MORE unpleasant surprises could emerge from Newcrest Mining's two troublesome growth projects after it offered an unusually broad guidance range for production over the coming year.
The nation's biggest listed goldminer has had a frustrating year. Problems at its Lihir and Cadia East developments forced it to downgrade its production guidance on multiple occasions.
Those downgrades eroded investor confidence. Newcrest's value almost halved over the past year - a loss of close to $17 billion - despite gold stocks traditionally faring well in times of uncertainty.
When asked yesterday if the worst of the turbulence was behind Lihir and Cadia, Newcrest's chief executive, Greg Robinson, cautioned that significant developments were still to be installed and trialled, particularly at Lihir.
Newcrest has not given full guidance for 2013 but it gave production guidance of between 700,000 and 900,000 ounces for Lihir, and 400,000 to 500,000 ounces for Cadia.
Mr Robinson said the Lihir guidance was being kept "deliberately very broad" as there were aspects of the project still to be installed before it is commissioned in December. "It's a very busy six months ahead," he said. He assured investors the company was "getting better" at running the mine "consistently" and a cost blowout on the $1.9 billion expansion at Cadia would be kept within 10 per cent of the original budget.
The Deutsche analyst Chris Terry said it was clear whether those two projects still contained risks, and 2013 would continue to be a transition period that sets up a foundation for good results and growth in the years ahead.
"The reason there's such a big range between the top and bottom [of the guidance], particularly at Lihir, is to allow for some potential issues that could arise as the project progresses," he said.
Newcrest reported gold production of 2.28 million ounces in the year to June 30, which was well below its original guidance of up to 2.92 million ounces, but in keeping with the revised guidance announced in April.
The market responded warmly to the result, and a rise in the gold price, pushing Newcrest shares 5 per cent higher in early trading. They eventually closed 1 per cent or 22? higher at $22.37.
Three of Newcrest's biggest shareholders - BlackRock, Commonwealth Bank and Fidelity Management - have reduced their stake in recent months, contributing to the share price slide.