TORONTO (Reuters) - Canadian mining companies are still enjoying historically high metal prices, but rising costs, some recent price easing and unfavorable exchange rates mean the upcoming earnings season could be a tough one.

Analysts expect an overall decline in profit among base metals producers when fourth-quarter results start coming out next week, as prices have begun to retreat after a five-year run-up.

"Earnings look set to decline on a sequential quarter basis, due to weaker metal prices, stronger commodity currencies and rising costs," RBC Capital Markets analysts said in a recent note.

While gold producers have continued to enjoy soaring bullion prices, their results will also be stung by climbing costs, and in come cases by the strong Canadian dollar.

The results could weigh on a sector that has outperformed the broader Toronto Stock Exchange S&P/TSX composite index during the recent market downturn.

While the main index is down four percent this year - despite a three percent gain this past week - the TSX materials sector is up nearly five percent in 2008.

The strong performance has been in part due to the steady upward push of the gold price, which has lit a fire under Canadian producers such as Barrick Gold, Yamana Gold and Kinross Gold.

But other metals have been on the defensive, driven lower by worries of slowing demand from India, and to a lesser extent, by concerns about a US recession.

Zinc is down about 27 percent year-on-year while nickel is down 30 percent.

Copper is up about 30 percent from its year-ago levels, but well below where it was through the second and third quarters of last year.

Meanwhile, costs such as energy, labour, equipment, and reactants used in the mining process, are higher, meaning margins will be squeezed when results are released.

"If there are surprises, it really won't be on the revenue side of things, it will be on the cost side," said John Kinsey, portfolio manager at Caldwell Securities.

Base metals producer Teck Cominco went so far as to warn in December that its fourth-quarter earnings would take a "severe" hit from falling metal prices and the appreciation of the Canadian dollar - currently around par with the greenback - which raises costs at the company's domestic operations.

Some analysts also wonder whether Teck might take a substantial writedown on its stake in the Galore Creek gold and copper project, which was halted in November due to skyrocketing construction costs. NovaGold is Teck's partner on the project.

Paradigm Capital said in a note that it expects a writedown, although Caldwell's Kinsey thinks Teck might hold off on doing so.

Other miners struggling with the Canadian dollar's strength include zinc and copper producer HudBay Minerals and nickel producer FNX Mining , along with gold producers Agnico-Eagle and Goldcorp.

Investors looking for a silver lining can probably expect the impact of cost increases to begin to subside later this year, said David Whetham, who manages a resource fund at Scotia Cassels.

"Now that all those commodities are at a much higher level, the odds of having continued fast increases in those commodity prices are probably low," he said.

The first major earnings news will be from the world's No.1 uranium producer, Cameco Corp, expected next Wednesday.