U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549




                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                                 Date of Report:
                Date of Earliest Event Reported: August 18, 1998




                                  NEWGOLD, INC.
                                  -------------
          (Exact Name of Small Business Issuer as Specified in Charter)


  Delaware                           0-20722                     16-1400479
- -------------                        -------                 -------------------
(State or Other               (Commission File No.)          (IRS Employer
Jurisdiction of                                              Identification No.)
Incorporation)

                               35265 Willow Avenue
                               Post Office Box 230
                          Clarksburg, California 95612
                     --------------------------------------
                    (Address of Principal Executive Offices)

                                 (916) 665-1840
                     --------------------------------------
                           (Issuer's Telephone Number)






                     --------------------------------------
                   (Former Name, if changed since Last Report)




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Item 1. Changes in Control of Registrant.

N/A

Item 2. Acquisition or Disposition of Assets.

N/A

Item 3. Bankruptcy or Receivership.

N/A

Item 4. Changes in Registrant's Certifying Accountants

N/A
Item 5. Other Events

         On August 18, 1998,  the  Registrant  announced  that it entered into a
"Letter of  Intent"(LOI)  whereby the  Registrant  and  Vauquelin  Mines Ltd. of
Montreal Canada will enter into a transaction which will result in a combination
of the  respective  companies  assets  and  business.  To  date  the  terms  and
conditions of a final  agreement or what form this  combination  will be has not
yet been determined.

         The LOI has  specified  that  at the  end of the  expected  transaction
shareholders of the Registrant will receive 49% of the outstanding  common stock
of  the  new  company  and  Vauquelin  shareholders  will  receive  51%  of  the
outstanding common stock of the new company.  The terms and conditions needed to
be met by the two  companies  in  order  for the  transaction  to  close  are as
follows:

         1. The completion of legal, geological, environmental,  operational and
         financial due  diligence  satisfactory  to each company  within 45 days
         after  which time the  companies  shall  state  whether  they intend to
         proceed to the definitive agreement.

         2. No material adverse changes shall occur in either company.

         3.  Execution  and  delivery  of the  agreement  and  other  definitive
         documentation on or before October 15, 1998.

         4. The obtaining of a commitment  letter by a financial  institution of
         U.S. $5,000,000 debt financing acceptable to the companies.

         5. Receipt of all necessary consents, permits and other governmental or
         regulatory authority.

         6. Settlement of Registrant's accounts payable acceptable to Vauquelin.

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         7. Approval of the transaction by the Montreal Stock  Exchange,  NASDAQ
         (if required) and any other regulatory authority.

         8.  Conclusion  of  a  mutually  satisfactory   agreement  which  shall
         determine  composition  of the  new  Board  of  Directors  and  various
         committee and other matters.

         9. Conclusion of satisfactory Management and Consulting agreements with
         key management of the companies.

         10. The establishment of a technical  committee of the Board of the new
         company consisting of representatives of each company which will review
         and approve the new budget of the new company.

         11.  Revisions to each of the company's  stock option plan so that they
         are  in  conformance  with  all  regulatory  authority  in  Canada  and
         Montreal.

         12. Approval by both companies respective shareholders.

         13.   Satisfactory   resolution  of  fiscal  issues  relative  to  both
         companies.

         14. Satisfaction of the tax effect on both parties.

         15.  The obtaining of all necessary consents of third-parties  required
         to assure that the benefits contemplated to be received  by each of the
         companies will be received.

         16. Other customary conditions to the transaction of a similar nature.


Item 6. Resignation of Registrant's Directors

N/A

Item 7.  Financial Statements. Pro Forma Financial Information and Exhibits.

N/A

Item 8.  Change in Fiscal Year

N/A

Item 9.  Sale of Equity Securities under Regulation S.
                  (Required until January 1, 1999)

N/A


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                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has caused this report to be signed on its behalf by the  undersigned
hereunto duly authorized .

                                            NEWGOLD, INC.

Date:  August 27, 1998                      By:/s/Arthur Scott Dockter
                                               -----------------------
                                               Arthur Scott Dockter,
                                               President






























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