5 219.8 (20.1)

Effectofexchangeratechangesoncashandcashequivalents 2.8 (0.9) 3.0 9.1

Changeincashandcashequivalents 8.3 (68.3) 21.2 (184.3)

OperationsFortheninemonthsendedSeptember30,2017,thedecreaseincashgeneratedfromoperationswasprimarilyduetoincome taxespaidand thedecrease in total operatingmargin.Offsetting thiswas the collection in January2017of aconcentratereceivableatNewAftonthatwasoutstandingatDecember312016,whichbenefittedworkingcapital.

InvestingActivitiesCashusedininvestingactivitiesisprimarilyforthecontinuedcapitalinvestmentintheCompany’soperatingminesanddevelopment projects. Spending was $490.1 million in the nine months ended September 30, 2017 compared to$402.2millionintheprior-yearperiod.Inboththecurrentandprior-yearperiods,investingactivitiesprimarilyfocusedoncontinuedprojectadvancementatRainyRiver. Inaddition togrowthcapital spendingatRainyRiver theCompanyreceived$65.0millionofnetproceedsfromthesaleoftheElMorrostreamduringthefirstquarterof2017.


The following table summarizes the capital expenditures (mining interests per theunaudited condensed consolidatedinterimstatementsofcashflows)forthethreemonthsendedSeptember30,2017and2016:



(inmillionsofU.S.dollars) 2017 2016 2017 2016

CAPITALEXPENDITURESBYSITE NewAfton 12.0 9.4 33.6 30.5Mesquite 4.0 10.4 8.9 33.7CerroSanPedro - 0.1 0.7 0.8RainyRiver 129.6 130.7 416.0 320.5Blackwater 4.9 2.7 8.9 7.0Corporate 0.1 0.2 0.4 1.7CapitalExpendituresfromcontinuingoperations 150.6 153.5 468.5 394.2PeakMines 7.7 3.1 21.6 8.0TotalCapitalExpenditures 158.3 156.6 490.1 402.2

FinancingActivitiesCashgeneratedfromfinancingactivitieswasprimarilyrelatedtotheboughtdealfinancingofcommonsharesinMarch2017fornetproceedsof$165.7million,partiallyoffsetbyinterestpaid.Pleaserefertothe“CorporateDevelopments”sectionofthisMD&Aforfurtherinformationontheboughtdealfinancingtransaction.

TheCompany’sSeptember30,2017cashbalanceof$207.1million,togetherwiththe$72.7millionavailablefordrawdownunder theCreditFacilityatSeptember30,2017provide theCompanywith$279.8millionof liquidity, inaddition to thenetcashtheCompany’soperatingminesareexpectedtogenerate.

AdecreaseingoldorcopperpricesordepreciationoftheU.S.dollarrelativetotheCanadiandollar,or,toalesserextent,theAustraliandollarorMexicanpeso,couldnegativelyimpacttheCompany’sliquidity.

Thenetcashgeneratedbyoperationsishighlydependentonmetalprices, includinggoldandcopper,aswellasotherfactors,includingtheCanadian/U.S.dollarexchangerate.Tomitigateaportionofthisrisk,inparticularduringtheRainyRiver constructionperiod,NewGoldentered intogoldpriceoption contracts covering120,000ouncesofNewGold’ssecondhalfof2017production.Specifically,NewGoldpurchasedputoptionsatastrikepriceof$1,250perounceandsold call options at a strike price of $1,400per ounce for 120,000ounces of gold productionbetween July 2017 andDecember2017.AsatSeptember30,2017goldpriceoptioncontractscovering60,000ouncesremainedoutstanding.

InFebruary2017, theCompanyentered intocopperswapcontracts for7.3millionpoundsofcopperpermonth fromJuly 2017 through December 2017 at a fixed price of $2.73 per pound. As at September 30, 2017 copper forwardcontractscovering21.9millionpoundsremainedoutstanding.

TheCompanyhasoutstandingnotesintheprincipalamountof$500millionmaturingin2022and$300millionmaturingin2025.TheCompanyalsohas$200millionoutstandingunderthecreditfacility,excludinglettersofcredit.Assumingthecontinuation of prevailing commodity prices and exchange rates, operations performing in accordancewithmine plans,the Company will be able to repay indebtedness from internally generated cash flow during the projected life of theoperatingmines.


TakingintoconsiderationtheCompany’scurrentcashposition,volatileequitymarketsandforeignexchangerates,globaluncertaintyinthecapitalmarketsandincreasingcostpressures,theCompanyregularlyreviewsexpendituresandassessesbusiness opportunities to enhance liquidity in order to ensure adequate liquidity and flexibility to support its growthstrategy,includingthedevelopmentofitsprojects,whilecontinuingproductionatitscurrentoperations.

Inaddition,theCompanyhasinitiatedaprocesstodivestthePeakMines,locatedinNewSouthWales,Australia.Thesaleof Peak Mines will further enable the Company to focus on its America’s centric portfolio of operating mining anddevelopment projectswhile offering a prospective buyer an opportunity to fully leverage Peak’s strong track record ofperformance,andunlockitslongertermpotential.

Commitments The Company has entered into a number of contractual commitments for capital items relating to operations anddevelopment.AtSeptember30,2017, thesecommitments totalled$53.5million,$44.5millionofwhichareexpectedtofalldueoverthenext12months.Thiscomparestocommitmentsof$130.2millionasatDecember31,2016,$103.2millionofwhichwas expected to fall due over the upcoming year. Certain contractual commitmentsmay contain cancellationclauses;however,theCompanydisclosesitscommitmentsbasedonmanagement’sintenttofulfillthecontracts.

Contingencies InassessingthelosscontingenciesrelatedtolegalproceedingsthatarependingagainsttheCompanyorunassertedclaimsthat may result in such proceedings, the Company and its legal counsel evaluate the perceived merits of any legalproceedingsorunassertedclaimsaswellastheperceivedmeritsoftheamountofreliefsoughtorexpectedtobesought.Iftheassessmentofacontingencysuggeststhatalossisprobable,andtheamountcaneasilybeestimated,thenalossisrecorded.Whena contingent loss is not probablebut is reasonably possible, or is probablebut the amountof the losscannotbereliablyestimated,thendetailsofthecontingent lossaredisclosed.Losscontingenciesconsideredremotearegenerallynotdisclosedunlesstheyinvolveguarantees,inwhichcasetheCompanydisclosesthenatureoftheguarantees.Legal fees incurred in connectionwithpending legalproceedingsareexpensedas incurred. If theCompany isunable toresolvethesedisputesfavourably,itmayhaveamaterialadverseimpactonourfinancialcondition,cashflowandresultsofoperations.


Contractual Obligations ThefollowingisasummaryoftheCompany’spaymentsdueundercontractualobligations:

Asat

September30Asat

December31

<1year

1-3Years

4-5YearsAfter5Years

2017Total

2016Total

CONTRACTUALOBLIGATIONS(1)

Long-termdebt - 200.0 - 800.0 1,000.0 900.0

Interestpayableonlong-termdebt 31.2 100.8 100.8 82.6 315.4 252.5

Operatingleasecommitments 2.6 1.5 1.5 3.4 9.0 2.6

Capitalexpenditurecommitments 44.5 8.8 0.2 - 53.5 130.2

Reclamationandclosurecostobligations 0.8 10.2 18.1 151.7 180.8 105.9

Goldstreamobligation 21.4 50.4 43.8 163.8 279.4 277.7

Totalcontractualobligations 100.5 371.7 164.4 1,201.5 1,838.1 1,668.91. ThemajorityoftheCompany’scontractualobligationsconsistoflong-termdebtandinterestpayable.Long-termdebtobligationsarecomprisedofseniorunsecured

notesissuedonApril5,2012andNovember15,2012.Refertothesection“FinancialConditionReview–BalanceSheetReview–Long-termdebt”forfurtherdetails.

Related Party Transactions TheCompanydidnotenterintoanyrelatedpartytransactionsduringtheninemonthsendedSeptember30,2017.

Off-Balance Sheet Arrangements TheCompanyhasnooff-balancesheetarrangements.

Outstanding Shares As at October 25, 2017, there were 577,805,681 common shares of the Company outstanding. The Company had11,889,619stockoptionsoutstandingunderitsshareoptionplan,exercisableforupto11,889,619commonshares.


NON-GAAPFINANCIALPERFORMANCEMEASURESTotal Cash Costs per Gold Ounce “Total cash costsper goldounce” is anon-GAAPmeasure that is a common financial performancemeasure in the goldminingindustrybutwithnostandardmeaningunderIFRS.NewGoldreportstotalcashcostsonasalesbasis.TheCompanybelieves that, in addition to conventional measures prepared in accordance with IFRS, certain investors use thisinformationtoevaluatetheCompany’sperformanceandabilitytogenerateliquiditythroughoperatingcashflowtofundfuture capital expenditures andworking capital needs. NewGold believes that thismeasure, alongwith sales, is a keyindicatorofacompany’sabilitytogenerateoperatingearningsandcashflowfromitsminingoperations.

Total cash cost figures are calculated in accordance with a standard developed by The Gold Institute, a worldwideassociationof suppliersofgoldandgoldproducts thatceasedoperations in2002.Adoptionof thestandard isvoluntaryandthecostmeasurespresentedmaynotbecomparabletoothersimilarlytitledmeasuresofothercompanies.Totalcashcosts includemine site operating costs such asmining, processing and administration costs, royalties, production taxesandrealizedgainsandlossesonfuelcontracts,butareexclusiveofamortization,reclamation,capitalandexplorationcostsandnetofby-productsales.Totalcashcostsarethendividedbygoldouncessoldtoarriveatthetotalcashcostsperouncesold.

TheCompanyproducescopperandsilverasby-productsofitsgoldproduction.ThecalculationoftotalcashcostspergoldounceforCerroSanPedroisnetofby-productsilversalesrevenue,andthecalculationoftotalcashcostspergoldouncesoldforPeakMinesandNewAftonisnetofby-productsilverandcoppersalesrevenue.NewGoldnotesthatinconnectionwithNewAfton,thecopperby-productrevenueissufficientlylargetoresultinanegativetotalcashcostonasingleminebasis.Notwithstandingthisby-productcontribution,asacompanyfocusedongoldproduction,NewGoldaimstoassesstheeconomic resultsof itsoperations in relation togold,which is theprimarydriverofNewGold’sbusiness.NewGoldbelieves this metric is of interest to its investors, who invest in the Company primarily as a gold mining company. Todeterminetherelevantcostsassociatedwithgoldonly,NewGoldbelieves it isappropriatetoreflectalloperatingcosts,aswellasanyrevenuerelatedtometalsotherthangoldthatareextractedinitsoperations.

Toprovideadditionalinformationtoinvestors,NewGoldhasalsocalculatedtotalcashcostsonaco-productbasis,whichremoves the impactofothermetal sales thatareproducedasaby-productofgoldproductionandapportions thecashcosts toeachmetalproducedonapercentageof revenuebasis,andsubsequentlydivides theamountby the totalgoldounces, silverouncesorpoundsofcoppersold,as thecasemaybe, toarriveatperounceorperpound figures.Unlessindicatedotherwise,alltotalcashcostinformationinthisMD&Aisnetofby-productsales.

TotalcashcostsareintendedtoprovideadditionalinformationonlyanddonothaveanystandardizedmeaningunderIFRSandmaynotbecomparabletosimilarmeasurespresentedbyotherminingcompanies.TheyshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithIFRS.ThemeasureisnotnecessarilyindicativeofcashflowfromoperationsunderIFRSoroperatingcostspresentedunderIFRS.

AstheCompanyhasclassifiedthePeakMinesasadiscontinuedoperationduringthethirdquarterof2017,totalcashcostspergoldouncehavebeendisclosedonacontinuingandtotalbasis.

All-in Sustaining Costs per Gold Ounce “All-insustainingcostspergoldounce”isanon-GAAPmeasurebasedonguidanceannouncedbytheWorldGoldCouncil(“WGC”)inSeptember2013.TheWGCisanon-profitassociationoftheworld’sleadinggoldminingcompaniesestablishedin1987topromotetheuseofgoldtoindustry,consumersandinvestors.TheWGCisnotaregulatorybodyanddoesnothave the authority to develop accounting standards or disclosure requirements. TheWGChasworkedwith itsmember


companies, includingNewGold, to develop ameasure that expands on IFRSmeasures such as operating expenses andnon-GAAPmeasurestoprovidevisibilityintotheeconomicsofagoldminingcompany.CurrentIFRSmeasuresusedinthegoldindustry,suchasoperatingexpenses,donotcapturealloftheexpendituresincurredtodiscover,developandsustaingoldproduction.NewGoldbelievestheall-insustainingcostsmeasureprovidesfurthertransparencyintocostsassociatedwithproducing gold andwill assist analysts, investors andother stakeholdersof theCompany in assessing its operatingperformance,itsabilitytogeneratefreecashflowfromcurrentoperationsanditsoverallvalue.

All-in sustaining costs per gold ounce is intended to provide additional information only and does not have anystandardizedmeaningunderIFRSandmaynotbecomparabletosimilarmeasurespresentedbyotherminingcompanies.ItshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithIFRS.ThemeasureisnotnecessarilyindicativeofcashflowfromoperationsunderIFRSoroperatingcostspresentedunderIFRS.

New Gold defines all-in sustaining costs per ounce as the sum of total cash costs, net capital expenditures that aresustaininginnature,corporategeneralandadministrativecosts,capitalizedandexpensedexplorationthatissustaininginnature,andenvironmentalreclamationcosts,alldividedbythetotalgoldouncessoldtoarriveataperouncefigure.Todeterminesustainingcapitalexpenditures,NewGoldusescashflowrelatedtomininginterestsfromitsstatementofcashflowsanddeductsanyexpenditures thatarenon-sustaining. Capital expenditures todevelopnewoperationsor capitalexpendituresrelatedtomajorprojectsatexistingoperationswheretheseprojectswillmateriallyincreaseproductionareclassified as non-sustaining and are excluded. The table “Sustaining Capital Expenditure Reconciliation” reconcilesNewGold’s sustaining capital to its cash flow statement. The definition of sustaining versus non-sustaining is similarlyappliedtocapitalizedandexpensedexplorationcosts.Explorationcoststodevelopnewoperationsorthatrelatetomajorprojects at existing operations where these projects are expected to materially increase production are classified asnon-sustainingandareexcluded.

Costsexcluded fromall-insustainingcostsarenon-sustainingcapitalexpendituresandexplorationcosts, financingcosts,taxexpense,transactioncostsassociatedwithmergersandacquisitions,andanyitemsthataredeductedforthepurposesofadjustedearnings.

Byincludingtotalcashcostsasacomponentofall-insustainingcosts,themeasuredeductsby-productrevenuefromgrosscashcosts.Refertothediscussionaboveregardingtotalcashcostspergoldounceforthediscussionofdeductionofby-productrevenue.


Cash Costs and All-in Sustaining Costs (“AISC”) per Ounce Reconciliation Tables Thefollowingtablesreconcilethesenon-GAAPmeasurestothemostdirectlycomparableIFRSmeasureonanaggregateandmine-by-minebasis.

ThreemonthsendedSeptember30,2017

(inmillionsofU.S.dollars,exceptwherenoted) Gold Copper Silver TotalCONSOLIDATEDOPEX,CASHCOSTANDAISCRECONCILIATION

Operatingexpenses(1) 40.3 28.3 1.7 70.3Unitsofmetalsoldfromcontinuingoperations(ounces/millionsofpounds/millionsofounces)

67,052

21.8

0.2

Operatingexpensesperunitofmetalsold($/ounceorpound) 601 1.30 7.73

Operatingexpenses(1) 40.3 28.3 1.7 70.3

Treatmentandrefiningchargesonconcentratesales 2.4 5.4 0.1 7.9

Adjustments(2) (0.2) (0.1) - (0.3)

Totalcashcostsfromcontinuingoperations 42.5 33.6 1.8 77.9

By-productsilverandcoppersalesfromcontinuingoperations (64.3)

Totalcashcostsnetofby-productrevenuefromcontinuingoperations 13.7Unitsofmetalsoldfromcontinuingoperations(ounces/millionsofpounds/millionsofounces)

67,052

21.8

0.2

Totalcashcostsonaco-productbasisfromcontinuingoperations(3)($/ounceorpound)

634

1.54

8.19

Totalcashcostspergoldouncesoldfromcontinuingoperations($/ounce) 204

Totalcashcostsonaco-productbasis(4) 56.9 42.6 2.4

Totalcashcostsnetofby-productrevenue(4) 27.1Unitsofmetalsold(ounces/millionsofpounds/millionsofounces)(6) 79,904 24.5 0.3 Totalcashcostsonaco-productbasis(3)($/ounceorpound)(4) 712 1.74 9.46

Totalcashcostspergoldouncesold($/ounce)(4) 339

Totalco-productcashcostsfromcontinuingoperations(6) 42.5 33.7 1.8

Totalcashcostsnetofby-productrevenuefromcontinuingoperations(6) 13.7

Sustainingcapitalexpenditures(4) 8.9 6.3 0.4 15.6

Sustainingexploration-expensed 0.6 0.4 - 1.0

CorporateG&Aincludingshare-basedcompensation(5) 4.8 3.4 0.2 8.4

Reclamationexpenses 1.3 0.9 0.1 2.2

Totalco-productall-insustainingcostsfromcontinuingoperations(6) 58.1 44.7 2.5 Totalall-insustainingcostsnetofby-productrevenuefromcontinuingoperations(6)

40.9All-insustainingcostsonaco-productbasisfromcontinuingoperations(3)($/ounceorpound)

866

2.05

11.18

All-insustainingcostspergoldouncesoldfromcontinuingoperations($/ounce)

610Totalco-productall-insustainingcosts(4) 78.1 56.7 3.3

Totalall-insustainingcostsnetofby-productrevenue(4) 63.3

All-insustainingcostsonaco-productbasis(3)($/ounceorpound)(4) 977 2.31 12.88

All-insustainingcostspergoldouncesold($/ounce)(4) 792

1. Operatingexpenses(“Opex”)areapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downreversalsandsocialclosurecostsincurredatCerroSanPedrothatareincludedinoperatingexpenses.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.4. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.


5. Includesthesumofcorporateadministrationcostsandshare-basedpaymentexpensepertheincomestatement,netofanynon-cashdepreciationwithinthosefigures.6. IncludestheimpactofPeak,whichhasbeenclassifiedasadiscontinuedoperationasatandforthethreeandninemonthsendedSeptember30,2017.Pleasereferto

Peak’sOpex,CashCostandAISCReconciliationtablesforamoredetailedreconciliationofthetotalcashcostsandall-insustainingcostsfromdiscontinuedoperations.

