1. Introduction

   The Board of Directors (the “Board”) has the responsibility for the overall stewardship of the conduct of the business of New Gold Inc. (the “Company”) and the activities of management, which is responsible for the day-to-day conduct of the business. The Board’s fundamental objectives are to enhance and preserve long-term shareholder value, to ensure that the Company meets its obligations on an ongoing basis and that the Company operates in a reliable and safe manner. In performing its functions, the Board should also consider the legitimate interests its other stakeholders such as employees, customers and communities may have in the Company. In overseeing the conduct of the business, the Board, through the Chief Executive Officer, shall set the standards of conduct for the Company.

2. Procedures and Organization

   The Board operates by delegating certain of its authorities to management and by reserving certain powers to itself. The Board retains the responsibility for managing its own affairs including selecting its Chair, nominating candidates for election to the Board and constituting committees of the Board. Subject to the Articles of the Company and the British Columbia Business Corporations Act (the “Act”), the Board may constitute, seek the advice of and delegate powers, duties and responsibilities to committees of the Board. The Corporate Secretary of the Company shall have the responsibility for taking minutes of all meetings of the Board and for circulating drafts of such minutes to the directors promptly following each meeting. The Corporate Secretary of the Company shall present draft minutes from the previous meeting containing the comments and corrections received from the directors at the next succeeding Board meeting for approval and execution.

3. Duties and Responsibilities

   The Board’s principal duties and responsibilities fall into a number of categories which are outlined below.

   Legal Requirements

   1. The Board has the responsibility to ensure that legal requirements have been met and documents and records have been properly prepared, approved and maintained;
   2. The Board has the statutory responsibility to:
      1. manage or, to the extent it is entitled to delegate such power, to supervise the management of the business and affairs of the Company by the senior officers of the Company;
      2. act honestly and in good faith with a view to the best interests of the Company;
      3. exercise the care, diligence and skill that reasonable, prudent people would exercise in comparable circumstances; and
      4. act in accordance with its obligations contained in the Act and the regulations thereto, the Company’s Articles, securities legislation of each province and territory of Canada, and other relevant legislation and regulations.

   Independence

   The Board has the responsibility to ensure that appropriate structures and procedures are in place to permit the Board to function independently of management, including endeavouring to have a majority of independent directors as well as an independent chair.

   Strategy Determination

   The Board has the responsibility to ensure, at least annually, that there are long-term goals and a strategic planning process in place for the Company and to participate with management directly or through its committees in developing and approving the mission of the business of the Company and the strategic plan by which it proposes to achieve its goals, which strategic plan takes into account, among other things, the opportunities and risks of the Company’s business.

   Managing Risk

   The Board has the responsibility to identify and understand the principal risks of the business in which the Company is engaged, to achieve a proper balance between risks incurred and the potential return to shareholders, and to ensure that there are systems in place which effectively monitor and manage those risks with a view to the long-term viability of the Company.

   Division of Responsibilities

   The Board has the responsibility to:

   1. appoint and delegate responsibilities to committees where appropriate to do so;
   2. develop position descriptions for:
      1. the Board;
      2. the Chair of the Board;
      3. the Chief Executive Officer;
      4. the Chief Financial Officer.
   3. ensure that the directors of the Company’s subsidiaries, if any, are qualified and appropriate in keeping with the Company’s Corporate Governance Policies and that they are provided with copies of the Company’s policies for implementation by the subsidiaries.

   To assist it in exercising its responsibilities, the Board hereby establishes four standing committees of the Board: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Sustainability, Environment, Health and Safety Committee. The Board may establish other standing committees from time to time which will function in accordance with its mandate.

   Each committee shall have a written mandate that clearly establishes its purpose, responsibilities, members, structure and functions. Each mandate shall be reviewed by the Board at least annually. The Board is responsible for appointing the committee members.

   Appointment, Training and Monitoring Senior Management

   The Board has the responsibility:

   1. to appoint the Chief Executive Officer, to monitor and assess the Chief Executive Officer’s performance, to satisfy itself as to the integrity of the Chief Executive Officer, and to provide advice and counsel in the execution of the Chief Executive Officer’s duties;
   2. to develop or approve the corporate goals or objectives that the Chief Executive Officer is responsible for;
   3. to approve the appointment of all corporate officers, acting upon the advice of the Chief Executive Officer and to satisfy itself as to the integrity of such corporate officers;
   4. to ensure that adequate provision has been made to train and develop management and for the orderly succession of management and to ensure that all new directors receive a comprehensive orientation, fully understand the role of the Board and its committees, the nature and operation of the Company’s business and the contribution that individual directors are required to make;
   5. to create a culture of integrity throughout the Company;
   6. to ensure that management is aware of the Board’s expectations of management;
   7. to set out expectations and responsibilities of directors including attendance at meetings and review of meeting materials;
   8. to avail itself collectively and individually of the open access to the Company’s senior management and to advise the Chair of the Board of significant matters discussed.

