Gold bars are displayed at a gold jewellery shop in Chandigarh May 8, 2012.
The results of their labour will be on display when Canadian mining companies report fourth-quarter earnings this week.
Investors are already expecting gold producers to reduce their bullion reserves, write down more assets and record lower profits.
But the bad news may soon be ending with companies adjusting to the lower gold price.
"The worst is over," said John Ing, president of investment firm Maison Placements Canada Inc. in Toronto.
That doesn't mean the picture will be pretty this quarter.
Barrick CEO Jamie Sokalsky told investors that the company will use a $1,100 (U.S.) price to calculate its unmined gold. That is down sharply from the $1,500 price assumption used to calculate last year's reserves.
That could slash more than 10 per cent from the miner's stockpile of 140 million ounces of gold in the ground, which is equivalent to 20 years of production at the current rate of seven million ounces per year.
Toronto-based Barrick will also record another writedown on its troubled Pascua Lama mine in the Andes and likely take additional impairment charges on mines that have become too expensive to run.
Agnico Eagle Mines Ltd. of Toronto is expected to cut its reserves after using a $1,490 price assumption for its mines that have a shorter life.
Vancouver-based Goldcorp Inc., too, is also expected to cut its reserves.
Kinross may record another write down on one of its mines. And fellow Toronto-based miner Iamgold Corp. has said it will produce less gold at higher costs.
But investors have been warned and now they want to ensure that companies follow through on plans to bolster their financial position.
"We're going to be looking for material improvement on the cost side," said Rick Rule, chairman of Sprott U.S. Holdings, who has spent years investing in natural resources.
Gold producers spent last year learning to live with the falling bullion price.
The yellow metal is now trading around $1,250 an ounce compared with $1,700 last year, squeezing margins and requiring companies to overhaul operations.
Miners that used to spend as much as $1,400 to dig up an ounce of gold have had to find ways to cut production costs. "The alternative is that they begin to go extinct," Mr. Rule said.
Barrick and Kinross, two companies that have been badly wounded by high-priced acquisitions, took some of the most aggressive measures to rein in expenses.
Kinross CEO Paul Rollinson reduced capital expenditures to below $1-billion this year and has repeatedly said the miner will not expand its problematic Tasiast mine in the Mauritanian desert unless it is economical.
Barrick halted construction at Pascua Lama and raised $3-billion to pay down debt.
Iamgold reduced capital expenditures, exploration and its dividend.
RBC Dominion Securities said companies will see benefits if they can improve their cash flow and show that they are disciplined with their capital. "Those with deteriorating balance sheets are likely to struggle to attract investor attention," RBC said in a research note.
In a sign that investors are getting comfortable with the weaker gold price and are starting to reward companies for austerity measures, the gold mining index is up 16 per cent so far this year, outperforming the bullion price, which is up 5 per cent over the same time
period.
Last year, the index dropped 47 per cent, while the price of gold fell about 30 per cent.
Rachelle Younglai