NinemonthsendedSeptember30,2017



200,672

62.5

0.7




Adjustments(2) (0.5) (0.4) - (0.9)




200,672

62.5

0.7


635

1.48

8.49







Sustainingcapitalexpenditures(4)(7) 24.0 15.5 1.1 40.7






855

1.93

11.42

All-insustainingcostspergoldouncesoldfromcontinuingoperations($/ounce)

614Totalco-productall-insustainingcosts(4) 240.4 146.4 9.4



All-insustainingcostspergoldouncesold($/ounce)(4) 7061. Operatingexpenses(“Opex”)areapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downreversalsandsocialclosurecostsincurredatCerroSanPedrothatareincludedinoperatingexpenses.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.4. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.5. Includesthesumofcorporateadministrationcostsandshare-basedpaymentexpensepertheincomestatement,netofanynon-cashdepreciationwithinthosefigures.


6. IncludestheimpactofPeak,whichhasbeenclassifiedasadiscontinuedoperationasatandforthethreeandninemonthsendedSeptember30,2017.PleaserefertoPeak’sOpex,CashCostandAISCReconciliationtablesforamoredetailedreconciliationofthetotalcashcostsandall-insustainingcostsfromdiscontinuedoperations.

7. FortheninemonthsendedSeptember30,2017,sustainingcapitalexpendituresarenetof$0.3Minproceedsfromdisposalofassets.




56,038

19.2

0.3







56,038

19.2

0.3


628

1.14

9.43








Sustainingexploration-expensed 0.9 0.5 0.1 1.4


Reclamationexpenses 0.4 0.2 - 0.7



930

1.64

14.05

All-insustainingcostspergoldouncesoldfromcontinuingoperations($/ounce) 718

Totalco-productall-insustainingcosts(4) 83.6 36.6 3.9



All-insustainingcostspergoldouncesold($/ounce)(4) 6821. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downs,theamortizationofMesquite’sPurchasePriceAllocation(“PPA”)associatedwithroyaltiesandsocial

closurecostsincurredatCerroSanPedrothatareincludedinoperatingexpenses.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.4. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.5. Includesthesumofcorporateadministrationcostsandshare-basedpaymentexpensepertheincomestatement,netofanynon-cashdepreciationwithinthosefigures.


6. IncludestheimpactofPeak,whichhasbeenclassifiedasadiscontinuedoperationasatandforthethreeandninemonthsendedSeptember30,2017.PleaserefertoPeak’sOpex,CashCostandAISCReconciliationtablesforamoredetailedreconciliationofthetotalcashcostsandall-insustainingcostsfromdiscontinuedoperations.

7. ForthethreemonthsendedSeptember30,2016,sustainingcapitalexpendituresarenetof$0.7Minproceedsfromdisposalofassets.




198,956

63.8

0.9




Adjustments(2) (0.1) (0.1) - (0.2)




198,956

63.8

0.9


606

1.16

8.09













894

1.65

12.01

All-insustainingcostspergoldouncesoldfromcontinuingoperations($/ounce) 710

Totalco-productall-insustainingcosts(4) 250.1 119.8 11.5



All-insustainingcostspergoldouncesold($/ounce)(4) 7181. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downs,theamortizationofMesquite’sPurchasePriceAllocation(“PPA”)associatedwithroyaltiesandsocial

closurecostsincurredatCerroSanPedrothatareincludedinoperatingexpenses.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.


4. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.5. Includesthesumofcorporateadministrationcostsandshare-basedpaymentexpensepertheincomestatement,netofanynon-cashdepreciationwithinthosefigures.6. IncludestheimpactofPeak,whichhasbeenclassifiedasadiscontinuedoperationasatandforthethreeandninemonthsendedSeptember30,2017.Pleasereferto

Peak’sOpex,CashCostandAISCReconciliationtablesforamoredetailedreconciliationofthetotalcashcostsandall-insustainingcostsfromdiscontinuedoperations.7. FortheninemonthsendedSeptember30,2016,sustainingcapitalexpendituresarenetof$0.7Minproceedsfromdisposalofassets.


(inmillionsofU.S.dollars,exceptwherenoted) Gold Copper Silver Total

NEWAFTONOPEX,CASHCOSTSANDAISCRECONCILIATION


Unitsofmetalsold(ounces/millionsofpounds/millionsofounces) 20,646 21.8 0.1




Totalcashcosts 10.8 24.5 0.6 35.9

By-productsilverandcoppersales (61.9)

Totalcashcostsnetofby-productrevenue (26.0)


Totalcashcostsonaco-productbasis(2)($/ounceorpound) 524 1.13 6.54

Totalcashcostspergoldouncesold($/ounce) (1,258)

Totalco-productcashcosts 10.8 24.5 0.6



Sustainingexplorationexpense 0.1 0.6 - 0.7Reclamationexpenses 0.1 0.3 - 0.4

Totalco-productall-insustainingcosts 14.5 33.3 0.8

Totalall-insustainingcostsnetofby-productrevenue (13.3)

All-insustainingcostsonaco-productbasis(2)($/ounceorpound) 709 1.53 8.86

All-insustainingcostspergoldouncesold($/ounce) (643)1. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.3. See“NewAftonSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.





Operatingexpenses(1) 26.2 55.0 1.2 82.4Unitsofmetalsold(ounces/millionsofpounds/millionsofounces) 60,935 62.5 0.2 Operatingexpensesperunitofmetalsold($/ounceorpound) 430 0.88 5.69 Operatingexpenses 26.2 55.0 1.2 82.4


Totalcashcosts 33.3 69.8 0.9 104.6By-productsilverandcoppersales (168.5)




Totalcashcostspergoldouncesold($/ounce) (1,048)

Totalco-productcashcosts 33.3 69.8 1.5 104.6Totalcashcostsnetofby-productrevenue (63.9)


Sustainingexplorationexpense 0.3 0.8 - 1.2






toeachmetalproducedonapercentageofrevenuebasis.3. See“NewAftonSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.4. FortheninemonthsendedSeptember30,2017,sustainingcapitalexpendituresarenetof$0.3Minproceedsfromdisposalofassets.















Totalcashcostspergoldouncesold($/ounce) (633)










toeachmetalproducedonapercentageofrevenuebasis.3. See“NewAftonSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.4. ForthethreemonthsendedSeptember30,2016,sustainingcapitalexpendituresarenetof$0.7Minproceedsfromdisposalofassets.















Totalcashcostspergoldouncesold($/ounce) (605)










toeachmetalproducedonapercentageofrevenuebasis.3. See“NewAftonSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.4. FortheninemonthsendedSeptember30,2016,sustainingcapitalexpendituresarenetof$0.7Minproceedsfromdisposalofassets.



(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016MESQUITEOPEX,CASHCOSTSANDAISCRECONCILIATION

Operatingexpenses 28.9 12.1

Goldouncessold 38,573 19,434

Operatingexpensespergoldouncesold 750 624


Adjustments(1) - 0.2

Totalcashcosts 28.9 12.3


Totalcashcostspergoldouncesold($/ounce) 750 633


Sustainingcapitalexpenditures(2) 4.0 10.4

Sustainingexploration-expensed - 0.4

Reclamationexpenses 0.5 0.3

Totalall-insustainingcosts 33.4 23.4

All-insustainingcostspergoldouncesold($/ounce) 866 1,2021. AdjustmentsincludetheamortizationofMesquite’sPurchasePriceAllocation(“PPA”)associatedwithroyalties.2. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.


(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016MESQUITEOPEX,CASHCOSTSANDAISCRECONCILIATION



Operatingexpensespergoldouncesold 717 612


Adjustments(1) - 0.7





Sustainingcapitalexpenditures(2) 8.9 33.7

Sustainingexploration-expensed - 0.4

Reclamationexpenses 1.6 1.0

Totalall-insustainingcosts 92.3 82.0

All-insustainingcostspergoldouncesold($/ounce) 809 1,0851. AdjustmentsincludetheamortizationofMesquite’sPurchasePriceAllocation(“PPA”)associatedwithroyalties.2. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.




PEAKMINESOPEX,CASHCOSTSANDAISCRECONCILIATION(5)

Operatingexpensesfromdiscontinuedoperation(1) 15.1 7.1 0.6 22.8

Unitsofmetalsold(ounces/millionsofpounds/millionsofounces) 12,852 2.7 -

Operatingexpensesperunitofmetalsold($/ounceorpound) 1,171 2.64 15.37



Adjustments (0.1) (0.1) - (0.2)

Totalcashcosts 15.2 8.0 0.7 23.9By-productsilverandcoppersales (10.5)

Totalcashcostsnetofby-productrevenue 13.4Unitsofmetalsold(ounces/millionsofpounds/millionsofounces) 12,852 2.7 -

Totalcashcostsonaco-productbasis(3)($/ounceorpound) 1,182 2.99 17.19

Totalcashcostspergoldouncesold($/ounce) 1,043


Totalcashcostsnetofby-productrevenue 13.4





Totalall-insustainingcostsnetofby-productrevenue 22.4

All-insustainingcostsonaco-productbasis(3)($/ounceorpound) 1,642 4.03 23.22

All-insustainingcostspergoldouncesold($/ounce) 1,7391. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downreversals.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.4. See“TotalSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.5. Duringthethirdquarterof2017,PeakMineshasbeenclassifiedasadiscontinuedoperation.










Adjustments(2) 0.2 0.1 - 0.2






Totalcashcostspergoldouncesold($/ounce) 600








All-insustainingcostsonaco-productbasis(3)($/ounceorpound) 1,089 2.54 15.36

All-insustainingcostspergoldouncesold($/ounce) 9881. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downreversals.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts








Operatingexpensesperunitofmetalsold($/ounceorpound) 627.0 1.00 9.30


Treatmentandrefiningchargesonconcentratesales 1.2 0.3 - 1.5


By-productsilverandcoppersales - (11.5)







Sustainingcapitalexpenditures(4) 2.3 0.8 - 3.1






All-insustainingcostspergoldouncesold($/ounce) 6321. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downs.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts










Treatmentandrefiningchargesonconcentratesales 2.6 0.2 - 2.8




Unitsofmetalsold(ounces/millionsofpounds/millionsofounces) 85,347 10.7 0.1 85,347











All-insustainingcostspergoldouncesold($/ounce) 7361. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludenon-cashitemsrelatedtoinventorywrite-downs.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts



ThreemonthsendedSeptember30,2017 ThreemonthsendedSeptember30,2016

(inmillionsofU.S.dollars,exceptwherenoted) Gold Silver Total Gold Silver TotalCERROSANPEDROOPEX,CASHCOSTSANDAISCRECONCILIATION

Operatingexpenses(1) 11.0 2.6 13.6 15.0 2.8 17.8

Unitsofmetalsold(ounces/millionsofounces) 7,833 0.1 15,357 0.2 Operatingexpensesperunitofmetalsold($/ounce)

1,388

18.10

974

14.26


Adjustments(2) (0.3) - (0.4) (0.2) 0.0 (0.2)

Totalcashcosts 10.7 2.5 13.2 15.8 2.8 17.6

By-productsilverandcoppersales (2.4) (3.7)

Totalcashcostsnetofby-productrevenue 10.8 13.9

Unitsofmetalsold(ounces/millionsofounces) 7,833 0.1 7,833 15,357 0.2 15,357Totalcashcostsonaco-productbasis(3)($/ounce)

1,354

17.65

964

14.11

Totalcashcostspergoldouncesold($/ounce) 1,370 897

Totalco-productcashcosts 10.7 2.5 14.8 2.8


Sustainingcapitalexpenditures(4) - - - 0.1 - 0.1

Reclamationexpenses 1.0 0.2 1.2 0.2 - 0.2

Totalco-productall-insustainingcosts 11.8 2.7 15.1 2.8 Totalall-insustainingcostsnetofby-productrevenue

12.1 14.2

All-insustainingcostsonaco-productbasis(3)($/ounce)

1,484

19.35

976

14.29

All-insustainingcostspergoldouncesold($/ounce)

1,532 912

1. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludesocialclosurecoststhatareincludedinoperatingexpenses.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.4. See“CerroSanPedroSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.


NinemonthsendedSeptember30,2017 NinemonthsendedSeptember30,2016

(inmillionsofU.S.dollars,exceptwherenoted) Gold Silver Total Gold Silver TotalCERROSANPEDROOPEX,CASHCOSTSANDAISCRECONCILIATION


Unitsofmetalsold(ounces/millionsofounces) 25,549 0.5 50,798 0.7 Operatingexpensesperunitofmetalsold($/ounce)

1,260

16.86

977

13.09


Adjustments(2) (0.7) (0.2) (0.9) (0.7) (0.1) (0.8)

Totalcashcosts 31.5 7.5 39.0 48.9 8.8 57.7

By-productsilverandcoppersales (7.8) (11.3)


Unitsofmetalsold(ounces/millionsofounces) 25,549 0.5 50,798 0.7 Totalcashcostsonaco-productbasis(3)($/ounce)

1,230

16.47

963

12.89


Totalco-productcashcosts 31.5 7.5 48.9 8.8


Sustainingcapitalexpenditures(4) 0.6 0.1 0.7 0.7 0.1 0.8

Reclamationexpenses 2.9 0.7 3.6 0.5 0.1 0.6

Totalco-productall-insustainingcosts 35.0 8.3 50.1 9.0 Totalall-insustainingcostsnetofby-productrevenue

35.6 47.8

All-insustainingcostsonaco-productbasis(3)($/ounce)

1,367

18.31

984

13.18

All-insustainingcostspergoldouncesold($/ounce)

1,389 936

1. Operatingexpensesareapportionedtoeachmetalproducedonapercentageofrevenuebasis.2. Adjustmentsincludesocialclosurecoststhatareincludedinoperatingexpenses.3. Amountspresentedonaco-productbasisremovetheimpactofothermetalsalesthatareproducedasaby-productofourgoldproductionandapportionsthecashcosts

toeachmetalproducedonapercentageofrevenuebasis.4. See“CerroSanPedroSustainingCapitalExpenditureReconciliation”belowtoreconcilesustainingcapitalexpenditurestomininginterestsperthestatementofcashflows.


Sustaining Capital Expenditures Reconciliation Tables ThreemonthsendedSeptember30

(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016

TOTALSUSTAININGCAPITALEXPENDITURES

Mininginterestsperstatementofcashflows 150.6 153.5NewAftongrowthcapitalexpenditure(1) (0.4) (0.8)RainyRivergrowthcapitalexpenditure (129.5) (130.7)Blackwatergrowthcapitalexpenditure (4.8) (2.7)

Sustainingcapitalexpendituresfromcontinuingoperations 15.6 19.3

Sustainingcapitalfromdiscontinuedoperations:PeakMines 7.1 3.1

Totalsustainingcapitalexpenditures 22.7 22.41. GrowthcapitalexpendituresatNewAftoninthecurrentperiodandprior-yearperiodrelatetoexplorationfortheC-zone.GrowthcapitalexpendituresatPeakMinesin

thecurrentperiodrelatetocapitalizedexplorationactivitiesatGreatCobar.


(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016

TOTALSUSTAININGCAPITALEXPENDITURES

Mininginterestsperstatementofcashflows 468.5 394.2NewAftongrowthcapitalexpenditure(1) (2.5) (2.8)RainyRivergrowthcapitalexpenditure (416.0) (320.5)Blackwatergrowthcapitalexpenditure (8.8) (7.0)

Sustainingcapitalexpendituresfromcontinuingoperations 40.9 63.9Sustainingcapitalfromdiscontinuedoperations:PeakMines 20.0 8.0Totalsustainingcapitalexpenditures 60.9 71.9

1. GrowthcapitalexpendituresatNewAftoninthecurrentperiodandprior-yearperiodrelatetoexplorationfortheC-zone.GrowthcapitalexpendituresatPeakMinesinthecurrentperiodrelatetocapitalizedexplorationactivitiesatGreatCobar.


(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016NEWAFTONSUSTAININGCAPITALEXPENDITURES Capitalexpenditurepersegmentedinformation 12.0 9.4NewAftongrowthcapitalexpenditure(1) (0.5) (0.8)

NewAftonsustainingcapitalexpenditures 11.5 8.61. GrowthcapitalexpendituresatNewAftoninthecurrentperiodandprior-yearperiodrelatetoexplorationfortheC-zone.


(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016NEWAFTONSUSTAININGCAPITALEXPENDITURES Capitalexpenditurepersegmentedinformation 33.6 30.5NewAftongrowthcapitalexpenditure(1) (2.6) (2.8)

NewAftonsustainingcapitalexpenditures 31.0 27.71. GrowthcapitalexpendituresatNewAftoninthecurrentperiodandprior-yearperiodrelatetoexplorationfortheC-zone.



(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016PEAKSUSTAININGCAPITALEXPENDITURES Capitalexpenditureperdiscountedoperationsnote 7.7 3.1Peakgrowthcapitalexpenditure(1) (0.6) -

Peaksustainingcapitalexpenditures 7.1 3.11. GrowthcapitalexpendituresatPeakMinesinthecurrentperiodrelatetocapitalizedexplorationactivitiesatGreatCobar.


(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016PEAKSUSTAININGCAPITALEXPENDITURES Capitalexpenditureperdiscountedoperationsnote 21.6 8.0Peakgrowthcapitalexpenditure(1) (1.6) -

Peaksustainingcapitalexpenditures 20.0 8.01. GrowthcapitalexpendituresatPeakMinesinthecurrentperiodrelatetocapitalizedexplorationactivitiesatGreatCobar.

Adjusted Net Earnings and Adjusted Net Earnings per Share “Adjustednetearnings”and“adjustednetearningspershare”arenon-GAAPfinancialmeasureswithnostandardmeaningunderIFRSwhichexcludethefollowingfromnetearnings:

• Impairmentlosses;• Inventorywrite-downs;• Itemsincludedin“Othergainsandlosses”asperNote3oftheCompany’sunauditedcondensed

consolidatedinterimfinancialstatements;and• Certainnon-recurringitems.

As the Company has classified the PeakMines as a discontinued operation during the third quarter of 2017, adjustedearnings and adjusted earnings per share have been disclosed on a continuing and total basis. Net earnings have beenadjusted,includingtheassociatedtaximpact,forthegroupofcostsin“Othergainsandlosses”ontheauditedconsolidatedincomestatements.Keyentriesinthisgroupingare:thefairvaluechangesforthegoldstreamobligation;sharepurchasewarrantsandthegoldoptioncontracts; foreignexchangegainor loss;and lossondisposalofassets.Otheradjustmentstonetearningsalsoincludeinventorywritedowns,andagainontheissuanceandsettlementofseniorunsecurednotes.The adjusted entries are also impacted for tax to the extent that the underlying entries are impacted for tax in theunadjustednetearnings.

TheCompanyusesadjustednetearningsforitsowninternalpurposes.Management’sinternalbudgetsandforecastsandpublic guidance do not reflect the items which have been excluded from the determination of adjusted net earnings.Consequently, the presentation of adjusted net earnings enables shareholders to better understand the underlyingoperatingperformanceofourcoreminingbusinessthroughtheeyesofmanagement.Managementperiodicallyevaluatesthecomponentsofadjustednetearningsbasedonan internalassessmentofperformancemeasures thatareuseful forevaluating theoperatingperformanceofourbusinessanda reviewof thenon-GAAPmeasuresusedbymining industryanalystsandotherminingcompanies.