   Policies, Procedures and Compliance

   The Board has the responsibility:

   1. to ensure that the Company operates at all times within applicable laws, regulations and ethical standards;
   2. to approve and monitor compliance with significant policies and procedures by which the Company is operated.

   Reporting and Communication

   The Board has the responsibility:

   1. to ensure the Company has in place policies and programs to enable the Company to communicate effectively with its shareholders, other stakeholders and the public generally;
   2. to ensure that the financial performance of the Company is adequately reported to shareholders, other security holders and regulators on a timely and regular basis;
   3. to ensure the timely reporting of developments that have a significant and material impact on the value of the Company;
   4. to report annually to shareholders on its stewardship of the affairs of the Company for the preceding year;
   5. to develop appropriate measures for receiving shareholder feedback;
   6. to develop the Company’s approach to corporate governance and to develop a set of corporate governance principles and guidelines.

   Monitoring and Acting

   The Board has the responsibility:

   1. to monitor the Company’s progress towards it goals and objectives and to revise and alter its direction through management in response to changing circumstances;
   2. to take action when performance falls short of its goals and objectives or when other special circumstances warrant;
   3. to ensure that the Company has implemented adequate control and information systems which ensure the effective discharge of its responsibilities;
   4. to make regular assessments of the Board’s, its committees and each individual director’s effectiveness and contribution.

   Membership and Composition

   The Board has the responsibility to determine:

   1. its appropriate size and composition;
   2. the relevant criteria for proposed additions to the Board, having regard to areas of required expertise and the need for independent directors, as that term is defined in National Instrument 58-101 “Disclosure of Corporate Governance Practices” and the rules of the applicable exchanges;
   3. the maximum number of boards or other engagements considered appropriate for directors, having regard to whether they are independent directors or members of management;
   4. any appropriate age for retirement of directors;
   5. the recommended compensation of directors to be proposed to the Compensation Committee for review and advice;
   6. the number of meetings of the Board to be held each year and the time and place of such meetings; provided that the Board shall meet at least on a quarterly basis, and the independent directors shall meet on a regular basis as often as necessary to fulfill their responsibilities including at least annually in executive session without the presence of non-independent directors or management.

   Self-Assessment

   Members of the Board will be required annually to assess their own effectiveness as directors and the effectiveness of the Board in conjunction with the Company’s Directors and Officers insurance requirements.

   Third Party Advisors

   The Board, and any individual director with the written approval of the Chair of the Board, may retain at the expense of the Company independent counsel and advisors in appropriate circumstances.

4. Chair of the Board

   The Chair of the Board will provide leadership to directors in discharging their duties as set out in this Charter, including by:

   1. leading, managing and organizing the Board consistent with the approach to corporate governance adopted by the Board from time to time;
   2. promoting cohesiveness among the directors;
   3. being satisfied, that the responsibilities of the Board and its committees are well understood by the directors.

   The Chair will assist the Board in discharging its stewardship function, which includes:

   1. leading, managing and organizing the Board consistent with the approach to corporate governance adopted by the Board from time to time;
   2. satisfying itself as to the integrity of the senior officers of the Corporation and ensuring that such senior officers created a culture of integrity throughout the organization;
   3. strategic planning;
   4. identifying and managing risks;
   5. succession planning;
   6. together with the Corporate Governance and Nominating Committee Chair, reviewing the Committees of the Board, the Chairs of such Committees and the charters of such Committees; and
   7. together with the Corporate Governance and Nominating Committee Chair, ensuring that the Board, committees of the Board, individual directors and senior management of the Company understand and discharge their duties and obligations under the Company’s system of corporate governance.

   In connection with meetings of the directors, the Chair shall be responsible for the following (in consultation with the Corporate Governance and Nominating Committee Chair, as appropriate):

   1. scheduling meetings of the directors;
   2. coordinating with the Chairs of the committees of the Board to schedule meetings of the committees;
   3. reviewing items of importance for consideration by the Board;
   4. ensuring that all business required to come before the Board is brought before the Board, such that the Board is able to carry out all of its duties to manage or supervise the management of the business and affairs of the Company;
   5. setting the agenda for meetings of the Board;
   6. monitoring the adequacy of materials provided to the directors by management in connection with the directors' deliberations;
   7. ensuring that the directors have sufficient time to review the materials provided to them and to fully discuss the business that comes before the Board;
   8. presiding over meetings of the directors; and
   9. encouraging free and open discussion at meetings of the Board.

The Corporate Governance and Nominating Committee will annually review and reassess the adequacy of this policy and submit any recommended changes to the Board for approval.

Reviewed and ratified by the Board on March 12, 2009.

Adopted by the Board on July 8, 2008.