According to animal wranglers who had worked with The Hobbit production, around 27 animals died during production. They allege (through PETA) that the farm the animals were kept on was dangerous with bluffs, sinkholes, fences and other "death traps." The farm was used to house around 150 animals used for the film. The deaths did not occurs during actual filming of the film but while being kept at the farm.
The production does admit that two horses died from events that could have been avoided and improvements were made to avoid those but no specific details were provided on the other 25 deaths, which the wranglers do admit some (but not how many) were caused by natural causes. Other deaths was one other horse, six goats, six sheep and a dozen chickens. Most of the deaths were caused by sinkholes that were caused by underground streams. Some by the animals going over bluffs and multiple chickens were killed by dogs. After two horses died, "hundreds of thousands" in upgrades were performed on the farm area but apparently it wasn't enough to prevent additional harm. The American Humane Association (AHA) was on set and verify no animals were harmed during filming of The Hobbit but they have no oversight on what happens off set.
Director Peter Jackson, production Veterinary Dr. Julia Bryce BVSc, farm owner Joy Gray and actor Jed Brophy (Nori) all provided statements to The One Ring contesting the mistreatment allegations. Jackson strongly hints that the two wranglers are just disgruntled ex-employees (unproven) and that PETA is just after another attention grab (absolutely true considering the organization's history).
The exact time line of events remains unclear. It seems wranglers did make complaints, the AHA investigated and may safety recommendations that were implemented. Exactly when the various animals died (before, during, and after complaints and repairs) is not provided. While PETA is claiming mistreatment, even their own reports don't seem to substantiate any intended abuse from people, using them ways unintended, not caring for them or not feeding them. Instead most of the deaths involved accidents due to farm terrain and animals literally being animals. It seems that the "mistake" was not locking them up enough, something that PETA would have also complained about. PETA plan on doing protests when the movie launches on December 14th in various cities (where ever they can get enough members to put on a show for the local press).