Adjustednetearnings is intendedtoprovideadditional informationonlyanddoesnothaveanystandardizedmeaningunderIFRSandmaynotbecomparabletosimilarmeasurespresentedbyothercompanies.ItshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithIFRS.Themeasureisnotnecessarily


indicativeofoperatingprofitorcashflowsfromoperationsasdeterminedunderIFRS.Thefollowingtablereconcilesthisnon-GAAPmeasuretothemostdirectlycomparableIFRSmeasure.

As theCompanyhasclassified thePeakMinesasadiscontinuedoperationduring the thirdquarterof2017,adjustedearningshavebeendisclosedonacontinuingandtotalbasis.

Threemonthsended


September30


ADJUSTEDEARNINGSFROMCONTINUINGOPERATIONSRECONCILIATION

Earnings(loss)beforetaxesfromcontinuingoperations(2) 37.1 (7.6) 90.9 5.9

Other(gains)losses(1) (23.8) 17.5 (64.2) 18.3

Gainonmodificationoflong-termdebt (3.3) - (3.3) -

Adjustednetearningsbeforetaxes(2) 10.0 9.9 23.4 24.2

Incometax(expense)recovery(2) (7.9) 8.4 (13.0) 9.0

Incometaxadjustments 3.0 (8.3) 4.7 (15.1)

Adjustedincometax(expense)recovery(2) (4.9) 0.1 (8.3) (6.1)

Adjustednetearningsfromcontinuingoperations(2) 5.1 10.0 15.1 18.1

Adjustedearningspershare(basicanddiluted)(2) 0.01 0.02 0.03 0.04

Adjustedeffectivetaxrate(2) 49% 1% 35% 25%1. PleaserefertoNote3oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsforadetailedbreakdownofothergainsandlosses.2. Prior-yearperiodcomparativeshavebeenrevised.Pleaserefertothe“KeyQuarterlyOperatingandFinancialInformation”sectionofthisMD&Aforfurtherinformation.




ADJUSTEDNETEARNINGSRECONCILIATION

Earnings(loss)beforetaxesfromcontinuingoperations(2) 37.1 (7.6) 90.9 5.9

Earnings(loss)beforetaxesfromdiscontinuedoperations(2)(3) (2.9) 5.1 13.5 2.2

Other(gains)losses(1) (23.8) 17.5 (64.2) 18.3

Other(gains)lossesfromdiscontinuedoperations(1)(3) 0.7 (1.7) 1.6 (1.5)

Inventorywrite-down 0.3 - (0.2) -

Gainonmodificationoflong-termdebt (3.3) - (3.3) -

Adjustednetearningsbeforetaxes(2) 8.1 13.3 38.3 24.9

Incometax(expense)recovery(2) (7.1) 6.6 (16.7) 7.4

Incometaxadjustments 2.8 (7.5) 4.8 (12.8)

Adjustedincometax(expense)recovery(2) (4.3) (0.9) (11.9) (5.4)

Adjustednetearnings(2) 3.8 12.4 26.4 19.5

Adjustedearningspershare(basicanddiluted)(2) 0.01 0.02 0.05 0.04

Adjustedeffectivetaxrate(2) 53% 7% 31% 22%1. PleaserefertoNote3oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsforadetailedbreakdownofothergainsandlosses.2. Prior-yearperiodcomparativeshavebeenrevised.Pleaserefertothe“KeyQuarterlyOperatingandFinancialInformation”sectionofthisMD&Aforfurtherinformation.3. Please refer toNote12of theCompany’sunauditedcondensedconsolidated interim financial statements foradetailedbreakdownof theearnings (loss) fromPeak

Mines,whichhasbeenclassifiedasadiscontinuedoperationinthethirdquarterof2017.


Cash Generated from Operations, before Changes in Non-Cash Operating Working Capital “Cashgeneratedfromoperations,beforechangesinnon-cashoperatingworkingcapital”isanon-GAAPfinancialmeasurewithnostandardmeaningunder IFRS,whichexcludeschanges innon-cashoperatingworkingcapital.Managementusesthismeasure to evaluate the Company’s ability to generate cash from its operations before temporaryworking capitalchanges.

Cashgeneratedfromoperations,beforenon-cashchangesinworkingcapitalisintendedtoprovideadditionalinformationonlyanddoesnothaveanystandardizedmeaningunder IFRS; itshouldnotbeconsidered in isolationorasasubstituteformeasuresofperformanceprepared inaccordancewith IFRS.Othercompaniesmaycalculatethismeasuredifferentlyandthismeasureisunlikelytobecomparabletosimilarmeasurespresentedbyothercompanies.

Threemonthsended


September30


CASHRECONCILIATION

Operatingcashflowgeneratedfromcontinuingoperations 65.5 54.0 183.9 176.1Addback(deduct):Changeinnon-cashoperatingworkingcapitalfromcontinuingoperations

(6.3)

7.5

(14.5)

4.8

Operatingcashflowsgeneratedfromcontinuingoperationsbeforechangesinnon-cashoperatingworkingcapital

59.2

61.5

169.4

180.9

Operatingcashflowsgeneratedfromdiscontinuedoperations(1) 0.5 35.6 39.5 54.4Addback(deduct):Changeinnon-cashoperatingworkingcapitalfromdiscontinuedoperations(1)

0.9

(8.5)

(2.6)

(2.0)

Cashgeneratedfromoperationsbeforechangesinnon-cashoperatingworkingcapital

60.6

88.6

206.3

233.3

1. PleaserefertoNote12oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsforadetailedbreakdownofthecashflowsfromPeakMines,whichhasbeenclassifiedasadiscontinuedoperationinthethirdquarterof2017.

Operating Margin “Operatingmargin” is anon-GAAP financialmeasurewithno standardmeaningunder IFRS,whichmanagementuses toevaluate the Company’s aggregated and mine-by-mine contribution to net earnings before non-cash depreciation anddepletion charges. Operating margin is calculated as revenue less operating expenses and therefore does not includedepreciationanddepletion.Operatingmargin is intended toprovideadditional informationonlyanddoesnothaveanystandardizedmeaningunderIFRS;itshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithIFRS.Othercompaniesmaycalculatethismeasuredifferentlyandthismeasureisunlikelytobecomparabletosimilarmeasurespresentedbyothercompanies.Thefollowingtablesreconcilethisnon-GAAPmeasuretothemostdirectlycomparableIFRSmeasureonanaggregatedandmine-by-minebasis.

Operating Margin Reconciliation Tables Threemonthsended


September30

(inmillionsofU.S.dollars) 2017 2016 2017 2016TOTALOPERATINGMARGIN Revenue 142.5 115.2 410.9 382.1

Less:Operatingexpenses (70.3) (53.7) (204.0) (181.3)

Totaloperatingmargin 72.2 61.5 206.9 200.8




(inmillionsofU.S.dollars) 2017 2016 2017 2016NEWAFTONOPERATINGMARGIN Revenue 80.4 65.4 224.7 212.3


NewAftonoperatingmargin 52.4 41.6 142.3 135.8

Threemonthsended


September30

(inmillionsofU.S.dollars) 2017 2016 2017 2016MESQUITEOPERATINGMARGIN Revenue 49.5 25.8 145.7 95.0


Mesquiteoperatingmargin 20.6 13.7 63.9 48.8



(inmillionsofU.S.dollars) 2017 2016 2017 2016CERROSANPEDROOPERATINGMARGIN Revenue 12.6 24.0 40.5 74.8


CerroSanPedrooperatingmargin (0.8) 6.2 0.7 16.2



(inmillionsofU.S.dollars) 2017 2016 2017 2016PEAKMINESOPERATINGMARGIN Revenue(1) 26.0 63.5 112.8 131.4

Less:Operatingexpenses(1) 22.8 (30.8) 66.7 (69.8)

PeakMinesoperatingmargin(1) 3.2 32.7 46.1 61.61. PleaserefertoNote12oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsforadetailedbreakdownoftheearnings(loss)fromPeak


Average Realized Price “Average realizedpriceperounceof gold sold” is anon-GAAP financialmeasurewithno standardmeaningunder IFRS.Managementuses thismeasure tobetterunderstand theprice realized ineach reportingperiod forgold sales.AveragerealizedpriceisintendedtoprovideadditionalinformationonlyanddoesnothaveanystandardizedmeaningunderIFRS;itshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithIFRS.Othercompaniesmaycalculatethismeasuredifferentlyandthismeasureisunlikelytobecomparabletosimilarmeasurespresented by other companies. The following tables reconcile this non-GAAPmeasure to themost directly comparableIFRSmeasureonanaggregateandmine-by-minebasis.




(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016TOTALAVERAGEREALIZEDPRICEFROMCONTINUINGOPERATIONS

Revenuefromgoldsales 83.5 71.9 249.5 242.2

Treatmentandrefiningchargesongoldconcentratesales 8.0 6.0 22.3 20.5

Grossrevenuefromgoldsales 91.5 77.0 271.8 262.7

Goldouncessold 67,052 56,038 200,672 198,956

Totalaveragerealizedpricepergoldouncesold($/ounce) 1,286 1,325 1,280 1,258

Threemonthsended


September30

(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016NEWAFTONAVERAGEREALIZEDPRICE




Goldouncessold 20,646 21,247 60,935 72,680

NewAftonaveragerealizedpricepergoldouncesold($/ounce) 1,292 1,324 1,288 1,264

Threemonthsended


September30

(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016MESQUITEAVERAGEREALIZEDPRICE


Goldouncessold 38,573 19,434 114,188 75,477

Mesquiteaveragerealizedpricepergoldouncesold($/ounce) 1,283 1,326 1,276 1,258

Threemonthsended


September30

(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016CERROSANPEDROAVERAGEREALIZEDPRICE


Goldouncessold 7,833 15,357 25,549 50,798

CerroSanPedroaveragerealizedpricepergoldouncesold($/ounce) 1,285 1,325 1,278 1,249

Threemonthsended


September30

(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016PEAKMINESAVERAGEREALIZEDPRICE

Revenuefromgoldsales(1) 15.8 52.6 82.0 107.8



Goldouncessold 12,852 40,414 65,771 85,347

PeakMinesaveragerealizedpricepergoldouncesold($/ounce) 1,310 1,332 1,298 1,2961. Please refer toNote12of theCompany’sunauditedcondensedconsolidated interim financial statements foradetailedbreakdownof theearnings (loss) fromPeak



ENTERPRISERISKMANAGEMENTANDRISKFACTORSTheCompany is subject to various financial and other risks that couldmaterially adversely affect the Company’s futurebusiness,operationsandfinancialcondition.Thefollowing isasummaryofcertainrisksfacingtheCompany.Foramorecomprehensivediscussionof theseandother risks facingCompany,please refer to the sectionentitled“RiskFactors” inthe Company’s most recent Annual Information Form and the section entitled “Enterprise Risk Management” in theCompany’s Management’s Discussion and Analysis for the year ended December 31, 2016, both filed on SEDAR atwww.sedar.com.TherewerenosignificantchangestothoserisksortotheCompany’smanagementofexposuretothoserisksduringthethreemonthsendedSeptember30,2017,exceptasnotedbelow:

MetalpriceriskTheCompany’searnings,cashflowsandfinancialconditionaresubjecttoriskduetofluctuationsinthemarketpriceofgold,copperandsilver.

ForthethreemonthsendedSeptember30,2017,theCompany’srevenuesandcashflowswere impactedbygoldpricesin the rangeof$1,211 to$1,346perounce,andby copperprices in the rangeof$2.62 to$3.13perpound. Lowmetalprices could cause continued development of, and commercial production from, the Company’s properties to beuneconomic. Inaddition, there isa time lagbetween the shipmentofgoldandcopperand finalpricing,andchanges inpricingcanimpacttheCompany’srevenueandworkingcapitalposition.AsatSeptember30,2017,workingcapitalincludesunpricedgoldandcopperconcentratereceivablestotalling2,100ouncesofgoldand1.9millionpoundsofcopperrelatingtoNewAftonnotoffsetbycopperswapcontracts.

The Company’s exposure to changes in gold prices has been significantly reduced during the current year and during thefirstninemonthsof2017astheCompanyhasenteredintogoldpriceoptioncontracts(wherebyitsoldaseriesofcalloptioncontractsandpurchasedaseriesofputoptioncontracts)toreduceexposuretochangesingoldprices.

ThedetailsoftheremainingcontractsareasfollowsasatSeptember30,2017:

Quantityoutstanding

Remainingterm

Exercise

price($/oz)

Fairvalue–asset(liability)(inmillions)

(1)GOLDOPTIONCONTRACTSOUTSTANDING Goldcallcontracts-sold 60,000oz October2017–December2017 1,400 $(0.1)

Goldputcontracts-purchased 60,000oz October2017–December2017 1,250 $0.4

1. TheCompanypresents the fairvalueof itsputandcalloptionsonanetbasison thecondensedconsolidatedstatementsof financialposition.TheCompanyhasalegallyenforceablerighttosetofftheamountsunderitsoptionscontractsandintendstosettleonanetbasis.Thecontractscover20,000ouncesofgoldpermonth.

A$100changeinthegoldpriceperouncewouldhaveanimpactof$0.2millionontheCompany’sworkingcapitalposition.A $0.10 change in the copper priceper poundwouldhave an impact of $0.2millionon theCompany’sworking capitalposition.


Anincreaseingold,copperandsilverpriceswouldincreasetheCompany’snetearningswhereasanincreaseinfuelorshareunitvestingpriceswoulddecreasetheCompany’snetearnings.A10%changeincommoditypriceswouldimpacttheCompany’snetearnings(loss)beforetaxesandothercomprehensiveincome(loss)beforetaxesasfollows:

ThreemonthsendedSeptember30 ThreemonthsendedSeptember30


2017

NetEarnings(Loss)

2017Other

ComprehensiveIncome(Loss)

2016

NetEarnings(Loss)

2016Other


IMPACTOF10%CHANGEINCOMMODITYPRICES Goldprice(1) 10.3 - 12.8

Copperprice 2.4 - 5.3 -Silverprice 0.2 - 0.4 -

1. AsaresultoftheCompany’sgoldpriceoptioncontracts,theimpactofa10%decreaseingoldpriceswouldbereduced.

NinemonthsendedSeptember30 NinemonthsendedSeptember30


2017

NetEarnings(Loss)

2017Other


2016

NetEarnings(Loss)

2016Other


IMPACTOF10%CHANGEINCOMMODITYPRICES Goldprice(1) 34.2 - 36.1 Copperprice 6.4 - 16.0 -Silverprice 0.8 - 1.1 -1. AsaresultoftheCompany’sgoldpriceoptioncontracts,theimpactofa10%decreaseingoldpriceswouldbereduced.

InNovember2016,theCompanyenteredcopperswapcontractsfor5.3millionpoundsofcopperpermonthfromJanuarythroughJune2017atafixedpriceof$2.52perpound.InFebruary2017,theCompanyenteredintofurthercopperswapcontracts for7.3millionpoundsof copperpermonth fromSeptember2017 throughDecember2017ata fixedpriceof$2.73perpound. Copper swaps settle against the LondonMetals Exchangemonthly averageprice. The copper forwardcontracts are treated as derivative financial instruments and marked to market at each reporting period on theconsolidatedstatementoffinancialpositionwithchangesinfairvaluerecognizedinothergainsandlosses.Realizedgainsand losses on settlement of the Company’s copper forward contracts up to an amount not exceeding the Company’sproductionofcopperpoundsforthereportingperiodarerecordedasanadjustmenttorevenue.ThesettlementoncopperpoundsinexcessoftheCompany’scopperproductionforthereportingperiodarerecordedasothergainsandlosses.TheCompanypresentsthefairvalueofitscopperforwardcontractsontheconsolidatedstatementsoffinancialpositionwithin‘tradeandotherpayables’.


Quantity

outstanding(oz)

RemainingtermExerciseprice($)

Fairvalue–asset(liability)

Copperforwardcontractsoutstanding 21.9million October–December2017 2.73 $(4.4)million

OnOctober18,2017,NewGoldenteredintocopperpriceoptioncontractscoveringapproximately60millionpoundsofits2018production,withputoptionsatastrikepriceof$3.00perpoundandcalloptionsatastrikepriceof$3.37perpound,atanominalcosttotheCompany.


CRITICALJUDGMENTSANDESTIMATIONUNCERTAINTIESThe preparation of the Company’s consolidated financial statements in conformity with IFRS requires the Company’smanagementtomakejudgments,estimatesandassumptionsaboutthefutureeventsthataffecttheamountsreportedinthe consolidated financial statements and related notes to the financial statements. Estimates and assumptions arecontinually evaluated and are based on management’s experience and other facts and circumstances. Revisions toestimates and the resulting effects on the carrying amounts of the Company’s assets and liabilities are accounted forprospectively.

Theareaswhichrequiremanagementtomakesignificant judgments,estimatesandassumptions indeterminingcarryingvaluesaredescribed in theCompany’sauditedconsolidatedfinancialstatements for theyearendedDecember31,2016and have been consistently applied in the preparation of the unaudited condensed consolidated interim financialstatements.

ACCOUNTINGPOLICIESTheCompany's significant accounting policies and future changes in accounting policies are presented in the auditedconsolidated financial statements for the year ended December 31, 2016 and have been consistently applied in thepreparationoftheunauditedcondensedconsolidatedinterimfinancialstatements.


CONTROLSANDPROCEDURESDisclosure Controls and Procedures TheCompany’smanagement,withtheparticipationofandunderthesupervisionofitsPresident&ChiefExecutiveOfficer,andChiefFinancialOfficer,hasevaluatedtheeffectivenessoftheCompany’sdisclosurecontrolsandproceduresasdefinedinRules13a-15(e)and15d-15(e)undertheSecuritiesExchangeActof1934,asamended(“ExchangeAct”)andinNationalInstrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, as at and for the year endedDecember 31, 2016. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer haveconcludedthat,asatandfortheyearendedDecember31,2016,theCompany’sdisclosurecontrolsandprocedureswereeffectivetoprovidereasonableassurancethattheinformationrequiredtobedisclosedbytheCompanyinreportsitfilesisrecorded,processed,summarizedandreported,withintheappropriatetimeperiods.

Internal Controls over Financial Reporting NewGold’smanagement,withtheparticipationofitsChiefExecutiveOfficerandChiefFinancialOfficer,isresponsibleforestablishingandmaintainingadequate internalcontrolsoverfinancialreporting. Internalcontrolsoverfinancialreportingisaprocessdesignedby,orunderthesupervisionof,theCompany’sprincipalexecutiveandprincipalfinancialofficersandeffected by the Company’s Board of Directors, management and other personnel, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordancewith International FinancialReportingStandards.NewGold’smanagement assessed theeffectivenessof theCompany’s internalcontrolsoverfinancialreportingasatandfortheyearendedDecember31,2016basedonthe2013updatedCommitteeofSponsoringOrganizationoftheTreadwayCommission(“COSO”)andhasconcludedthatNewGold’sinternalcontrolsoverfinancialreportingareeffectiveasatandfortheyearendedDecember31,2016.

