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Toronto-based Barrick said it has opted to vastly scale back capital spending in 2013 and in 2014 on the Pascua-Lama project in South America.

Barrick Gold Corp. has gained some breathing room with its decision to delay development of its Pascua-Lama project, but the company faces pressure to shrink its global mining operations amid tumbling metal prices.

Barrick says first production from the South American gold and silver venture will be postponed by more than 18 months, as the Canadian company forecasts taking a writedown of up to $5.5-billion (U.S.) on the project.

Toronto-based Barrick said it has opted to vastly scale back capital spending this year and in 2014 on the project, which is located in the Andes mountains and straddles the border between Chile and Argentina.

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While construction of the $8.5-billion project has suffered another setback, the venture remains strategically important to the world's largest gold producer, analysts say.

"With all this talk about what Barrick could look like in the future, Pascua-Lama will be key to the company's future operational performance, especially if Barrick wants to shed high-cost mines," said Chris Thompson, a Vancouver-based mining analyst at Raymond James Ltd.

Even though Pascua-Lama has enormous upfront capital costs, Barrick is drawn to the prospective rewards. There are an estimated 17.9 million ounces of proven and probable gold reserves, as well as 676 million ounces of silver, in the deposit.

Amid declining gold and silver prices, Barrick said it plans to "resequence construction of the process plant and other facilities in Argentina in order to target first production by mid-2016" – a delay of more than 18 months. Barrick had been aiming for a launch in the second half of 2014, though analysts interpreted that to mean late 2014, at best.

With Barrick committed to the South American venture in the long term, analysts say the company will be in a position to run fewer mines worldwide, potentially jettisoning operations with high operating costs.

Hours before Barrick made its announcement late Friday, credit rating agency DBRS placed the gold producer's debt under review, with negative implications.

In February, Barrick wrote down $3.8-billion of its 2011 investment in Equinox Minerals Ltd. Barrick had acquired Equinox for $7.5-billion, but the prized Lumwana copper mine in Zambia drained cash as extraction costs rose.

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Since last September, gold prices have tumbled by 31 per cent to $1,230 an ounce while copper prices have declined by 20 per cent to $3 a pound, hammering the global mining industry and triggering a series of massive writedowns.

The commodity market's slump has raised questions about "Barrick's ability to restrain its debt burden in the face of ongoing cost pressures and capital expenditure requirements," DBRS warned.

DBRS also cautioned that Barrick had net debt of $12.5-billion on March 31, soaring from $2.7-billion at the end of 2010.

An after-tax asset impairment charge of between $4.5-billion and $5.5-billion is envisaged for the second quarter, due to the woes at Pascua-Lama. Other assets, including goodwill, could have impairment charges after further review.

Capital spending at Pascua-Lama is forecast to be chopped by a total of $1.5-billion to $1.8-billion in the 2013-14 time frame. That will translate into capital expenditures at the project of roughly $2-billion this year and potentially $1.2-billion next year, at the upper end of the range.

"In light of the challenging business environment we are facing today, and taking into consideration existing construction delays, the company is advancing the project in a prudent manner by extending the construction schedule over a longer period," Barrick chief executive officer Jamie Sokalsky said in a statement.

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Mr. Sokalsky replaced Aaron Regent as CEO in June, 2012, when John Thornton was named co-chairman by Peter Munk, Barrick's founder and chairman. But the shakeup has done little to assuage concerns among some major shareholders seeking improved corporate governance, notably a call for new independent directors.

Pascua-Lama, which is already half-built, has been dogged by a series of delays.

In early April, a preliminary court injunction led to the suspension of construction work on the open-pit mine in Chile. In May, Chile's environmental regulator ordered Barrick to complete a water management system to prevent potential contamination.

Barrick expects to meet the regulator's demands to protect Chilean water supplies, aiming for completion by the end of 2014.

Barrick's stock price has plunged by 53 per cent this year.

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