BARRICK SHARES TAKE HIT AFTER CYANIDE SPILLS.

Barrick Gold Corp.’ s third cyanide spill in two years at its Argentine operation was among a number of environmental and social concerns that took centre stage at its annual general meeting Tuesday, the stock’s worst day in six months.

Barrick president Kelvin Dushnisky told shareholders that a cyanide pipeline rupture on Mar. 28 at its Veladero mine posed no risk to people or the environment.

“However, this was the third incident at Veladero l each pad in the l ast 18 months and that is completely unacceptable,” Dushnisky said. “These incidents weaken our partnerships and the trust that underpin them.”

The company has slashed its production forecast and hiked costs at the mine, calling the spill a severe setback after previously maintaining the spill would not have a material impact on its results.

The world’s largest gold producer told shareholders it has presented Argentine authorities with a “comprehensive plan” to improve operating systems at the mine, which will include skills training and investing in digital infrastructure.

Provincial authorities have told the company it must overhaul practices and temporarily suspended it from adding cyanide to its leach pad, pending a review of its proposed plan. Cyanide is used at mine sites to separate gold from the ore.

In addition, the National Minister of Environment of Argentina has filed a lawsuit in Buenos Aires federal court over the incident and another has been filed by locals in provincial court. Both seek to suspend activities at the site or shut the mine down.

Operations at Veladero were also temporarily suspended last September after falling ice damaged a pipe that spilled ore soaked in cyanide. A year earlier, another cyanide spill prompted a judicial investigation, as well as a suspension of oper- ations and fines for Barrick.

The most recent incident was a big hit to the company’s guidance for 2017.

Barrick now expects fullyear production at Veladero to be between 630,000 and 730,000 ounces of gold at an all- in sustaining cost of between US$890 to US$990 per ounce. Production guidance was down 12 to 18 per cent from its original projection of between 770,000 and 830,000 ounces at a cost between US$840 to US$940 per ounce. The Veladero mine is the third-largest contributor to the firm’s output.

The cyanide spill is not the only development expected to hit Barrick’s revenues from the Veladero mine. It recently sold a 50-per-cent stake in the project to Shandong Gold Mining Co. for US$ 960 million. Barrick’s share of production after the deal closes, expected July 1, will fall to between 430,000 to 480,000 ounces of gold as a result.

The firm said it has begun initial work to make modifications at Veladero as the government reviews its plan. Its 2017 guidance assumed it will be able to resume normal operations by June.

That June date was set based on an “assessment of the time required to complete the proposed modifications to the leach pad,” the company said in a statement.

However, Barclays analysts noted that even the downgraded forecast for Veladero requires quick approval and execution for its proposal to correct the recurring heap leach issues.

“The timeline offered for government approvals, execution of a new mine plan, and restart of heap leaching activity seems aggressive to us on first glance,” they wrote in a note.

Environmental damage at Veladero was not the only social concern raised at the company’s annual general meeting on Tuesday. Two indigenous women f rom remote communities near Barrick’s Porgera joint venture flew in from Papua New Guinea, alleging they were raped by mine security staff. They called on the company to meet with them directly and to offer remedies to the people they say have been abused by mine staff.

Another speaker raised concerns about the environmental impact of Barrick’s 60- per- cent- owned Pueblo Viejo mine in the Dominican Republic and asked Dushnisky to tour local communities with him.

There was a heavy police presence at the meeting’s venue, many standing guard outside watching a small cluster of protesters holding signs reading “We believe survivors.”

The company’s shares turned in their worst oneday performance in si x months on Tuesday, sliding 10.97 per cent to close at $22.89 in Toronto on a down day for its peers in the sector.

Barrick’s shares underperformed after it also reported Monday first- quarter 2017 earnings that missed analysts’ expectations.

Net income was US$ 679 million, compared with a net loss of US$ 83 million a year earlier. However, adjusted earnings of 14 cents per share missed the 20 cents analysts had been expecting.