TheeffectivenessoftheCompany’sinternalcontroloverfinancialreportingasofDecember31,2016hasbeenauditedbyDeloitteLLP,theCompany’sindependentregisteredpublicaccountingfirm,asstatedintheirreportimmediatelyprecedingtheCompany’sauditedconsolidatedfinancialstatementsfortheyearendedDecember31,2016.

Limitations of Controls and Procedures The Company’s management, including its Chief Executive Officer and Chief Financial Officer, believe that any internalcontrolsandproceduresforfinancialreporting,nomatterhowwellconceivedandoperated,canprovideonlyreasonable,not absolute, assurance that theobjectivesof the control systemaremet. Furthermore, thedesignof a control systemmustreflectthefactthatthereareresourceconstraintsandthebenefitsofcontrolsmustbeconsideredrelativetotheircosts.Duetotheinherentlimitationsofallcontrolsystems,theycannotprovideabsoluteassurancethatallcontrolissuesand instances of fraud, if any, within the Company have been prevented and/or detected. These inherent limitationsinclude therealities that judgments indecision-makingcanbe faultyandbreakdownscanoccurbecauseof simpleerrorormistake.Additionally,controlscanbecircumventedbytheindividualactsofsomepersons,bycollusionoftwoormorepeople, or by unauthorized override control. The design of any system of controls is also based in part upon certainassumptionsaboutthelikelihoodoffutureevents,andtherecanbenoassurancethatanydesignwillsucceedinachievingits stated goals under all potential future conditions. Accordingly, becauseof the inherent limitations in a cost-effectivecontrolsystem,misstatementsduetoerrororfraudmayoccurandnotbedetected.

Changes in Internal Controls over Financial Reporting TherehasbeennochangeintheCompany’sdesignofinternalcontrolsandproceduresoverfinancialreportingthathasmateriallyaffected,or isreasonably likelytomateriallyaffect,theCompany’s internalcontrolsoverfinancialreportingduringtheperiodcoveredbythisMD&A.


CAUTIONARYNOTESCautionary 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 CanadianstandardsunderapplicableCanadiansecuritieslaws,andmaynotbecomparabletosimilarinformationforUnitedStatescompanies. The terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “InferredMineralResource”used inthisMD&AareCanadianminingtermsasdefined intheCIMDefinitionStandardsforMineralResourcesandMineralReservesadoptedbytheCIMCouncilonMay10,2014andincorporatedbyreferenceinNationalInstrument43-101(“NI43-101”).Whiletheterms“MineralResource”,“MeasuredMineralResource”,“IndicatedMineralResource”and“InferredMineralResource”arerecognizedandrequiredbyCanadiansecurities regulations, theyarenotdefined terms under standards of theUnited States Securities and Exchange Commission. As such, certain informationcontained in this MD&A concerning descriptions of mineralization and resources under Canadian standards is notcomparable to similar information made public by United States companies subject to the reporting and disclosurerequirementsoftheUnitedStatesSecuritiesandExchangeCommission.

An“InferredMineralResource”hasagreatamountofuncertaintyasto itsexistenceandasto itseconomicand legalfeasibility.UnderCanadianrules,estimatesof InferredMineralResourcesmaynot formthebasisof feasibilityorpre-feasibilitystudies.Itcannotbeassumedthatalloranypartofan“InferredMineralResource”willeverbeupgradedtoahigherconfidencecategorythroughadditionalexplorationdrillingandtechnicalevaluation.Readersarecautionednottoassumethatalloranypartofan“InferredMineralResource”existsoriseconomicallyorlegallymineable.

UnderUnitedStatesstandards,mineralizationmaynotbeclassifiedasa“Reserve”unlessthedeterminationhasbeenmadethat the mineralization could be economically and legally produced or extracted at the time the Reserve estimationismade. Readersarecautionednot toassumethatalloranypartof theMeasuredor IndicatedMineralResourceswilleverbeconvertedintoMineralReserves.Inaddition,thedefinitionsof“ProvenMineralReserves”and“ProbableMineralReserves”underCIMstandardsdifferincertainrespectsfromthestandardsoftheUnitedStatesSecuritiesandExchangeCommission.

Cautionary Note Regarding Forward-Looking Statements CertaininformationcontainedinthisMD&A,includinganyinformationrelatingtoNewGold’sfuturefinancialoroperatingperformanceare“forward looking”.Allstatements inthisMD&A,otherthanstatementsofhistorical fact,whichaddressevents, results, outcomesordevelopments thatNewGoldexpects tooccur are “forward-looking statements”. Forward-lookingstatementsarestatementsthatarenothistoricalfactsandaregenerally,butnotalways, identifiedbytheuseofforward-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 orstatements thatcertainactions,eventsor results “may”, “could”, “would”, “should”, “might”or “willbe taken”, “occur”or“beachieved”orthenegativeconnotationofsuchterms.Forward-lookingstatementsinthisMD&Aincludethoseunderthe heading “Outlook for 2017” and “Development and Exploration Review” include, among others, statements withrespect to:guidance forproduction,operatingexpensespergoldouncesold, total cashcostsandall-in sustainingcosts,and the factors contributing to those expected results, as well as expected capital expenditures; Mineral Reserve andMineralResourceestimates;gradesexpectedtobeminedat theCompany’soperations; theexpectedproduction,costs,economics andoperatingparametersofRainyRiver, Blackwater andNewAftonC-zone; plannedactivities for 2017andbeyond at the Company’s operations and projects, as well as planned exploration activities and expenses; expectedpermitting and development activities for Blackwater and the New Afton C-zone;; the expected capital costs andcontingency amounts aswell asproduction, costs, economics, gradeandotheroperatingparametersof theRainyRiver


Mine;thecapacityofthestarterdamattheRainyRiverMine;targetedtimingfordevelopmentactivities,andcommercialproductionfortheRainyRiverMine.

Allforward-lookingstatementsinthisMD&Aarebasedontheopinionsandestimatesofmanagementasofthedatesuchstatementsaremadeandaresubjectto importantrisk factorsanduncertainties,manyofwhicharebeyondNewGold’sabilitytocontrolorpredict.Certainmaterialassumptionsregardingsuchforward-lookingstatementsarediscussedinthisMD&A,NewGold’sAnnualInformationFormanditsTechnicalReportsfiledonSEDARatwww.sedar.com.Inadditionto,and subject to, suchassumptionsdiscussed inmoredetail elsewhere, the forward-looking statements in thisMD&Aarealso 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, beingconsistent with New Gold’s current expectations; (3) the accuracy of New Gold’s currentMineral Reserve andMineralResourceestimates; (4) theexchange ratebetween theCanadiandollar,Australiandollar,MexicanpesoandU.S. dollarbeing approximately consistent with current levels; (5) prices for diesel, natural gas, fuel oil, electricity and other keysuppliesbeingapproximatelyconsistentwithcurrentlevels;(6)equipment,labourandmaterialcostsincreasingonabasisconsistentwithNewGold’scurrentexpectations;(7)arrangementswithFirstNationsandotherAboriginalgroupsinrespectofRainyRiverandBlackwaterbeingconsistentwithNewGold’scurrentexpectations;(8)allrequiredpermits,licensesandauthorizations being obtained from the relevant governments and other relevant stakeholders within the expectedtimelines;(9)theresultsofthefeasibilitystudiesforRainyRiver,theNewAftonC-zoneandBlackwaterbeingrealized;and(10)inthecaseofproduction,costandexpenditureoutlooksatoperatingminesfor2017,commoditypricesandexchangeratesbeingconsistentwiththoseestimatedforthepurposesof2017guidance.

Forward-lookingstatementsarenecessarilybasedonestimatesandassumptionsthatareinherentlysubjecttoknownandunknown risks, uncertainties and other factors that may cause actual results, level of activity, performance orachievementstobemateriallydifferentfromthoseexpressedorimpliedbysuchforward-lookingstatements.Suchfactorsinclude, 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 currencymarkets and in the ratesof exchangeof the currencies of Canada, theUnitedStates, Australia and Mexico; discrepancies between actual and estimated production, between actual and estimatedMineralReservesandMineralResourcesandbetweenactualandestimatedmetallurgicalrecoveries;changes innationalandlocalgovernmentlegislationinCanada,theUnitedStates,AustraliaandMexicooranyothercountryinwhichNewGoldcurrentlyormayinthefuturecarryonbusiness;taxation;controls,regulationsandpoliticaloreconomicdevelopmentsinthe countries in which New Gold does or may carry on business; the speculative nature of mineral exploration anddevelopment,includingtherisksofobtainingandmaintainingthevalidityandenforceabilityofthenecessarylicensesandpermitsandcomplyingwiththepermittingrequirementsofeachjurisdictioninwhichNewGoldoperates,including,butnotlimitedto: inCanada,obtainingthenecessarypermitsforRainyRiver,NewAftonC-zoneandBlackwater;andinMexico,whereCerroSanPedrohasahistoryofongoing legal challenges related toourenvironmentalauthorization; the lackofcertainty with respect to foreign legal systems, which may not be immune from the influence of political pressure,corruptionorotherfactorsthatareinconsistentwiththeruleoflaw;theuncertaintiesinherenttocurrentandfuturelegalchallenges New Gold is or may become a party to; diminishing quantities or grades of Mineral Reserves and MineralResources;competition;lossofkeyemployees;risingcostsoflabour,supplies,fuelandequipment;actualresultsofcurrentexplorationorreclamationactivities;uncertaintiesinherenttominingeconomicstudiesincludingthefeasibilitystudiesforRainyRiver,NewAftonC-zoneandBlackwater;theuncertaintywithrespecttoprevailingmarketconditionsnecessaryforapositivedevelopmentorconstructiondecisionatBlackwater;changesinprojectparametersasplanscontinuetoberefined;accidents; labour disputes; defective title to mineral claims or property or contests over claims to mineral properties;unexpecteddelaysandcostsinherenttoconsultingandaccommodatingrightsofFirstNationsandotherAboriginalgroups;


uncertainties and unanticipated delays associated with obtaining and maintaining necessary licenses, permits andauthorizationsandcomplyingwithpermittingrequirements,includingthoseassociatedwiththeenvironmentalassessmentprocess for Blackwater. 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 unexpectedformations,pressures,cave-ins,floodingandgoldbullionlosses(andtheriskofinadequateinsuranceorinabilitytoobtaininsurancetocovertheserisks)aswellas“RiskFactors”includedinNewGold’sdisclosuredocumentsfiledonandavailableonSEDARatwww.sedar.com.Forward-looking statementsarenotguaranteesof futureperformance,andactual resultsandfutureeventscouldmateriallydifferfromthoseanticipatedinsuchstatements.Alloftheforward-lookingstatementscontained in this MD&A are qualified by these cautionary statements. New Gold expressly disclaims any intention orobligationtoupdateorreviseanyforward-lookingstatementswhetherasaresultofnewinformation,eventsorotherwise,exceptinaccordancewithapplicablesecuritieslaws.

Technical Information ThescientificandtechnicalinformationrelatingtotheconstructionofandexpectedoperationsatNewGold’sRainyRiverMine contained herein has been reviewed and approved by Binsar Sirait, Director,Mine Engineering of NewGold. Thescientific and technical information relating toMineral Resources and exploration contained herein has been reviewedandapprovedbyMarkA. Petersen,VicePresident, ExplorationofNewGold.Mr. Sirait is a Professional Engineer andaSMERegisteredMember.Mr.PetersenisaSMERegisteredMember,AIPGCertifiedProfessionalGeologist.Mr.SiraitandMr.Petersenare"QualifiedPersons"forthepurposesofNI43-101.

The estimates of Mineral Reserves and Mineral Resources discussed in this MD&A may be materially affected byenvironmental,permitting, legal,title,taxation,sociopolitical,marketingandotherrelevant issues.NewGold’scurrentAnnual InformationFormand theNI43-101TechnicalReports for itsmineralproperties,allofwhichareavailableonSEDAR at www.sedar.com, contain further details regarding Mineral Reserve and Mineral Resource estimates,classificationandreportingparameters,keyassumptionsandassociatedrisksforeachofNewGold'smineralproperties,includingabreakdownbycategory.


Contents

CONDENSEDCONSOLIDATEDINCOMESTATEMENTS..........................................................................................................78

CONDENSEDCONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINCOME(LOSS).............................................................79

CONDENSEDCONSOLIDATEDSTATEMENTSOFFINANCIALPOSITION.................................................................................80

CONDENSEDCONSOLIDATEDSTATEMENTSOFCHANGESINEQUITY.................................................................................81

CONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLOW...............................................................................................82

NOTESTOTHECONDENSEDCONSOLIDATEDFINANCIALSTATEMENTS..............................................................................83

1.Descriptionofbusinessandnatureofoperations........................................................................................................83

2.Significantaccountingpolicies......................................................................................................................................83

3.Expenses.......................................................................................................................................................................86

4.Tradeandotherreceivables.........................................................................................................................................87

5.Tradeandotherpayables.............................................................................................................................................87

6.Inventories....................................................................................................................................................................88

7.Mininginterests............................................................................................................................................................89

8.Long-termdebt.............................................................................................................................................................91

9.Goldstreamobligation.................................................................................................................................................93

10.Derivativeinstruments...............................................................................................................................................95

11.Sharecapital...............................................................................................................................................................99

12.Discontinuedoperations...........................................................................................................................................101

13.Incomeandminingtaxes..........................................................................................................................................103

14.Reclamationandclosurecostobligations................................................................................................................105

15.Supplementalcashflowinformation........................................................................................................................106

16.Segmentedinformation............................................................................................................................................107

17.Fairvaluemeasurement...........................................................................................................................................111

18.Commitmentsandcontingencies.............................................................................................................................114

19.Subsequentevents...................................................................................................................................................114

78 WWW.NEWGOLD.COMTSX:NGDNYSEAmerican:NGD

CONDENSEDCONSOLIDATEDINCOMESTATEMENTS(unaudited)


(inmillionsofU.S.dollars,exceptpershareamounts) Note 20172016

(Note2)

2017

2016(Note2)

Revenues 142.5 115.2 410.9 382.1

Operatingexpenses 3 70.3 53.7 204.0 181.3

Depreciationanddepletion 50.7 43.3 149.8 143.0

Revenuelesscostofgoodssold 21.5 18.2 57.1 57.8

Corporateadministration 5.4 4.9 18.8 16.5

Share-basedpaymentexpenses 11 3.1 2.0 6.9 7.8


Earningsfromoperations 11.1 10.7 26.3 31.9

Financeincome 3 0.3 0.2 0.9 0.7

Financecosts 3 1.9 (1.0) (0.5) (8.4)

Othergains(losses) 3 23.8 (17.5) 64.2 (18.3)

Earnings(loss)beforetaxes 37.1 (7.6) 90.9 5.9Incometax(expense)recovery 13 (7.9) 8.4 (13.0) 9.0Earningsfromcontinuingoperations(1)

29.2 0.8 77.9 14.9

(Loss)earningsfromdiscontinuedoperations,netoftax

12

(2.2)

3.3

9.7

0.6

Netearnings 27.0 4.1 87.6 15.5

Earningsfromcontinuingoperationspershare

Basic 11 0.05 0.00 0.14 0.03

Diluted 11 0.05 0.00 0.14 0.03

Earningspershare

Basic 11 0.05 0.01 0.16 0.03

Diluted 11 0.05 0.01 0.16 0.03Weightedaveragenumberofsharesoutstanding(inmillions)

Basic 11 576.2 513.0 560.2 511.3

Diluted 11 577.0 515.8 560.9 513.1

1. For the three and ninemonths ended September 30, 2017 and comparative periods, PeakMines has been classified as a discontinued operation and accordinglyearningsandcashflowsfromcontinuingoperationsarepresentedexclusiveofPeakMines.RefertoNote12forfurtherdetails.

Seeaccompanyingnotestothecondensedconsolidatedfinancialstatements.


CONDENSEDCONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINCOME(LOSS)(unaudited)




Note 2017

2016(Note2) 2017

2016(Note2)

Netearnings 27.0 4.1 87.6 15.5

Othercomprehensive(loss)income

Unrealizedforeignexchangegainoncashandcashequivalentsdesignatedashedginginstruments

10

-

-

-

4.9

Reclassificationofrealizedforeignexchangegainoncashandcashequivalentsdesignatedashedginginstruments

10

-

-

-

3.2

Unrealized(loss)gainonmark-to-marketofdieselswapcontracts 10 - (0.1) (0.4) 0.9

Reclassificationofrealizedlossonsettlementofdieselswapcontracts 10 - 0.5 0.3 2.1

Lossonrevaluationofgoldstreamobligation 9 (11.4) (17.6) (5.9) (51.8)

Deferredincometaxrelatedtoderivativecontractsandgoldstreamobligation 9,10 3.8 5.2 2.0 15.5

Totalothercomprehensiveloss (7.6) (12.0) (4.0) (25.2)

Totalcomprehensiveincome(loss) 19.4 (7.9) 83.6 (9.7)



CONDENSEDCONSOLIDATEDSTATEMENTSOFFINANCIALPOSITION(unaudited)

AsatSeptember30

AsatDecember31

(inmillionsofU.S.dollars) Note 20172016

(Note2)ASSETS Currentassets

Cashandcashequivalents 207.1 185.9

Tradeandotherreceivables 4 28.9 37.1

Inventories 6 160.0 150.4

Currentincometaxreceivable 5.6 12.5

Derivativeassets 10 0.3 18.0

Prepaidexpensesandother 3.9 6.1

Totalcurrentassets 405.8 410.0Non-currentinventories 6 92.6 103.3

Mininginterests 7 3,421.8 3,191.3

Deferredtaxassets 13 252.2 224.9

Other 3.1 3.5

4,175.5 3,933.0

Assetsheldforsale 12 145.7 -Totalassets

4,321.2 3,933.0

LIABILITIESANDEQUITY Currentliabilities

Tradeandotherpayables 5 175.3 169.2

Currentincometaxpayable 2.6 6.2

Totalcurrentliabilities 177.9 175.4

Reclamationandclosurecostobligations 14 115.3 81.0

Goldstreamobligation 9 236.0 246.5

Provisions 6.4 12.0

Long-termdebt 8 977.0 889.5

Deferredtaxliabilities 13

404.0 455.2

Other 2.0 0.2

1,918.6 1,859.8

Liabilitiesheldforsale 12 69.1 -

Totalliabilities 1,987.7 1,859.8

Equity Commonshares 11 3,032.6 2,859.0

Contributedsurplus 103.6 100.5

Otherreserves (37.0) (33.0)

Deficit (765.7) (853.3)

Totalequity 2,333.5 2,073.2

Totalliabilitiesandequity 4,321.2 3,933.0



CONDENSEDCONSOLIDATEDSTATEMENTSOFCHANGESINEQUITY(unaudited)



(Note2)COMMONSHARES Balance,beginningofperiod 2,859.0 2,841.0

Commonshareissuance 172.8 15.0

Sharesissuedforexerciseofoptions 0.8 0.4

Balance,endofperiod 3,032.6 2,856.4

CONTRIBUTEDSURPLUS Balance,beginningofperiod 100.5 102.3

Exerciseofoptions 11 (0.1) (5.4)

