SYDNEY/TORONTO— The pain is not likely to be over for investors in mining shares after the steepest drop in gold prices in a generation led to a $6-billion asset writedown at Australia’s Newcrest Mining Ltd., fuelling speculation of more to come.

A $200 plunge in prices in two days in April heightened fears that gold’s 12-year rally may have topped out.

For nearly a month the price has languished around $1,400 an ounce, which could force more miners to write down the value of their reserves – calculated based on a higher price – and eroding the value of projects, some of which may no longer be profitable.

Gold miners were already struggling with the impact of soaring costs, including higher wages for workers and fuel prices, which have reduced margins and eaten into cash generation.

“We certainly expect we will see further writedowns from other producers as we … get closer to reporting season. It could be a trend,” said David Lennox, an analyst at Fat Prophets.

Newcrest, Australia’s biggest gold miner, said on Friday it would write down the value of mines in Australia, Papua New Guinea and Africa.

That turned the spotlight to miners such as African Barrick Gold, owned by major Barrick Gold Corp., and Newmont Mining Corp., which use prices near or above current spot levels to value reserves.

“I’m sure we’ll see more such actions in the industry,” Gordon Galt of Taurus Funds Management Pty Ltd. said.

“Over the next three months, we will see a substantial amount of the gold equities sector getting rid of high-cost ounces,” said Galt, a former managing director at Newcrest.

Major diversified miners have been battered by writedowns in recent months, sending top chief executives packing after ambitious deals struck during the boom years turned sour. And the gold industry has not been immune.

Barrick Gold, the world’s top gold producer, wrote off $4.2-billion in February, largely related to its Lumwana copper business, acquired with Equinox Minerals in 2011.

Kinross Gold Corp. took a $3.2-billion charge related to its Tasiast mine in Mauritania and the Chirano gold mine in Ghana, both of which were acquired in the company’s $7.1-billion takeover of Red Back Mining in 2010. It previously wrote down $2.94-billion in goodwill related to the two mines.

COST CUTS

When the gold price began to soar just over a decade ago, miners raced to add ounces through exploration, with many using high estimates to justify the push.

African Barrick Gold, along with parent Barrick, uses a long-term price of $1,500 an ounce to calculate its reserves, and others are not far off. Rival Goldcorp uses $1,350 an ounce, and Newmont Mining goes with $1,400 an ounce – both vulnerable at current spot prices, analysts say.

Many gold miners have already shelved projects that do not meet new, more stringent economic guidelines. The next step will be to review their gold price forecasts and determine the impact that any change will have on operations and reserves.

“Mid-year is usually when the companies have to admit it to themselves,” said Pawel Rajszel, a mining analyst with Veritas Investment Research. “They’re halfway through, and there’s got to be a realization at some point that, ‘You know what, we just can’t make those numbers.’”

But analysts said they will watch not just writedowns but also the miners’ push to concentrate on higher grade and higher margin projects – a focus that could hit cash generation.

Global gold miners including South Africa-listed AngloGold Ashanti Ltd., U.S.-based Newmont, Canada’s Yamana Gold Inc. and Kinross Gold Corp. have already flagged efforts to lower costs and cut higher-cost production.

Barrick too is pushing to reduce its overhead costs and recently cut support roles and redeployed some staff at its higher-cost Australian operations.

African Barrick faces soaring costs at mines such as Buzwagi in Tanzania, where the use of diesel to power generators has sent costs soaring. In 2012 cash costs at Buzwagi hit $1,087 per ounce, compared with $691 in 2011.

Overall at African Barrick, all-in costs are above the spot price at $1,550 to $1,600.

“The costs keep going up and the price keeps falling,” Rajszel said. “These companies have to do something.”