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A photo of "pre-stripping" in the future open pit area of the Pascua-Lama mine at about 5,000 metres above sea level. Barrick recently announced that first production at Pascua-Lama would be delayed until mid-2016.

Barrick Gold Corp.'s decision to slow down construction of its massive Pascua-Lama project has rattled investors as the company undergoes a global review of the value of its assets.

With trading resuming after Canada Day, Barrick's stock price slid 7.7 per cent on Tuesday in Toronto, and now stands at its lowest point in 21 years. The shares closed at $15.32 on Tuesday and have fallen 56 per cent since the start of the year.

Investors are still digesting the the company's Friday announcement that it has delayed the $8.5-billion (U.S.) mining project that straddles the border of Chile and Argentina. When completed, Pascua-Lama would become one of the largest gold mines in the world, but the venture has been dogged by a series of regulatory delays and further hampered by sharp declines in gold and silver prices.

Toronto-based Barrick said late Friday that it is now targeting first production from Pascua-Lama for mid-2016, more than 18 months behind schedule. The world's largest gold producer also disclosed that it will take a second-quarter writedown of up to $5.5-billion, and there could be further impairment charges. TD Securities Inc. analyst Greg Barnes estimated Tuesday that Barrick could book impairment charges totalling as much as $10-billion in the second quarter.

The announcement also underscores the growing financial pressure on Barrick, which has amassed more than $14-billion in long-term debt through a series of acquisitions and projects. Going slower on the South American mine will allow it to cut between $1.5-billion and $1.8-billion in capital spending this year and next.

Mr. Barnes pointed out that Barrick is conducting goodwill impairment tests, and two possible targets could be the company's Buzwagi project in Tanzania and copper assets that were inherited after the acquisition of Equinox Minerals Ltd. in 2011. In February, Barrick wrote down $3.8-billion of its $7.5-billion Equinox investment.

In its Friday statement, Barrick cautioned: "In light of the lower metal price environment, Barrick is also reviewing its other assets, including goodwill, for possible impairment charges in the second quarter, which, although dependent on various analyses and assumptions which have not been finalized, are likely to be significant."

Barrick still carries $3.5-billion of goodwill related to Equinox, said Mr. Barnes, who added that the company must position itself to gain "substantially more headroom" to stay onside with its public market debt covenant. Under the covenant, Barrick's consolidated tangible net worth must exceed $3-billion. After factoring in the planned Pascua-Lama writedown alone, Barrick's consolidated tangible net worth would be roughly $6.5-billion to $7-billion, he said.

Equinox has turned out to be a major disappointment instead of a cash cow, with the prized Lumwana copper mine in Zambia losing money amid escalating extraction costs.

Barrick's annual dividend rate of 80 cents a share will be under pressure if the company is unable to preserve and improve its free cash flow. "More work is required by Barrick to reduce company-wide capital and operating costs," BMO Nesbitt Burns Inc. analyst David Haughton said in a research note.

Mr. Barnes said Barrick pegged Pascua-Lama's book value at the end of 2012 at $5.24-billion. The company forecasts that it will take a writedown of between $4.5-billion and $5.5-billion on the gold and silver venture, which is located in the Andes Mountains.

Given depressed commodity prices and Pascua-Lama's regulatory delays related to environmental concerns, "Barrick has taken what we believe are necessary steps to slow down spending on the project," Mr. Barnes said in a research note.

Barrick will be reducing its capital spending by a total of up to $1.8-billion this year and in 2014 on Pascua-Lama. The company estimates that it will devote from $1.8-billion to $2-billion on the South American project this year and from $1-billion to $1.2-billion next year. The revised two-year spending total of up to $3.2-billion compares with the previous budget of up to $5-billion.

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