Equitysettledshare-basedpayments 3.2 4.5

Balance,endofperiod 103.6 101.4

OTHERRESERVES

Balance,beginningofperiod (33.0) 2.6

Changeinfairvalueofhedginginstruments(netoftax) 10 (0.1) 9.9

Gain(loss)onrevaluationofgoldstreamobligation(netoftax) (3.9) (35.1)

Balance,endofperiod (37.0) (22.6)

DEFICIT Balance,beginningofperiod (853.3) (846.3)

Netearnings 87.6 15.5

Balance,endofperiod (765.7) (830.8)

Totalequity 2,333.5 2,104.4



CONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLOW(unaudited)




(Note2) 20172016

(Note2)OPERATINGACTIVITIES Earningsfromcontinuingoperations 29.2 0.8 77.9 14.9Adjustmentsfor: Foreignexchange(gains)losses 3 (30.6) 11.3 (52.6) (17.1)Reclamationandclosurecostspaid 14 (0.3) (0.4) (0.8) (1.3)GainondisposalofElMorrostream - - (33.0) -Depreciationanddepletion 51.0 42.7 150.0 143.0Othernon-cashadjustments 15 12.1 10.4 28.7 39.9Incometaxexpense(recovery) 13 7.9 (8.4) 13.0 (9.0)Financeincome 3 (0.3) (0.2) (0.9) (0.7)Financecosts 3 (1.9) 1.0 0.5 8.4 67.1 57.2 182.8 178.1Changeinnon-cashoperatingworkingcapital 15 6.3 (7.5) 14.5 (4.8)Incometaxespaid (7.9) 4.3 (13.4) 2.8Operatingcashflowsgeneratedfromcontinuingoperations(1) 65.5 54.0 183.9 176.1Operatingcashflowsgeneratedfromdiscontinuedoperations 12 0.5 35.6 39.5 54.4Cashgeneratedfromoperations 66.0 89.6 223.4 230.5INVESTINGACTIVITIES Mininginterests (150.6) (153.5) (468.5) (394.2)Goldpriceoptioncontractinvestmentcosts - (1.0) (0.9) (3.1)Proceedsfromthesaleofassets - - 65.3 0.6Interestreceived 0.3 0.1 0.7 0.6Investingcashflowsusedbycontinuingoperations(1) (150.3) (154.4) (403.4) (396.1)Investingcashflowsusedbydiscontinuedoperations 12 (7.7) (3.1) (21.6) (7.7)Cashusedbyinvestingactivities (158.0) (157.5) (425.0) (403.8)FINANCINGACTIVITIES Proceedsreceivedfromexerciseofoptions 11 - 1.3 0.6 8.5Netproceedsreceivedfromissuanceofcommonshares - - 164.7 -Financinginitiationcosts - - - (0.3)Issuanceofseniorunsecurednotes,netoftransactioncosts 8 - - 295.1 -Repaymentofseniorunsecurednotes 8 - - (305.3) -DrawdownofCreditFacility 8 100.0 - 100.0 -Interestpaid (2.5) (0.8) (35.3) (28.3)Cashgeneratedby(usedby)financingactivities 97.5 0.5 219.8 (20.1)Effectofexchangeratechangesoncashandcashequivalents 2.8 (0.9) 3.0 9.1Changeincashandcashequivalents 8.3 (68.3) 21.2 (184.3)Cashandcashequivalents,beginningofperiod 198.8 219.5 185.9 335.5 Cashandcashequivalents,endofperiod 207.1 151.2 207.1 151.2Cashandcashequivalentsarecomprisedof: Cash 134.2 105.0 134.2 105.0Short-termmoneymarketinstruments 72.9 46.2 72.9 46.2 207.1 151.2 207.1 151.2

1. For the three and ninemonths ended September 30, 2017 and comparative periods, PeakMines has been classified as a discontinued operation and accordinglyearningsandcashflowsfromcontinuingoperationsarepresentedexclusiveofPeakMines.RefertoNote12forfurtherdetails



NOTESTOTHECONDENSEDCONSOLIDATEDFINANCIALSTATEMENTSFortheninemonthsendedSeptember30,2017and2016(AmountsexpressedinmillionsofU.S.dollars,exceptpershareamountsandunlessotherwisenoted)

1.DESCRIPTIONOFBUSINESSANDNATUREOFOPERATIONSNewGoldInc.(“NewGold”orthe“Company”)isanintermediategoldminingcompanyengagedinthedevelopmentandoperationofmineralproperties.Theassetsof theCompany,directlyor through its subsidiaries,are comprisedof theNewAftonMine inCanada(“NewAfton”), theMesquiteMine intheUnitedStates (“Mesquite”), theCerroSanPedroMine inMexico (“Cerro San Pedro”) and the PeakMines in Australia (“PeakMines”) which has been classified as adiscontinuedoperationduringthethirdquarterof2017.Significantprojects includeRainyRiver (“RainyRiver”),whichsuccessfullyachievedstart-uponSeptember14,2017andachievedcommercialproductionsubsequenttothequarterend,andBlackwater(“Blackwater”)projects,bothinCanada.

TheCompanyisacorporationgovernedbytheBusinessCorporationsAct(BritishColumbia).TheCompany’ssharesarelistedontheTorontoStockExchangeandtheNewYorkStockExchangeAmericanunderthesymbolNGD.

The Company’s registered office is located at 1100Melville Street, Suite 610, Vancouver, British Columbia, V6E 4A6,Canada.

2.SIGNIFICANTACCOUNTINGPOLICIES(a) Statement of compliance These unaudited condensed consolidated interim financial statements have been prepared in accordance withInternational Accounting Standard (“IAS”) 34, Interim Financial Reporting, on a basis consistent with the accountingpoliciesdisclosedintheCompany’sauditedconsolidatedfinancialstatementsfortheyearendedDecember31,2016.

Theseunaudited interim financial statements shouldbe read inconjunctionwith theCompany’sauditedconsolidatedfinancial statements for the year ended December 31, 2016 which includes information necessary or useful tounderstanding the Company's business and financial statement presentation. In particular, the Company's significantaccounting policies are presented as Note 2 in the audited consolidated financial statements for the year endedDecember31,2016,andhavebeenconsistentlyappliedinthepreparationoftheseunauditedcondensedconsolidatedinterimfinancialstatements.

Theseunauditedcondensedconsolidated interimfinancialstatementswereapprovedbytheBoardofDirectorsoftheCompanyonOctober25th,2017.

(b) Future changes in accounting policies

RevenueOnMay28,2014theIASBissuedIFRS15,RevenuefromContractswithCustomers(“IFRS15”).Thisstandardoutlinesasingle comprehensive model with prescriptive guidance for entities to use in accounting for revenue arising fromcontractswithitscustomers.IFRS15usesacontrolbasedapproachtorecognizerevenuewhichisachangefromtheriskandrewardapproachunderthecurrentstandard.ThisstandardreplacesIAS18Revenue,IAS11ConstructionContractsandrelatedinterpretations.TheeffectivedateisforreportingperiodsbeginningonorafterJanuary1,2018withearlyapplicationpermitted.


TheCompany is currentlyevaluating thepotential impactof applying IFRS15,primarilyanalyzing its concentrate saleagreements. The standard requires entities to apportion revenue earned from contracts to individual promises orperformanceobligations,onarelativestandalonesellingpricebasis.FortheCompany'sconcentratesales,thesellermaycontractforandpaytheshippingandinsurancecostsnecessarytobringthegoodstothenameddestination.Therefore,wherematerial,aportionoftherevenueearnedunderthesecontracts,representingtheobligationtofulfilltheshippingand insurance services, will be deferred and recognized over time as the obligations are fulfilled, along with theassociatedcosts.Basedonapreliminaryassessment,theimpactofthischangeontheamountofrevenuerecognizedinayearisnotexpectedtobesignificant.Asaresult,theCompanydoesnotanticipateanychangesintheamountsoftherevenuerecognizedorasignificantchangeinthetimingofrevenuerecognitionunderthenewstandard.

LeasesOnJanuary6,2016,theIASB issuedIFRS16,Leases(“IFRS16”).Thisstandardspecifiesthemethodologytorecognize,measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees torecognizeassetsandliabilitiesforallleasesunlesstheleasetermis12monthsorlessortheunderlyingassethasalowvalue.ThisstandardreplacesIAS17Leases.TheeffectivedateisforreportingperiodsbeginningonorafterJanuary1,2019with early adoption permitted. The Company is assessing the effect of adoption of IFRS 16 on its consolidatedfinancialstatementshowever,asminingatitsCerroSanPedroMineceasedduring2016,theCompanynolongerholdssignificant operating leases on mining equipment and therefore the adoption of IFRS 16 is not expected to have asignificantimpactontheCompany'sconsolidatedfinancialstatements.


(c) Revisions to prior period comparativesIn the firstquarterof2017 theCompany identifiedan immaterial error relating todepletionof itsNewAftonmininginterestfortheyearendedDecember31,2016resultinginareductionin2016netearningsof$9.7million.

Thequarterlyimpactonthecomparativecondensedconsolidatedincomestatementisoutlinedinthetablebelow.Theresulting overstatement of the mining interests balance of $15.4 million, overstatement of deferred tax liability of$5.3million,andunderstatementofinventoriestotalling$0.4millionasatDecember31,2016hasbeenrevisedinthecomparativecondensedconsolidatedstatementsoffinancialpositionandchangesinequity,andtheassociatednotestothecondensedconsolidatedfinancialstatements.Therehasbeennochangetothecashflowsfromoperating,investing,andfinancingactivitiesinthecomparativecondensedconsolidatedstatementsofcashflow.

1. FortheperiodsinwhichtheCompanyrecordsaloss,dilutedlosspershareiscalculatedusingthebasicweightedaveragenumberofsharesoutstanding,asusingthedilutedweightedaveragenumberofsharesoutstandinginthecalculationwouldbeanti-dilutive.

Threemonthsended

Threemonthsended

Threemonthsended

Threemonthsended Yearended


March31,2016

June30,2016

September30,2016

December31,2016

December31,2016

IMPACTONNETEARNINGS(LOSS)Netearnings(loss)beforerevision 26.8 (8.8) 5.1 (19.9) 2.7

Revisiontodepreciationanddepletion (3.4) (4.1) (3.4) (4.1) (15.0)

Revisiontoincometaxrecovery(expense) 2.2 (1.0) 2.4 1.7 5.3

Revisiontonetearnings(loss) (1.2) (5.1) (1.0) (2.4) (9.7)

Revisednetearnings(loss) 25.6 (13.9) 4.1 (22.3) (7.0)Basic weighted average number of sharesoutstanding(inmillions) 509.6 511.2 513.0 513.3 511.8Dilutionofsecurities:

Stockoptions 1.1 - 2.8 - -Dilutedweightedaveragenumberofsharesoutstanding(inmillions) 510.7 511.2 515.8 513.3 511.8Netearnings(loss)persharebeforerevision:

Basic 0.05 (0.02) 0.01 (0.04) 0.01

Diluted(1) 0.05 (0.02) 0.01 (0.04) 0.01Impactofrevisiontonetearnings(loss)pershare:Basic - (0.01) - - (0.02)

Diluted(1) - (0.01) - - (0.02)

Revisednetearnings(loss)pershare:

Basic 0.05 (0.03) 0.01 (0.04) (0.01)

Diluted(1) 0.05 (0.03) 0.01 (0.04) (0.01)


3.EXPENSES(a) Operatingexpensesbynature


(inmillionsofU.S.dollars) 2017 2016 2017 2016OPERATINGEXPENSESBYNATURE Rawmaterialsandconsumables 35.0 31.2 98.2 96.7

Salariesandemployeebenefits 21.4 20.5 64.0 64.5

Contractors 9.1 7.9 27.1 27.1

Repairsandmaintenance 4.7 5.4 13.9 15.3

Generalandadministrative 3.6 3.1 11.0 10.2

Operatingleases 0.6 0.3 1.7 7.8

Royalties 1.9 1.6 5.8 5.3

Drillingandanalytical 0.3 0.3 0.7 1.1

Other 0.6 1.2 1.7 1.8

Totalproductionexpenses 77.2 71.5 224.1 229.8

Less:Productionexpensescapitalized (5.6) (8.4) (17.5) (33.9)

Less:Changeininventoriesandwork-in-progress (1.3) (9.4) (2.6) (14.6)

Totaloperatingexpenses 70.3 53.7 204.0 181.3

(b) Financecostsandincome


(inmillionsofU.S.dollars) 2017 2016 2017 2016FINANCECOSTS

Interestonseniorunsecurednotes 13.3 13.5 41.0 40.3

InterestonCreditFacility 1.6 - 3.5 -

Accretionexpenseondecommissioningobligations(Note14) 0.4 0.3 1.0 0.8

Gainonmodificationoflong-termdebt(Note8) (3.3) - (3.3) -

Otherfinancecosts 1.3 0.7 3.9 2.6

13.3 14.5 46.1 43.7

Less:amountsincludedincostofqualifyingassets (15.2) (13.5) (45.6) (35.3)

Totalfinancecosts (1.9) 1.0 0.5 8.4

FINANCEINCOME

Interestincome 0.3 0.2 0.9 0.7


(c) Othergains(losses)


(inmillionsofU.S.dollars) 2017 2016 2017 2016OTHERGAINS(LOSSES) Unrealized(loss)gainonsharepurchasewarrants - (0.8) 1.2 (1.3)

Gain(loss)onforeignexchange 30.6 (11.3) 52.6 17.1

GainondisposalofElMorrostream - - 33.0 -

Othergainondisposalofassets - 0.7 0.1 0.2

(Loss)gainonrevaluationofinvestments - - (0.1) 0.7

Unrealizedgain(loss)onrevaluationofgoldstreamobligation 0.2 (8.9) (4.8) (34.4)Settlementand(loss)gainonrevaluationofgoldpriceoptioncontracts

(1.3)

2.4

(14.2)

(0.9)

Lossonrevaluationofcopperforwardcontracts (5.9) - (4.7) -

Other 0.2 0.4 1.1 0.3Totalothergains(losses) 23.8 (17.5) 64.2 (18.3)4.TRADEANDOTHERRECEIVABLES

Asat

September30Asat

December31

(inmillionsofU.S.dollars) 2017 2016TRADEANDOTHERRECEIVABLES Tradereceivables 9.0 27.4

Salestaxreceivable 22.3 11.8

Unsettledprovisionallypricedconcentratederivativesandcopperswapcontracts(Note10) (3.3) (4.5)

Other 0.9 2.4

Totaltradeandotherreceivables 28.9 37.15.TRADEANDOTHERPAYABLES

Asat

September30Asat

December31

(inmillionsofU.S.dollars) 2017 2016TRADEANDOTHERPAYABLES Tradepayables 42.8 32.0

Interestpayable 19.2 8.6

Accruals 86.9 125.4

Currentportionofreclamationandclosurecostobligations(Note14) 0.6 0.9

Currentportionofgoldstreamobligation(Note9) 21.2 -

Provisionforofficeconsolidation 0.2 1.0

Derivativeliabilities(Note10) 4.4 1.3

Totaltradeandotherpayables 175.3 169.2


6.INVENTORIES

Asat

September30Asat

December31

(inmillionsofU.S.dollars) 2017 2016(Note2)

INVENTORIES Heapleachore 176.9 185.9

Work-in-process 7.9 8.7

Finishedgoods(1)(3) 14.4 11.5

Stockpileore 5.7 6.7

Supplies 47.7 40.9

252.6 253.7

Less:non-currentinventories(2) (92.6) (103.3)

Totalcurrentinventories 160.0 150.4

1. TheamountofinventoriesrecognizedinoperatingexpensesforthethreeandninemonthsendedSeptember30,2017was$65.7millionand$190.7million(2016–$50.1millionand$168.8million).

2. Heapleachinventoriesof$92.6million(December31,2016–$103.3million)areexpectedtoberecoveredafteroneyear.3. Priorperiodcomparativeshavebeenrevisedaspernote2(c).


7.MININGINTERESTS

DepletableNon-

depletablePlant&

equipmentConstructioninprogress

Exploration&evaluation Total


COST

AsatDecember31,2015 1,459.5 1,020.9 875.8 325.5 7.5 3,689.2

Additions 57.0 90.2 32.6 509.9 - 689.7

Disposals - - (13.6) - - (13.6)

Impairments - - - - (6.4) (6.4)

Transfers 23.7 6.0 64.3 (94.0) - -

AsatDecember31,2016 1,540.2 1,117.1 959.1 741.4 1.1 4,358.9

Additions 36.5 59.8 29.2 443.4 - 568.9

DisposalofElMorrostream - (32.0) - - - (32.0)

Disposals - - (6.3) - - (6.3)

Reclassifiedasheldforsale(2) (217.6) (9.8) (166.0) (0.3) - (393.7)

Transfers 1.2 - (1.2) - - -

AsatSeptember30,2017 1,360.3 1,135.1 814.8 1,184.5 1.1 4,495.8

ACCUMULATEDDEPRECIATION AsatDecember31,2015 541.8 - 344.2 - - 886.0

Depreciationfortheyear 193.1 - 100.7 - - 293.8

Disposals - - (12.2) - - (12.2)

AsatDecember31,2016(1) 734.9 - 432.7 - - 1,167.6Depreciationfortheperiod 115.9 - 70.9 - - 186.8

Disposals - - (6.1) - - (6.1)

Reclassifiedasheldforsale(2) (159.0) - (115.3) - - (274.3)

AsatSeptember30,2017 691.8 - 382.2 - - 1,074.0

CARRYINGAMOUNT AsatDecember31,2016(1) 805.3 1,117.1 526.4 741.4 1.1 3,191.3

AsatSeptember30,2017 668.5 1,135.1 432.6 1,184.5 1.1 3,421.8

1. Prior-yearperiodcomparativeshavebeenrevisedaspernote2(c).2. RefertoNote12forfurtherinformationontheassetsheldforsale.

TheCompanycapitalized interestof$15.2millionand$45.6millionforthethreeandninemonthsendedSeptember30,2017(2016–$13.5millionand$35.3million)toqualifyingdevelopmentprojects.TheCompany’sannualizedcapitalizationrateis6.54%(2016–6.76%).

DisposalofElMorrogoldstreamasset

InFebruary2017theCompanydisposedofitsElMorrogoldstreamassetforproceedsof$65.0millionwhichresultedinanetgainof$33.0million.


CarryingamountbypropertyasatSeptember30,2017:

AsatSeptember30,2017

(inmillionsofU.S.dollars) DepletableNon-

depletablePlant&

equipmentConstructioninprogress Total

MININGINTERESTBYSITE NewAfton 515.6 22.6 231.7 14.2 784.1

Mesquite 151.9 - 86.9 2.8 241.6

CerroSanPedro 1.0 - - - 1.0

RainyRiver - 577.5 95.8 1,167.5 1,840.8

Blackwater - 535.0 14.8 - 549.8

Other(1) - 1.1 3.4 - 4.5

CarryingamountasatSeptember30,2017 668.5 1,136.2 432.6 1,184.5 3,421.81. Otherincludescorporatebalancesandexplorationproperties.

