Shares in Centerra Gold (TSX:CG.TO - News) fell nearly 20 per cent Tuesday after the miner cut its production guidance for the Kumtor mine due to ice movement in the pit that will delay access to a section of high grade ore.

The company said a preliminary engineering analysis now indicates production of 390,000 to 410,000 ounces of gold in 2012 at Kumtor, down from an earlier estimate of between 575,000 and 625,000 ounces.

"The company is undertaking further technical analysis of the impact of the ice movement on its life of mine plan and expects to provide further information on production, capital costs and operating costs in due course," Centerra said.

Shares in the company were down $3.05 or 19 per cent at $13.08 in midday trading on the Toronto Stock Exchange.

Centerra produced 585,000 ounces of gold last year at its key Kumtor mine, which accounts for the bulk of the company's global output.

Scotiabank analyst Trevor Turnbull cut his price target on Centerra after the news to $23 per share, down from $26.

"There remains a risk of further delays in the waste removal if additional work stoppages occur when Centerra's collective bargaining agreement expires at the end of this year," Turnbull wrote in a note to clients.

"We have reduced our production model accordingly with some impact in 2013 and 2014 as well."

The company said the removal of ice and waste in the southeast section of the pit has delayed access to a section of higher grade ore from late 2012 to late 2013, resulting in the deferral into 2013-2015 of production from the zone otherwise expected in 2012.

Centerra said it expects to partially mitigate the delay by accelerating mining in another portion of the pit to access part of the new reserves —reported in a reserve and resource update last month — in September.

The company cautioned that its collective bargaining agreement with workers at the mine expires at the end of 2012 and a work stoppage during the year could hurt production.

"Additionally, achieving the revised 2012 production is dependent on the delivery of new mining equipment on schedule and successfully maintaining the mining rates of the waste and ice in the southern portion of the pit to gain access to the higher grade ore," Centerra said.

In addition to the Kumtor mine in the Kyrgyz Republic, Centerra, which was spun off from Cameco (TSX:CCO.TO - News) in 2005, owns the Boroo mine in Mongolia and interests in mines in Nevada, Turkey and Russia.

Last month, workers at the Kumtor mine went on strike for more than a week over a dispute over payments to a state social fund is expected to cost the company US$4 million this year.

Centerra earned US$370.9 million or US$1.57 per share on $1.02 billion in gold sales in 2011. That compared with a profit of $322.3 million or $1.37 per share on $849.8 million in sales in 2010.