UPDATE 2-New Gold shares sag on renewed Mexican legal woes12 minutes ago via Thomson Reuters

* Court ruling could hit output from Cerro San Pedro mine

* Shares tumble 8.4 percent in Toronto (Adds details, background, share price move)

By Euan Rocha

TORONTO, July 7 (Reuters) - New Gold <NGD.TO> said on Wednesday that a Mexican court had denied its appeal of a federal ruling that had revoked the environmental permit at its Cerro San Pedro mine.

The Toronto-based junior gold producer won an injunction in December against the original ruling, which had forced it to suspend operations at the site in central Mexico. The injunction allowed New Gold to resume full production at the mine in 2010.

However, the latest district court ruling could again force the company to halt production at Cerro San Pedro, which accounts for almost 30 percent of its annual gold output.

Shares of New Gold were down 8.4 percent at C$5.57 on Wednesday morning on the Toronto Stock Exchange.

New Gold said it is not yet aware of all the implications of the latest ruling, as it has yet to receive the court's full decision on the matter.

Upon reviewing the district court's ruling, New Gold plans to launch an appeal with a Collegiate Appeals Court in Mexico City. It may also consider asking the Mexican Supreme Court to hear the case.

"While we are disappointed by this most recent decision, we will continue to pursue all avenues to ensure the continuous operation of Cerro San Pedro," Chief Executive Robert Gallagher said in a statement.

If the latest ruling orders regulators to again halt operations at the site, New Gold intends to request for a new injunction that would allow it to continue to operate while it appeals the decision, said a company spokesman.

New Gold also said it is in ongoing talks with regulators to ensure uninterrupted operations at the mine, which is expected to produce about 100,000 ounces of gold in 2010 at a total cash cost of C$390 to C$410 an ounce.

($1=$1.05 Canadian) (Reporting by Euan Rocha in Toronto and Koustav Samanta in Bangalore; editing by Rob Wilson)

http://ca.reuters.com/article/businessNews/idCATRE6663H420100707