CarryingamountbypropertyasatDecember31,2016: AsatDecember31,2016

(inmillionsofU.S.dollars) DepletableNon-

depletablePlant&

equipmentConstructioninprogress Total

MININGINTERESTBYSITE

NewAfton 574.4 20.0 247.1 5.2 846.7

Mesquite 170.3 - 98.2 3.1 271.6

PeakMines 58.6 9.8 52.5 0.3 121.2

CerroSanPedro 2.0 - - - 2.0

RainyRiver - 531.0 109.6 732.8 1,373.4

Blackwater - 524.3 15.2 - 539.5

ElMorrogoldstreamasset - 32.0 - - 32.0

Other(1) - 1.1 3.8 - 4.9

CarryingamountasatDecember31,2016(2) 805.3 1,118.2 526.4 741.4 3,191.31. Otherincludescorporatebalancesandexplorationproperties.2. Prior-yearperiodcomparativeshavebeenrevisedaspernote2(c).


8.LONG-TERMDEBTLong-termdebtconsistsofthefollowing:


(inmillionsofU.S.dollars) 2017 2016Long-termdebt Seniorunsecurednotes-dueApril15,2020(b) - 296.1

Seniorunsecurednotes-dueNovember15,2022(a) 494.1 493.4

Seniorunsecurednotes-dueNovember15,2025(b) 282.9 -

CreditFacility(c) 200.0 100.0

Totallong-termdebt 977.0 889.5

(a) SeniorUnsecuredNotes–dueNovember15,2022OnNovember15,2012, theCompany issued$500.0millionof seniorunsecurednotes (“2022UnsecuredNotes”).AsatSeptember 30, 2017 the face value was $500.0 million. The 2022 Unsecured Notes are denominated in U.S. dollars,matureandbecomedueandpayableonNovember15,2022,andbearinterestattherateof6.25%perannum.Interestispayableinarrearsinequalsemi-annualinstallmentsonMay15andNovember15ofeachyear.

TheCompanyincurredtransactioncostsof$9.9millionwhichhavebeenoffsetagainstthecarryingamountofthe2022UnsecuredNotesandarebeingamortizedtonetearningsusingtheeffectiveinterestmethod.

The2022UnsecuredNotesaresubjecttoaminimuminterestcoverageincurrencecovenantofearningsbeforeinterest,taxes,depreciation,amortization,impairment,andothernon-cashadjustmentstointerestof2:1.Thetestisappliedonapro-forma basis prior to the Company incurring additional debt, entering into business combinations or acquiringsignificantassets,orcertainothercorporateactions.Therearenomaintenancecovenants.

The2022UnsecuredNotesareredeemablebytheCompanyinwholeorinpart:

• AtanytimepriortoNovember15,2017ataredemptionpriceof100%oftheaggregateprincipalamountofthe2022UnsecuredNotes,plusamake-wholepremium(consistingof future interestthatwouldhavebeenpaidhadthebondsremainedoutstandinguntil2022),plusaccruedandunpaidinterest,ifany,totheredemptiondate.

• During the 12-monthperiodbeginningonNovember 15of the years indicated at the redemptionpricesbelow,expressedasapercentageoftheprincipalamountofthe2022UnsecuredNotestoberedeemed,plusaccruedandunpaidinterest,ifany,totheredemptiondate:

Date Redemptionprices(%)2017 103.13%2018 102.08%2019 101.04%2020andthereafter 100.00%

(b) SeniorUnsecuredNotes–dueNovember15,2025andSeniorUnsecuredNotes–dueApril15,2020OnMay18,2017, theCompany issued$300.0millionof seniorunsecurednotes (“2025UnsecuredNotes”) fornetcashproceedsof$295.1millionaftertransactioncosts.Theproceedswereusedtoredeemandpurchaseforcancellationthe$300.0millionprincipalamountofthepreviouslyoutstandingseniorunsecurednotes(“2020UnsecuredNotes”)forwhichthe Company was required to pay a redemption premium of $5.3 million. As a result, total costs paid relating to this


refinancingwere$10.2million.Additionally,theCompanywasrequiredtopay$2.8millionofaccruedinterestonthe2020UnsecuredNotesonredemptionandcancellation.

This refinancing transactiondidnotmeet thecriteriaassociatedwithanextinguishmentunder IFRS9as thediscountedpresentvalueof thecashflowsof the2025UnsecuredNoteswas less than10%different fromthepresentvalueof theremainingcashflowsofthe2020UnsecuredNotes.Asaresult,theCompanyrecognizedagainonthemodificationofitsfinancialliability.Transactioncostsrelatingtothe2025UnsecuredNoteshavebeenoffsetagainstthecarryingamountandarebeingamortizedtonetearningsusingtheeffectiveinterestmethod.

The2025UnsecuredNotesbear interest at the rateof 6.375%per annum. Interest is payable in arrears in equal semi-annualinstalmentsonMay15andNovember15ofeachyear.The2025UnsecuredNotesaresubject toaminimuminterestcoverage incurrencecovenantofearningsbefore interest,taxes,depreciation,amortization,impairment,andothernon-cashadjustmentstointerestof2:1.Thetestisappliedonapro-formabasispriortotheCompanyincurringadditionaldebt,enteringintobusinesscombinationsoracquiringsignificantassets,orcertainothercorporateactions.Therearenomaintenancecovenants.The2025UnsecuredNotesareredeemablebytheCompanyinwholeorinpart:

• AtanytimepriortoMay15,2020ataredemptionpriceof100%oftheaggregateprincipalamountofthe2025UnsecuredNotes, plus amake-wholepremium (consistingof future interest thatwouldhavebeenpaiduptothefirstcalldateofMay15,2020),plusaccruedandunpaidinterest,ifany,totheredemptiondate.

• Duringthe12-monthperiodbeginningonMay15oftheyears indicatedattheredemptionpricesbelow,expressed as a percentage of the principal amount of the 2025 Unsecured Notes to be redeemed, plusaccruedandunpaidinterest,ifany,totheredemptiondate:

Date Redemptionprices(%)2020 104.78%2021 103.19%2022 101.59%2023andthereafter 100.00%

(c) CreditFacilityIn June 2017, the Company amended its $400.0 million revolving credit facility (the “Credit Facility”) to extend thematuritydateoftheagreementbyoneyeartoAugust2020.

Netdebt isusedtocalculate leverageforthepurposeofcovenanttestsandpricing levels.TheCreditFacilitycontainsvariouscovenantscustomaryforaloanfacilityofthisnature,includinglimitsonindebtedness,assetsalesandliens.TheCredit Facility contains two covenant tests, the minimum interest coverage ratio, earnings before interest, taxes,depreciation, amortization, exploration, impairment, and other non-cash adjustments (“Adjusted EBITDA”) to interestandthemaximumleverageratio (netdebttoAdjustedEBITDA),bothofwhicharemeasuredonarolling four-quarterbasisattheendofeveryquarter.

InJune2017,theCompanyamendedtheCreditFacility’snetdebttoAdjustedEBITDA("LeverageRatio")covenant,toincrease themaximum Leverage Ratio to 4.0 to 1.0 from January 1, 2018 toMarch 31, 2018 (previously 3.5 to 1.0).


Followingthatperiod,themaximumleverageratiowillbe3.5:1.0.ThemaximumLeverageRatiofromOctober1,2017toDecember31,2017willbe4.0to1.0.

Significantfinancialcovenantsareasfollows:

Twelvemonthsended

September30Twelvemonthsended

December31

Financialcovenant

2017 2016FINANCIALCOVENANTS Minimuminterestcoverageratio(AdjustedEBITDAtointerest) >3.0:1 4.9:1 5.7:1

Maximumleverageratio(netdebttoAdjustedEBITDA) <4.5:1 3.0:1 2.6:1

TheinterestmarginondrawingsundertheCreditFacilityrangesfrom1.00%to3.25%overLIBOR,thePrimeRateortheBaseRate,basedontheCompany’snetdebttoadjustedEBITDAratioandthecurrencyandtypeofcreditselectedbytheCompany.BasedontheCompany’snetdebttoadjustedEBITDAratio,therateis3.25%overLIBORasatSeptember30,2017(December31,2016–3.25%).ThestandbyfeesonundrawnamountsundertheCreditFacilityrangefrom0.45%to0.73%,dependingontheCompany’snetdebttoadjustedEBITDAratio.BasedontheCompany’snetdebttoadjustedEBITDAratio,therateis0.73%asatSeptember30,2017(December31,2016–0.73%).

AsatSeptember30,2017,theCompanyhasdrawn$200millionundertheCreditFacilityandtheCreditFacilityhasbeenusedtoissuelettersofcreditof$127.3millionasatSeptember30,2017(December31,2016-$122.1million).Lettersofcreditrelatetoreclamationbonds,worker’scompensationsecurityandotherfinancialassurancesrequiredwithvariousgovernmentagencies.

9.GOLDSTREAMOBLIGATIONIn2015theCompanyenteredintoa$175millionstreamingtransactionwithRGLDGoldAG,awholly-ownedsubsidiaryofRoyalGoldInc.(“RoyalGold”).Underthetermsoftheagreement,theCompanywilldelivertoRoyalGold6.5%ofgoldproduction fromtheRainyRiverprojectup toa totalof230,000ouncesofgoldand then3.25%of theproject’sgoldproductionthereafter.TheCompanywillalsodelivertoRoyalGold60%oftheproject’ssilverproductiontoamaximumof3.1millionouncesandthen30%ofsilverproductionthereafter.RoyalGoldpaid$175.0millioninconsiderationofthistransaction.

Inadditiontotheupfrontdeposit,RoyalGoldwillpay25%oftheaveragespotgoldorsilverpriceatthetimeeachounceofgoldor silver isdeliveredunder thestream.Thedifferencebetween thespotpriceofmetaland thecash receivedfromRoyalGoldwillreducethe$175.0milliondepositoverthelifeofthemine.Uponexpiryofthe40-yeartermoftheagreement (which may be extended in certain circumstances), any balance of the $175.0 million upfront depositremainingunpaidwillberefundedtoRoyalGold.

The Company has designated the gold stream obligation as a financial liability at fair value through profit or loss(“FVTPL”) under the scope of IFRS 9 (2013). Accordingly, the Company values the liability at the present value of itsexpectedfuturecashflowsateachreportingperiodwithchangesinfairvaluereflectedinthecondensedconsolidatedincome statements and condensed consolidated statements of comprehensive loss. The gold stream obligationcontainedamaximumleverageratiocovenant(netdebttoEBITDA)of3.5:1.0,withtheexceptionthatthenetleveragecovenantlimitispermittedtobeincreasedto4.0:1.0fortwoconsecutivequarters,providedthatitthereafterreturnstoamaximumof3.5:1.0.Furthermore,theleverageratiocontainedintheaboveagreementwithRoyalGoldhasalsobeenadjustedtomatchtherevisedmaximumleverageratioundertheCreditFacility,uptoMarch31,2018.


ThefollowingisasummaryofthechangesintheCompany’sgoldstreamobligation:

(inmillionsofU.S.dollars) CHANGEINSTREAMOBLIGATION

Balance,December31,2015 147.6

FairvalueadjustmentsrelatedtochangesintheCompany’sowncreditrisk(1) 67.8

Otherfairvalueadjustments(2) 31.1

Balance,December31,2016 246.5

Paymentsduringtheperiod -

FairvalueadjustmentsrelatedtochangesintheCompany’sowncreditrisk(1) 5.9

Otherfairvalueadjustments(2) 4.8

Balance,September30,2017 257.2

Less:currentportionofgoldstreamobligation (21.2)

Non-currentportionofgoldstreamobligation 236.0

1. FairvalueadjustmentsrelatedtochangesintheCompany’sowncreditriskareincludedinothercomprehensiveincome.

2. Otherfairvalueadjustmentsareincludedinthecondensedconsolidatedincomestatements.

FairvalueadjustmentsrepresenttheneteffectonthegoldstreamobligationofchangesinthevariablesincludedintheCompany’s valuation model between the date of receipt of deposit and the reporting date. These variables includeaccretion, risk-free interest rate, future metal prices, Company-specific credit spread and expected gold and silverouncestobedelivered.


10.DERIVATIVEINSTRUMENTS

Asat

September30Asat

December31

(inmillionsofU.S.dollars) 2017 2016DERIVATIVEASSETS Goldoptionscontracts 0.3 17.6

Dieselswapcontracts - 0.1

Copperforwardcontracts - 0.3

Totalderivativeassets 0.3 18.0

DERIVATIVELIABILITIES

Sharepurchasewarrants(1) - 1.3Unsettledprovisionallypricedconcentratederivatives,andswapcontracts(2) 3.3 4.5Copperforwardcontracts(3) 4.4 -

Totalderivativeliabilities 7.7 5.81. OnJune28,2017,NewGold’ssharepurchasewarrantsexpired,unexercised.

2. Unsettledprovisionallypricedconcentratederivativesareincludedwithintradeandotherreceivablesinthestatementoffinancialposition.

3. Copperforwardcontractsareincludedwithintradeandotherpayablesinthestatementoffinancialposition.

(a) Hedginginstruments


(inmillionsofU.S.dollars) 2017 2016 2017 2016EFFECTIVEPORTIONOFCHANGEINFAIRVALUEOFHEDGINGINSTRUMENTS

Foreignexchangegainoncashandcashequivalentsdesignatedashedginginstruments

-

-

-

4.9

Reclassificationofrealizedforeignexchangegainoncashandcashequivalentsdesignatedashedginginstrument

-

-

-

3.2

Unrealized(loss)gainondieselswapcontracts(i) - (0.1) (0.4) 0.9

Realizedlossonsettlementofdieselswapcontracts(i) - 0.5 0.3 2.1

Deferredincometaxrelatedtohedginginstruments - (0.3) - (1.2)

Totalhedginggains(losses)inothercomprehensiveincome - 0.1 (0.1) 9.9

(i)DieselswapcontractsIn2015,theCompanyenteredintodieselswapcontractstohedgedieselcostatMesquite.Realizedgainsandlossesarereclassifiedfromothercomprehensiveincometooperatingexpensesasdieselisconsumedattheminesite.

TheCompanyrealizedalossof$0.3milliononsettlementof1.0milliongallonsfortheninemonthsendedSeptember30,2017(2016–lossof$2.1millionon4.2milliongallons).ThehedgewasfullysettledasatJune30,2017andnogainorlosswasrealizedonsettlementforthethreemonthsendedSeptember30,2017.(b) ProvisionallypricedcontractsTheCompanyhadprovisionallypricedsalesforwhichpricefinalizationisoutstandingatSeptember30,2017.Realizedand unrealized non-hedged derivative gains (losses) on the provisional pricing of concentrate sales are classified asrevenue,with the unsettled provisionally priced concentrate derivatives included in trade and other receivables. TheCompany enters into gold and copper swap contracts to reduce exposure to gold and copper prices. Realized andunrealizedgains(losses)arerecordedinrevenue,withtheunsettledgoldandcopperswapsincludedintradeandotherreceivables.


Thefollowingtablessummarizetherealizedandunrealizedgains(losses)onprovisionallypricedsales:

ThreemonthsendedSeptember30,2017 NinemonthsendedSeptember30,2017

(inmillionsofU.S.dollars) Gold Copper Total Gold Copper TotalGAIN(LOSS)ONTHEPROVISIONALPRICINGOFCONCENTRATESALESRealized 0.4 (0.7) (0.3) 2.9 5.2 8.1

Unrealized (0.3) (1.8) (2.1) (0.3) (0.5) (0.8)

Totalgain(loss) 0.1 (2.5) (2.4) 2.6 4.7 7.3


(inmillionsofU.S.dollars) Gold Copper Total Gold Copper Total(LOSS)GAINONTHEPROVISIONALPRICINGOFCONCENTRATESALESRealized 0.1 (0.2) (0.1) 4.3 (0.4) 3.9

Unrealized (0.2) 1.7 1.5 (0.2) 3.1 2.9

Total(loss)gain (0.1) 1.5 1.4 4.1 2.7 6.8

Thefollowingtablessummarizetherealizedandunrealizedgains(losses)ongoldandcopperswapcontracts:


(inmillionsofU.S.dollars) Gold Copper Total Gold Copper TotalGAIN(LOSS)ONSWAPCONTRACTSRealized - 7.3 7.3 (2.2) (0.7) (2.9)

Unrealized 0.1 (1.5) (1.4) 0.1 (2.6) (2.5)

Totalgain(loss) 0.1 5.8 5.9 (2.1) (3.3) (5.4)


(inmillionsofU.S.dollars) Gold Copper Total Gold Copper TotalGAIN(LOSS)ONSWAPCONTRACTSRealized (0.1) 1.6 1.5 (4.4) 0.3 (4.1)

Unrealized 0.4 (2.3) (1.9) 0.4 (2.8) (2.4)

Totalgain(loss) 0.3 (0.7) (0.4) (4.0) (2.5) (6.5)


The following table summarizes the net exposure to the impact of movements in market commodity prices forprovisionallypricedsales:


2017 2016Volumessubjecttofinalpricingnetofoutstandingswaps

Goldounces(000s) 2.1 4.0

Copperpounds(millions) 1.9 3.0

(c) GoldpriceoptioncontractsInMarch 2016, the Company entered into gold price option contracts by purchasing put options at a strike price of$1,200perounceandsellingcalloptionsata strikepriceof$1,400perounce for270,000ouncesofgoldproductionbetween April 2016 and December 2016 (“gold option contracts”). In September 2016, the Company entered into asecondtrancheofgoldpriceoptioncontractsbypurchasingputoptionsatastrikepriceof$1,300perounceandsellingcalloptionsatastrikepriceof$1,400perouncefor120,000ouncesofgoldproductionbetweenJanuary2017andJune2017.InJune2017,theCompanyenteredintoathirdtrancheofgoldpriceoptioncontractsbypurchasingputoptionsatastrikepriceof$1,250perounceandsellingcalloptionsatastrikepriceof$1,400perouncefor120,000ouncesofgoldproductionbetweenJuly2017andDecember2017.TheCompanyincurredinvestmentcostsof$1.0millioninJune2017relatingtothisthirdtrancheofgoldpriceoptioncontracts.

Thecalloptionssoldandputoptionspurchasedaretreatedasderivativefinancialinstrumentsandmarkedtomarketateach reporting period on the condensed consolidated statement of financial position with changes in fair valuerecognizedinothergainsandlosses.RealizedgainsandlossesasaresultoftheexerciseoftheCompany’scallandputoptionsuptoanamountnotexceedingtheCompany’sproductionofgoldouncesforthereportingperiodarerecordedasanadjustmenttorevenue.TheexerciseofoptionsongoldouncesinexcessoftheCompany’sgoldproductionforthereportingperiodarerecordedasothergainsandlosses.TheCompanypresentsthefairvalueofitsputandcalloptionsonanetbasisonthecondensedconsolidatedstatementsoffinancialpositionwithin‘derivativeassets’.

FortheninemonthsendedSeptember30,2017theCompanyexercisedputoptionsfor140,000ouncesandrecognized$7.5millionwithinrevenueandearningsfromdiscontinuedoperations.FortheninemonthsendedSeptember30,2017,theCompanyrecognizedalossof$10.8millionrelatingtothegoldpriceoptioncontracts,whichincludesthesettlementand loss on revaluationof the gold price option contracts of $14.2million as per note 3(c) and $4.1million includedearningsfromdiscontinuedoperations,netoftheamountincludedinrevenue.


Quantity

outstanding RemainingtermExercise

price($/oz)

Fairvalue–asset(liability)(inmillions)

(1)GOLDOPTIONCONTRACTSOUTSTANDING Goldcallcontracts-sold 60,000oz October2017–December2017 1,400 $(0.1)

Goldputcontracts-purchased 60,000oz October2017–December2017 1,250 $0.4

1. TheCompanypresents the fairvalueof itsputandcalloptionsonanetbasison thecondensedconsolidatedstatementsof financialposition.TheCompanyhasalegallyenforceablerighttosetofftheamountsunderitsoptionscontractsandintendstosettleonanetbasis.Thecontractscover20,000ouncesofgoldpermonth.


(d) CopperforwardcontractsIn November 2016, the Company entered copper swap contracts for 5.3 million pounds of copper per month fromJanuary through June 2017 at a fixed price of $2.52 per pound. In February 2017, the Company entered into furthercopper swapcontracts for7.3millionpoundsofcopperpermonth fromJuly2017 throughDecember2017ata fixedpriceof$2.73perpound.CopperswapssettleagainsttheLondonMetalsExchangemonthlyaverageprice.Thecopperforwardcontractsaretreatedasderivativefinancialinstrumentsandmarkedtomarketateachreportingperiodontheconsolidated statement of financial positionwith changes in fair value recognized in other gains and losses. Realizedgains and losses on settlement of the Company’s copper forward contracts up to an amount not exceeding theCompany’s production of copper pounds for the reporting period are recorded as an adjustment to revenue. Thesettlementoncopperpounds inexcessof theCompany’s copperproduction for the reportingperiodare recordedasother gains and losses. The Company presents the fair value of its copper forward contracts on the consolidatedstatementsoffinancialpositionwithin‘tradeandotherpayables’.


Quantityoutstanding

(lbs) RemainingtermExercise

price($/lb)

Fairvalue–asset(liability)

(inmillions)

COPPERFORWARDCONTRACTSOUTSTANDING CopperforwardcontractsforQ42017 21.9million October2017–December2017 2.73 $(4.4)


11.SHARECAPITALAt September 30, 2017, the Company had unlimited authorized common shares and 577.5 million common sharesoutstanding.

(a) No par value common shares issued Numberofshares

(inmillionsofU.S.dollars,exceptwherenoted) (000s) $NOPARVALUECOMMONSHARESISSUED BalanceatDecember31,2015 509,469 2,841.0

Exerciseofoptionsandvestedperformanceshareunits 3,827 16.3

IssuanceofsharesunderFirstNationsagreementsandlandpurchases 329 1.3

AcquisitionofBayfieldVenturesCorp. 84 0.4

BalanceatDecember31,2016 513,709 2,859.0Issuanceofcommonsharesonequityoffering(1) 61,740 166.6IssuanceofcommonsharesunderFirstNationsagreementsandlandpurchases 1,783 6.2Exerciseofoptionsandvestedperformanceshareunits(i) 235 0.8

BalanceatSeptember30,2017 577,467 3,032.6

1. OnMarch10,2017 theCompanyclosedaboughtdeal financingand relatedagreementsand issued61.7million commonsharesatapriceofUS$2.80per share.Proceedsof$172.9millionareincludedwithinequitynetofequityissuancecostsof$8.2millionandtheassociateddeferredtaxrecoveryof$1.9million.

(b) Share-based payment expenses Thefollowingtablesummarizesshare-basedpaymentexpenses:


(inmillionsofU.S.dollars) 2017 2016 2017 2016SHARE-BASEDPAYMENTEXPENSES Stockoptionexpense(i) 0.5 0.9 2.0 2.9

Performanceshareunitexpense 1.8 0.9 3.1 3.4

Restrictedshareunitexpense(1) 1.0 0.6 1.8 2.6

Deferredshareunitexpense 0.6 - 1.5 0.9

Totalshare-basedpaymentexpense 3.9 2.4 8.4 9.8

1. For the threeandninemonthsendedSeptember30,2017$0.8millionand$1.5million (2016 -$0.4millionand$2.0million)of restricted shareunitexpensewasrecognizedinoperatingexpenses.


(i)StockoptionsThefollowingtablepresentschangesinCompany’sstockoptionplan(the“Plan”):

NumberofoptionsWeightedaverage

exerciseprice

(000s) C$/shareCHANGESTOTHEPLAN

BalanceatDecember31,2015 16,998 5.76

Granted 2,676 4.42

Exercised (3,626) 3.49

Forfeited (1,014) 8.16

Expired (179) 10.74

BalanceatDecember31,2016 14,855 5.84

Granted 309 4.02

Exercised (235) 3.31

Forfeited (686) 5.44

Expired (2,355) 8.87

BalanceatSeptember30,2017 11,888 5.27

(c) Earnings per share Thefollowingtablesetsoutthecalculationofdilutedearningspershare:


(inmillionsofU.S.dollars,exceptwherenoted) 2017 2016 2017 2016CALCULATIONOFDILUTEDEARNINGSPERSHARE Earningsfromcontinuingoperations 29.2 0.8 77.9 14.9

Netearnings 27.0 4.1 87.6 15.5

Basicweightedaveragenumberofsharesoutstanding(inmillions)

576.2

513.0

560.2

511.3

Dilutionofsecurities:

Stockoptions 0.8 2.8 0.7 1.8

Dilutedweightedaveragenumberofsharesoutstanding(inmillions)

577.0

515.8

560.9

513.1

Earningsfromcontinuingoperationspershare:

Basic 0.05 0.00 0.14 0.03

Diluted 0.05 0.00 0.14 0.03

Netearningspershare:

Basic 0.05 0.01 0.16 0.03

Diluted 0.05 0.01 0.16 0.03


The following table lists theequity securitiesexcluded fromthecalculationofdilutedearningsper share. Suchequitysecurities were excluded as their respective exercise prices exceeded the average market price of the Company’scommonsharesofC$4.02andC$4.16 for the threeandninemonthsendedSeptember30,2017 (2016–C$6.49andC$5.32).


(inmillionsofunits) 2017 2016 2017 2016

EQUITYSECURITIESEXCLUDEDFROMTHECALCULATIONOFDILUTEDEARNINGSPERSHARE

Stockoptions 8.6 4.1 6.4 6.4

Warrants(1) - 27.9 - 28.1

1. OnJune28,2017,NewGold’ssharepurchasewarrantsexpired,unexercised.

12.DISCONTINUEDOPERATIONSIn July2017, theCompanybeganaprocess for the saleofPeakMines, its gold-coppermine located inAustralia. TheCompany expects a sale within the next 12 months and upon commencement of the process met the criteria as adiscontinued operation under IFRS 5. The transaction is expected to provide the Company with the opportunity toenhanceliquidityanddevelopandgrowitscoreassets.

For the threeandninemonthsendedSeptember30,2017, thenetearnings fromPeakMines is reportedasearningsfromdiscontinuedoperations.TotalassetsandliabilitiesofPeakMines(excludinganyassetsandliabilitieswhichdonotformpartofthenetassetsbeingsold)arereportedasassetsandliabilitiesofdiscontinuedoperations,respectively,asatSeptember30,2017withoutrestatementoftheprior-yearperiodcomparativeamounts.

ThenetearningsfromPeakMinesforthethreeandninemonthsendedSeptember30,2017areasfollows:


(inmillionsofU.S.dollars,exceptpershareamounts) 2017 2016 2017 2016Revenues 26.0 63.5 112.8 131.4Operatingexpenses 22.8 30.8 66.7 69.8


Revenuelesscostofgoodssold (0.3) 4.6 20.6 5.8


(Loss)earningsfromoperations (2.0) 3.6 15.7 1.2

Financecosts (0.2) (0.2) (0.6) (0.5)

Other(losses)gains (0.7) 1.7 (1.6) 1.5

(Loss)earningsbeforetaxes (2.9) 5.1 13.5 2.2Incometaxrecovery(expense) 0.7 (1.8) (3.8) (1.6)(Loss)earningsfromdiscontinuedoperations

(2.2) 3.3 9.7 0.6

1. DepreciationanddepletionrelatestothePeakMinespriortoreclassificationasadiscontinuedoperation.


ThemajorclassesofassetsandliabilitiesofPeakMinesareasfollows:

AsatSeptember30

(inmillionsofU.S.dollars) 2017

ASSETS Tradeandotherreceivables 2.3

Inventories 9.1

Currentincometaxreceivable 0.1

Prepaidexpensesandother 0.8

Mininginterests 119.4

Deferredtaxassets 14.0Totalassetsheldforsale

145.7

LIABILITIES Tradeandotherpayables 16.1

Currentincometaxpayable 8.5

Reclamationandclosurecostobligations 14.7

Provisions 9.9

Deferredtaxliabilities 19.9

Totalliabilitiesheldforsale 69.1

Netassetsheldforsale 76.6

Thefollowingtableprovidesdetailsofthecashflowfromoperating,investingandfinancingactivitiesofPeakMinesforthethreeandninemonthsendedSeptember30,2017andprior-yearcomparativeperiods:



OPERATINGACTIVITIES (Loss)earningsfromdiscontinuedoperations (2.2) 3.3 9.7 0.6Adjustmentsfor: Foreignexchangelosses(gains) (0.6) (1.0) (2.5) (1.6)Depreciationanddepletion 3.5 28.1 25.5 55.8Othernon-cashadjustments 1.3 (0.7) 4.1 0.1Incometax(recovery)expense (0.8) 1.8 3.8 1.6Financecosts 0.2 0.2 0.6 0.5

1.4 31.7 41.2 57.0Changeinnon-cashoperatingworkingcapital (0.9) 8.5 2.6 2.0Incometaxespaid - (4.6) (4.3) (4.6)

Cashgeneratedfromoperations 0.5 35.6 39.5 54.4

INVESTINGACTIVITIES Mininginterests (7.7) (3.1) (21.6) (8.0)Proceedsfromthesaleofassets - - - 0.3

Cashusedbyinvestingactivities (7.7) (3.1) (21.6) (7.7)

Changeincashandcashequivalents (7.2) 32.5 17.9 46.7


13.INCOMEANDMININGTAXESThefollowingtableoutlinesthecompositionofincometaxexpensebetweencurrenttaxanddeferredtax:


(inmillionsofU.S.dollars) 2017 2016 2017 2016CURRENTINCOMEANDMININGTAXEXPENSE

Canada 0.9 (0.5) 2.4 2.3

Foreign 7.4 1.8 18.8 5.8

Adjustmentsinrespectofprioryear - (1.8) - (4.6)

8.3 (0.5) 21.2 3.5

DEFERREDINCOMEANDMININGTAXEXPENSE(RECOVERY)

Canada 2.4 (8.1) 2.0 (13.0)

Foreign (4.0) (1.5) (11.5) (1.2)

Adjustmentsinrespectofprioryear 1.1 1.7 1.3 1.7

(0.4) (7.9) (8.2) (12.5)

Totalincometaxexpense(recovery) 7.9 (8.4) 13.0 (9.0)


IncometaxexpensediffersfromtheamountthatwouldresultfromapplyingtheCanadianfederalandprovincialincometaxratestoearningsbeforetaxes.Thedifferencesresultfromthefollowingitems:


(inmillionsofU.S.dollars) 2017 2016 2017 2016Earnings(loss)beforetaxes 37.1 (7.6) 90.9 5.9

Canadianfederalandprovincialincometaxrates 25.8% 25.9% 25.8% 25.9%

Incometax(recovery)expensebasedonaboverates 9.6 (2.0) 23.5 1.5

INCREASE(DECREASE)DUETO

Permanentdifferences (3.4) (4.7) 2.3 0.2

Differentstatutorytaxratesonearningsofforeignsubsidiaries (4.3) 0.6 (17.2) 2.3

Foreignexchangeonnon-monetaryassetsandliabilities (7.6) (3.6) (13.6) (9.4)

Otherforeignexchangedifferences 5.6 5.8 3.4 7.9

Prioryears’adjustmentsrelatingtotaxprovisionandtaxreturns 1.3 - 1.3 (2.8)

Canadianminingtax 1.3 0.7 2.1 0.6

Mexicanspecialdutytax 0.3 0.5 - 1.0

Withholdingtax - - - 0.2

Changeinunrecognizeddeferredtaxassets 5.9 (4.1) 20.5 (9.9)

DisposalofElMorrogoldstreamasset - - (8.4) -

Other (0.8) (1.6) (0.9) (0.6)

Incometaxexpense(recovery) 7.9 (8.4) 13.0 (9.0)


14.RECLAMATIONANDCLOSURECOSTOBLIGATIONSChangestothereclamationandclosurecostobligationsareasfollows:


NewAfton

Mesquite

PeakMines

CerroSanPedro

RainyRiver

Blackwater

Total

CHANGESTORECLAMATIONANDCLOSURECOSTOBLIGATIONS Balance–December31,2015 7.4 13.2 14.2 17.8 7.9 8.3 68.8Reclamationexpenditures - - - (2.5) - - (2.5)Unwindingofdiscount 0.1 0.2 0.3 0.7 0.2 0.2 1.7Revisionstoexpectedcashflows (0.1) 0.2 (0.7) 4.2 11.8 0.1 15.5Foreignexchangemovement 0.2 - (0.1) (2.1) 0.1 0.3 (1.6)Balance–December31,2016 7.6 13.6 13.7 18.1 20.0 8.9 81.9Less:currentportionofclosurecosts(Note5)

-

-

(0.1)

(0.8)

-

-

(0.9)

Non-currentportionofclosurecosts 7.6 13.6 13.6 17.3 20.0 8.9 81.0Balance–December31,2016 7.6 13.6 13.7 18.1 20.0 8.9 81.9Reclamationexpenditures (0.1) - (0.1) (0.6) - - (0.8)Unwindingofdiscount 0.1 0.2 0.3 0.1 0.4 0.2 1.3Revisionstoexpectedcashflows 3.4 0.3 (0.3) 1.6 37.6 (0.5) 42.1Foreignexchangemovement 0.7 - 1.1 1.7 1.9 0.7 6.2Less:amountsreclassifiedasheldforsale

-

-

(14.7)

-

-

-

(14.7)

Balance–September30,2017 11.7 14.1 - 20.9 59.9 9.3 115.9Less:currentportionofclosurecosts(Note5)

-

-

-

(0.6)

-

-

(0.6)

Non-currentportionofclosurecosts 11.7 14.1 - 20.3 59.9 9.3 115.3

EachperiodtheCompanyreviewscostestimatesandotherassumptionsusedinthevaluationoftheobligationsateachof itsminingpropertiesanddevelopmentproperties to reflectevents, changes incircumstancesandnew informationavailable. Changes in these cost estimates and assumptions have a corresponding impact on the fair value of theobligation.Thefairvaluesoftheobligationsaremeasuredbydiscountingtheexpectedcashflowsusingadiscountfactorthatreflectstherisk-freerateofinterest.TheCompanypreparesestimatesofthetimingandamountofexpectedcashflowswhenanobligationisincurred.Expectedcashflowsareupdatedtoreflectchangesinfactsandcircumstances.Theprincipal factors that can cause expected cash flows to change are: the construction of new processing facilities;obligations realized through additional ore bodies mined; changes in the quantities of material in reserves and acorresponding change in the Life of Mine (“LOM”); changing ore characteristics that impact required environmentalprotectionmeasuresandrelatedcosts;changesinwaterqualitythatimpacttheextentofwatertreatmentrequired;andchangesinlawsandregulationsgoverningtheprotectionoftheenvironment.Thefairvalueofanobligationisrecordedwhenitisincurred.

FortheninemonthsendedSeptember30,2017,theCompanyupdatedthereclamationandclosurecostobligationsforeachofitsminesites.Theimpactoftheseassessmentswasanincreaseof$42.1million(ninemonthsendedSeptember30, 2016 – $10.2 million), which primarily related to the Rainy River project. Key drivers of the Rainy River liabilityincreaseof $37.6million includeadvancementof theprocessingplant site area, constructionof tailingsmanagementarea, placement of mine rock and other additional obligations related to significant project advancement achievedduringtheperiodastheprojectcontinuedtoadvancetocommercialproduction.


15.SUPPLEMENTALCASHFLOWINFORMATIONSupplementalcashflowinformation(includedwithinoperatingactivities)isasfollows:



CHANGEINNON-CASHOPERATINGWORKINGCAPITAL

Tradeandotherreceivables 5.3 5.8 16.6 7.2

Inventories (2.4) (9.1) (3.8) (13.2)

Prepaidexpensesandother (1.6) 0.5 - 3.6

Tradeandotherpayables 5.0 (4.7) 1.7 (2.4)

Totalchangeinnon-cashoperatingworkingcapital 6.3 (7.5) 14.5 (4.8)



OTHERNON-CASHADJUSTMENTS

Unrealizedloss(gain)onsharepurchasewarrants - 0.8 (1.2) 1.3

Unrealizedlossonconcentratecontracts 4.4 2.4 3.3 0.4

Equitysettledshare-basedpaymentexpense 0.9 1.4 3.2 4.5

Gainondisposalofassets - (0.7) (0.1) (0.2)Settlementand loss (gain)on revaluationofgoldpriceoptioncontracts 1.3 (2.4) 14.2 0.9

Othernon-cashadjustments (0.2) - (0.2) (1.4)

Unrealized(gain)lossongoldstreamobligation (0.2) 8.9 4.8 34.4

Unrealizedlossoncopperforwardcontracts 5.9 - 4.7 -

Totalothernon-cashadjustments 12.1 10.4 28.7 39.9


16.SEGMENTEDINFORMATION(a) Segment revenues and results The Companymanages its reportable operating segments by operatingmines, development projects and explorationprojects.Theresultsfromoperationsforthesereportableoperatingsegmentsaresummarizedinthefollowingtables:



NewAfton

Mesquite

CerroSanPedro

Corporate

Other(1)

DiscontinuedOperations(3)

Total

OPERATINGSEGMENTRESULTS

Goldrevenues 24.0 49.5 10.0 - - - 83.5

Copperrevenues 55.4 - - - - - 55.4

Silverrevenues 1.0 - 2.6 - - - 3.6

Totalrevenues(2) 80.4 49.5 12.6 - - - 142.5

Operatingexpenses 28.0 28.9 13.4 - - - 70.3

Depreciationanddepletion 35.1 13.7 1.9 - - - 50.7Earnings(loss)frommineoperations 17.3 6.9 (2.7) - - - 21.5

Corporateadministration - - - 5.4 - - 5.4

Share-basedpaymentexpenses - - - 3.1 - - 3.1Explorationandbusinessdevelopment

0.7

-

-

0.2

1.0

-

1.9

Income(loss)fromoperations 16.6 6.9 (2.7) (8.7) (1.0) - 11.1

Financeincome - - 0.2 0.1 - - 0.3

Financecosts (0.3) (0.1) - 2.7 (0.4) - 1.9

Othergains(losses) 2.6 (1.4) (0.3) 7.3 15.6 - 23.8

Earnings(loss)beforetaxes 18.9 5.4 (2.8) 1.4 14.2 - 37.1

Incometax(expense)recovery (15.2) (2.9) (0.4) 8.1 2.5 - (7.9)Earnings(loss)fromcontinuingoperations

3.7

2.5

(3.2)

9.5

16.7

-

29.2

Lossfromdiscontinuedoperations,netoftax

-

-

-

-

-

(2.2)

(2.2)

Netearnings(loss) 3.7 2.5 (3.2) 9.5 16.7 (2.2) 27.0

1. Otherincludesbalancesrelatingtothedevelopmentandexplorationpropertiesthathavenorevenuesoroperatingcosts.2. Segmented revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the three months ended

September30,2017.3. RefertoNote12forfurtherinformationondiscontinuedoperations.




NewAfton

Mesquite

CerroSanPedro

Corporate

Other(1)


Total


Goldrevenues 71.2 145.7 32.6 - - - 249.5

Copperrevenues 150.4 - - - - - 150.4


Totalrevenues(2) 224.7 145.7 40.5 - - - 410.9


Depreciationanddepletion 103.5 41.2 5.1 - - - 149.8Earnings(loss)frommineoperations

38.8

22.7

(4.4)

-

-

-

57.1



1.1

-

-

0.4

3.6

-

5.1

Income(loss)fromoperations 37.7 22.7 (4.4) (26.1) (3.6) - 26.3

Financeincome - - 0.2 0.7 - - 0.9

Financecosts (0.8) (0.3) (0.3) 1.5 (0.6) - (0.5)

Othergains(losses)(3) 11.4 (6.6) (2.0) 1.9 59.5 - 64.2

Earnings(loss)beforetaxes 48.3 15.8 (6.5) (22.0) 55.3 - 90.9

Incometax(expense)recovery (11.1) (6.8) - 3.4 1.5 - (13.0)Earnings(loss)fromcontinuingoperations

37.2

9.0

(6.5)

(18.6)

56.8

-

77.9

Earningsfromdiscontinuedoperations,netoftax

-

-

-

-

-

9.7

9.7

Netearnings(loss) 37.2 9.0 (6.5) (18.6) 56.8 9.7 87.61. Otherincludesbalancesrelatingtothedevelopmentandexplorationpropertiesthathavenorevenuesoroperatingcosts.2. Segmented revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the nine months ended

September30,2017.3. Othergains(losses)includeforeignexchangerevaluation,anda$33.0milliongainonthedisposaloftheElMorrostream.4. RefertoNote12forfurtherinformationondiscontinuedoperations.


ThreemonthsendedSeptember30,2016(3)


NewAfton

Mesquite

CerroSanPedro

Corporate

Other(1)


Total


Goldrevenues 25.8 25.8 20.3 - - - 71.9

Copperrevenues 38.2 - - - - - 38.2


Totalrevenues(2) 65.4 25.8 24.0 - - - 115.2


Depreciationanddepletion 33.6 6.6 3.1 - - - 43.3Earnings(loss)frommineoperations

8.0

7.1

3.1

-

-

-

18.2



0.8

0.4

-

0.2

(0.8) -

0.6Income(loss)fromoperations 7.2 6.7 3.1 (7.1) 0.8 - 10.7

Financeincome - - - 0.2 - - 0.2

Financecosts (0.1) - (0.2) (0.7) - - (1.0)

Other(losses)gains (3.8) 1.0 - (12.7) (2.0) - (17.5)

Earnings(loss)beforetaxes 3.3 7.7 2.9 (20.3) (1.2) - (7.6)

Incometaxrecovery(expense) 7.2 (0.4) (0.3) 6.3 (4.4) - 8.4Earnings(loss)fromcontinuingoperations

10.5

7.3

2.6

(14.0)

(5.6)

-

0.8


-

-

-

-

-

3.3

3.3

Netearnings(loss) 10.5 7.3 2.6 (14.0) (5.6) 3.3 4.1

1. Otherincludesbalancesrelatingtothedevelopmentandexplorationpropertiesthathavenorevenuesoroperatingcosts.2. Segmented revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the three months ended

September30,2016.3. Priorperiodcomparativeshavebeenrevisedaspernote2(c).4. RefertoNote12forfurtherinformationondiscontinuedoperations.




NewAfton

Mesquite

CerroSanPedro

Corporate

Other(1)


Total

OPERATINGSEGMENTRESULTS Goldrevenues 83.8 95.0 63.4 - - - 242.2Copperrevenues 125.1 - - - - - 125.1Silverrevenues 3.4 - 11.4 - - - 14.8Totalrevenues(2) 212.3 95.0 74.8 - - - 382.1Operatingexpenses 76.5 46.2 58.6 - - - 181.3Depreciationanddepletion 113.0 25.4 4.6 - - - 143.0Earnings(loss)frommineoperations

22.8

23.4

11.6

-

-

-

57.8

Corporateadministration - - - 16.5 - - 16.5Share-basedpaymentexpenses - - - 7.8 - - 7.8Explorationandbusinessdevelopment

1.4

0.4

-

0.3

(0.5)

-

1.6

Income(loss)fromoperations 21.4 23.0 11.6 (24.6) 0.5 - 31.9Financeincome - - - 0.7 - - 0.7Financecosts (0.5) (0.3) (0.5) (7.0) (0.1) - (8.4)Othergains(losses) 8.0 (0.3) (2.7) (32.6) 9.3 - (18.3)Earnings(loss)beforetaxes 28.9 22.4 8.4 (63.5) 9.7 - 5.9Incometaxrecovery(expense) 2.4 (2.9) (1.7) 14.4 (3.2) - 9.0Earnings(loss)fromcontinuingoperations

31.3

19.5

6.7

(49.1)

6.5

-

14.9


-

-

-

-

-

0.6

0.6

Netearnings(loss) 31.3 19.5 6.7 (49.1) 6.5 0.6 15.51. Otherincludesbalancesrelatingtothedevelopmentandexplorationpropertiesthathavenorevenuesoroperatingcosts.2. Segmented revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the nine months ended

September30,2016.3. Priorperiodcomparativeshavebeenrevisedaspernote2(c).4. RefertoNote12forfurtherinformationondiscontinuedoperations


(b) Segmented assets and liabilities Thefollowingtablepresentsthesegmentedassetsandliabilities:

Totalassets Totalliabilities Capitalexpenditure(1)

Asat

September30Asat

December31Asat

September30Asat

December31Ninemonthsended

September30(inmillionsofU.S.dollars) 2017 2016(3) 2017 2016(3) 2017 2016(3)SEGMENTEDASSETSANDLIABILITIES NewAfton 889.1 961.5 135.4 128.4 33.6 30.5Mesquite 485.9 513.3 130.7 139.9 8.9 33.7PeakMines - 171.0 - 64.4 - -CerroSanPedro 51.9 60.5 32.4 29.8 0.7 0.8RainyRiver 2,013.6 1,505.1 573.9 545.6 416.0 320.5Blackwater 559.4 547.9 54.8 55.6 8.9 7.0Other(2)(5) 175.6 173.9 991.4 896.0 0.4 1.7 4,175.5 3,933.0 1,918.6 1,859.8 468.5 394.2Assetsandliabilitiesheldforsaleandcapitalexpendituresfromdiscontinuedoperations(4)

145.7

-

69.1

-

21.6

8.0Totalassets,liabilitiesandcapitalexpenditures

4,321.2

3,933.0

1,987.7

1,859.8

490.1

402.2

1. Capitalexpenditureperconsolidatedstatementofcashflows.2. Otherincludescorporatebalances,explorationpropertiesandtheElMorrogoldstreamasset.3. Prior-yearperiodcomparativeshavebeenrevisedaspernote2(c).4. RefertoNote12forfurtherinformationonassetsandliabilitiesheldforsale.5. OtherincludesPeakMines’cashandcashequivalents,whichdonotformpartofthenetassetsheldforsale.

17.FAIRVALUEMEASUREMENTFairvalueisthepricethatwouldbereceivedwhensellinganassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsat themeasurementdate. Inassessingthefairvalueofaparticularcontract, themarketparticipantwouldconsiderthecreditriskofthecounterpartytothecontract.Consequently,whenitisappropriatetodoso, the Company adjusts the valuation models to incorporate a measure of credit risk. Fair value representsmanagement'sestimatesofthecurrentmarketvalueatagivenpointintime.

TheCompanyhascertain financialassetsand liabilities thatareheldat fairvalue.The fairvaluehierarchyestablishesthree levels toclassify the inputs tovaluationtechniquesusedtomeasure fairvalue.Level1 inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.Level2inputsarequotedpricesinmarketsthatarenotactive,quotedpricesforsimilarassetsorliabilitiesinactivemarkets,inputsotherthanquotedpricesthatareobservablefortheassetor liability(forexample, interestrateandyieldcurvesobservableatcommonlyquoted intervals, forwardpricing curves used to value currency and commodity contracts), or inputs that are derived principally from orcorroborated by observablemarket data or othermeans. Level 3 inputs are unobservable (supported by little or nomarketactivity).The fairvaluehierarchygives thehighestpriority toLevel1 inputsand the lowestpriority toLevel3inputs.

TherewerenotransfersamongLevels1,2and3duringtheninemonthsendedSeptember30,2017ortheyearendedDecember31,2016.TheCompany’spolicyistorecognizetransfersintoandtransfersoutoffairvaluehierarchylevelsasofthedateoftheeventorchangeincircumstancesthatcausedthetransfer.


ValuationmethodologiesforLevel2and3financialassetsandliabilities:

ProvisionallypricedcontractsandgoldandcopperswapcontractsThefairvalueoftheprovisionallypricedcontractsandthegoldandcopperswapcontractsiscalculatedusingthemark-to-marketforwardpricesofLondonMetalsExchangegoldandcopperbasedontheapplicablesettlementdatesoftheoutstandingprovisionallypricedcontractsandcopperswapcontracts.

GoldoptioncontractsandcopperforwardcontractsThe fair value of the gold option contracts and copper forward contracts are calculated using the mark-to-marketmethodbasedon fair valuepricesobtained fromthecounterpartiesof thegoldoptioncontractsandcopper forwardcontracts.

Goldstreamobligation

Thefairvalueofthegoldstreamobligationiscalculatedusingtherisk-freeinterestratederivedfromthefifteen-yearU.STreasuryrate, forwardmetalprices,companyspecificcreditspreadbasedontheyieldontheCompany’s2025SeniorUnsecuredNotes,andexpectedgoldandsilverouncestobedeliveredfromtheRainyRiverprojectlifeofminemodel.

Performanceshareunits(PSU)The fair value of the PSU liability is calculated using the quantity of base options subject to cash settlement, theweighted-averagethree-yearachievedperformanceratio(calculatedusingtheannualizedreturnoftheCompany’ssharepricecomparedtotheannualizedreturnoftheS&PGlobalGoldIndex)andtheexpectedsharepriceattheendofthevestingperiodbasedonanalystconsensusonthefutureshareprice.

ThefollowingtablesummarizestheCompany’sfinancialassetsandliabilitiesbycategoryandinformationaboutfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisinthestatementoffinancialpositioncategorizedbylevelofsignificanceoftheinputsusedinmakingthemeasurements:

AsatSeptember30,2017 AsatDecember31,2016

(inmillionsofU.S.dollars) Category Level Level FINANCIALASSETS Cashandcashequivalents Loansandreceivablesatamortizedcost 207.1 185.9

Tradeandotherreceivables Loansandreceivablesatamortizedcost 32.2 41.6Provisionallypricedcontracts FinancialinstrumentsatFVTPL 2 (0.8) 2 4.5Goldandcopperswapcontracts FinancialinstrumentsatFVTPL 2 (2.5) 2 (9.0)Goldpriceoptions FinancialInstrumentsatFVTPL 2 0.3 2 17.6Investments FinancialinstrumentsatFVTPL 1 1.1 1 1.1Copperforwardcontracts FinancialinstrumentsatFVTPL 2 - 2 0.3

FINANCIALLIABILITIES

Tradeandotherpayables(1) Financialliabilitiesatamortizedcost 149.1 168.3

Long-termdebt Financialliabilitiesatamortizedcost 977.0 889.5Warrants FinancialInstrumentsatFVTPL 1 - 1 1.3Goldstreamobligation FinancialInstrumentsatFVTPL 3 257.2 3 246.5

Dieselswapcontracts FinancialliabilityatfairvaluethroughOCI 2 - 2 0.1Performanceshareunits FinancialInstrumentsatFVTPL 3 4.0 3 2.1Restrictedshareunits FinancialinstrumentsatFVTPL 1 2.7 1 0.9Copperforwardcontracts FinancialinstrumentsatFVTPL 2 4.4 2 -

1. Tradeandotherpayablesexcludetheshort-termportionofreclamationandclosurecostobligations,copperforwardcontractsandtheshort-termportionofthegoldstreamobligation.


ThecarryingvaluesandfairvaluesoftheCompany’sfinancialinstrumentsareasfollows:

AsatSeptember30,2017 AsatDecember31,2016


Carryingvalue Fairvalue

Carryingvalue Fairvalue

FINANCIALASSETS

Cashandcashequivalents 207.1 207.1 185.9 185.9

Tradeandotherreceivables 32.2 32.2 41.6 41.6

Provisionallypricedcontracts (0.8) (0.8) 4.5 4.5

Goldandcopperswapcontracts (2.5) (2.5) (9.0) (9.0)

Investments 1.1 1.1 1.1 1.1

Goldpriceoptions 0.3 0.3 17.6 17.6

Copperforwardcontracts - - 0.3 0.3

FINANCIALLIABILITIES

Tradeandotherpayables(1) 149.1 149.1 168.3 168.3

Long-termdebt 977.0 1,036.6 889.5 920.0

Goldstreamobligation 257.2 257.2 246.5 246.5

Sharepurchasewarrants - - 1.3 1.3

Dieselswapcontracts - - 0.1 0.1

Performanceshareunits 4.0 4.0 2.1 2.1

Restrictedshareunits 2.7 2.7 0.9 0.9

Copperforwardcontracts 4.4 4.4 - -

1. Tradeandotherpayablesexcludetheshort-termportionofreclamationandclosurecostobligation,copperforwardcontractsandtheshort-termportionofthegoldstreamobligation.


18.COMMITMENTSANDCONTINGENCIESThe Company has entered into a number of contractual commitments for capital items relating to operations anddevelopment.AtSeptember30,2017,thesecommitmentstotalled$53.5million,$44.5millionofwhichisexpectedtofall due over the next 12 months. This compares to commitments of $130.2 million as at December 31, 2016,$103.2millionofwhichwasexpectedtofalldueovertheupcomingyear.Certaincontractualcommitmentsmaycontaincancellation clauses; however, the Company discloses its commitments based on management’s intent to fulfill thecontracts.

19.SUBSEQUENTEVENTSTheCompanyachievedcommercialproductionatRainyRiverinmid-October,2017.Commercialproductionisdefinedasachieving 60% design capacity of 21,000 tonne per day over a 30-day period. From an accounting perspective, theCompanywillrecognizecommercialproductioneffectiveNovember1,2017,beingthefirstdayofthemonthfollowingsatisfaction of the commercial production criteria. Effective this date, Rainy River’s stockpiled orewill be reclassifiedfromMineral Interests to Inventory, assets capitalized toMineral Interestswill be componentized into asset classes,depreciationanddepletionwillcommence,andrevenueandoperatingexpenseswillberecognizedthroughprofitandloss.

DIRECTORS

David Emerson (1), (3) Corporate Director, Public Policy Advisor

James Estey (2) Corporate Director

Vahan Kololian (3), (4) Managing Partner, TerraNova Partners LP

Martyn Konig (1), (3) Chief Investment Officer, T Wealth Management SA

Randall Oliphant Corporate Director

Ian Pearce (2), (4) Chair of the Board, New Gold

Hannes Portmann President and Chief Executive Officer

Kay Priestly (1), (2) Corporate Director

Marilyn Schonberner Chief Financial Officer and Senior Vice President, and Executive Director, Nexen Energy ULC

Raymond Threlkeld (4) Corporate Director and Consultant

Board Committees(1) Audit Committee(2) Compensation Committee(3) Corporate Governance and Nominating Committee(4) Health, Safety, Environment and Corporate Social Responsibility Committee

OFFICERS

Hannes Portmann President and Chief Executive Officer

Paula Myson Executive Vice President and Chief Financial Officer

Cory Atiyeh Vice President, Operations

Lisa Damiani Vice President, General Counsel and Corporate Secretary

Rajesh Deora Vice President, Reporting and Tax

Kashif Farooq Vice President, Planning and Advisory

Barry O’Shea Vice President, Business Development

Armando Ortega Vice President, Latin America

Mark Petersen Vice President, Exploration

Martin Wallace Vice President, Treasury and Technology

Peter Woodhouse Vice President, Projects

COMPANY INFORMATION

Toronto Office

Brookfield Place

181 Bay Street, Suite 3510, Toronto, ON M5J 2T3

t: +1.416.324.6000 • f: +1.416.324.9494 • tf: +1.888.315.9715

www.newgold.com

Investor Relations

tf: +1.888.315.9715 • f: +1.416.324.9494 • e: [email protected]

Media Inquiries

t: +1.416.324.6015 • f: +1.416.324.9494 • e: [email protected]

Transfer Agent

Computershare Investor Services Inc.

tf: +1.800.564.6253 (North America)

t: +1.514.982.7555 (International)

f: +1.604.661.9401

Additional Information

New Gold encourages the electronic delivery of correspondence

and supports responsible use of forest resources. For any inquiries,

or to request printed or electronic delivery of correspondence,

please email us at [email protected].

Corporate Information(As of October 25, 2017)

TORONTO OFFICE

Brookfield Place

181 Bay Street, Suite 3510

Toronto, ON M5J 2T3

t: +1.416.324.6000

f: +1.416.324.9494

INVESTOR RELATIONS

tf: +1.888.315.9715

f: +1.416.324.9494

e: [email protected]

www.newgold.com

TSX/NYSE MKT: NGD

PORTFOLIO OF ASSETS IN TOP-RATED JURISDICTIONS

INVESTED AND EXPERIENCED TEAM

AMONG LOWEST-COST PRODUCERS WITH ESTABLISHED TRACK RECORD

STRONG GROWTH PIPELINE

A HISTORY OF VALUE CREATION

WHY INVEST IN NEW GOLD?

Outside Back Cover

Documents

FOR THE QUARTER ENDED SEPTEMBER 30, 2017in the United States (“Mesquite”), the Peak Mines in Australia (“Peak Mines”), which has been classified as a discontinued operation