Three-step problem solving Step 1: Diagnostic

Vision
To be the world's best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner.

Safety Vision
Every person going home safe and healthy every day.

Barrick Values
Behave Like an Owner
We accept accountability for our actions and results. We treat the Companys assets as our own. We are entrepreneurial and look for opportunities to grow our business. We act with integrity, operating within the letter and spirit of the law and Barricks Code of Business Conduct and Ethics.

Act with a Sense of Urgency

We are decisive, take initiative and make tough decisions when necessary. We set priorities and act on them.

Be a Team Player
We work safely at all times. We respect our colleagues and those we interact with outside our organization. We listen to others for understanding and we ask for help. We build trust and celebrate our successes. We help others improve their effectiveness. We promote confidence and trust in each others capabilities.

Continually Improve
We are always committed to improvement. We build on good ideas, learn from our mistakes and challenge the status quo. We think outside of the box and have a desire to succeed and add value to our work.

Deliver Results
We have a clear vision of where were going and the plan to get there. We focus our resources to achieve our objectives. We pay attention to detail and keep our commitments. We deliver results.

BARRICK 3-STEP PROBLEM SOLVING

Step 1
Diagnose opportunity/set goals
Key activities Define the problem and assign team Conduct critical analyses to identify vital few issues Build draft valuedriver tree and identify KPIs Communicate approach and Phase 1 findings

Step 2
Generate and evaluate ideas
Generate ideas for improvement
Existing ideas Brainstorming Specific tools (e.g., lean) Stand-alone initiatives

Step 3
Plan implementation
Prepare action plans
Key activities/ milestones Targets on top and front-line KPIs

Prioritize ideas Action Go-do ideas Prepare case for ideas requiring approval

Set up target control sheets around KPIs Implement and review progress
Actions Impact

BARRICK CI PROJECT OVERVIEW MINE X

The problem to be solved: What is the specific problem being solved? What specific actions will solve the problem? What is the relative priority of this project vs. other initiatives on site? Project boundaries/scope What is the scope of the project? What is not under consideration or off-limits to the problem solving efforts? Criteria and measures for success $Cashflow impact: ______ Top-line KPI(s): ______ Current performance: ______ [units] Target performance: ______ [units] Technical limit: ______ [units] Percent of gap closed: ______ % (other measures?) ______ Time frame: Start date: End of Phase 1: End of Phase 2: End of Phase 3: Total duration:

Major challenges/risks What specifically could get in the way of success?

_________ _________ _________ _________ _________ weeks

Key decision makers: Who needs to decide/act?

Other business impacts: What else could be affected by this project (e.g. other KPIs, safety, environment)??

Team composition Role: Name: Team leader ___________ CI Coach ___________ Analyst ___________ Support 1 ___________ Support 2 ___________

Commitment: _____% _____% _____% _____% _____%

TYPICAL CI UNIT REVIEW TEAM

Team role Desired skill set

Time Commitment (%)

100

CI Coach

Knowledge of CI process Experienced in the use of CI tools and techniques Influences others tomake things happen Formal leader in the area being reviewed, able to make changes happen Motivated by the need for change Good analytical skills Understands site IS (e.g., accounting, MP5, purchasing) Technically competent in field relevant to unit review (e.g., operators, mechanics, engineers) Motivated, not stuck in old way of doing things Relevant skills to assist in brainstorming and implementation (often specific experts in particular areas)

100

Project leader

50-100

Analyst

1-2 full-time team members

100

2-3 part-time team members

As required

TWO BASIC STEPS IN THE DIAGNOSTIC

1) Structure and focus the problem Build basic fact base Identify major improvement levers/bottlenecks
Pareto charts Capacity balance

2) Dig into the vital few sub-issues Further breakdown losses into sub-components Drive to root causes Build draft value driver tree and identify KPIs

The vital few issues and their causes, that when resolved, will meet the project improvement target!

BUILD BASIC FACT BASE

2001/2002 budget performance and breakdown by key cost component Historical operating performance Average and best performance day/week (e.g., TPH, Cost, Feet advance)

Tailor to needs of the particular project Use hypotheses to focus efforts on where improvements lie

Equipment kit/fleet performance Capacities Cycle times Other, as required

BASIC COST STATISTICS ROASTER

GOLDSTRIKE EXAMPLE
Cost per ton processed ($) May 2001 YTD cost breakdown (%) 100% = $58 million (annualized) Contract Services Propane Others

16.00

12.46

12.58

13.45

Lime

Other reagents
Design Total Costs Tons (millions) 2000 actual 38.7 3.1 2001 budget May 2001 YTD 59.4 4.6 58.0 4.2

13 14
Maintenance related*

Electricity 49% Grind 29 29% O2 5% Off gas 5% CIL 2% Crush 10% Other

19
Labor

Annualized May 2001 YTD cost base used as baseline for diagnostic

PARETO CHARTS BETZE-POST PIT SHOVELS

P&H Shovel total downtime costs by component
$350 $300
Annual Cost

$250 $200 $150 $100 $50 $0 Replace Track Drive Tumblers Set Front Idlers Track Pin Campaign Track Repairs Track Frame

Lost production Labor costs Parts costs

Failures

Top 2 categories account for ~ 70% of total cost

Sc h. M

# Of Occurrences
ai n
10 15 20 25 30 35 0 5

Mill 1 Down Occurrences

PARETO CHARTS GOLDSTRIKE MILL #1

t/R el in ch es .R et or SA qu G e 0 Di 03 s. Pm C o nv Br p. . ok & en Li ne SA s G Li ne A/ rs Th C St ck an .P db m p. y & Li ne s Se SA rv ic G es Lu be Sc Sy h. s. R et or qu Ch e ip Sc re en Cy cl on es Un s Ba ll M ill s LC I

O th e

CAPACITY BALANCE: BULYANHULU PROCESS PLANT

Tons per operating hour
Existing pump and conveyor motors can be upgraded to accommodate an increase in throughput
256 250 200 185 160 145 160 160 150

Potential Constraint Areas

171

190 145 145

141

Actual = 124

DEFINE TECHNICAL LIMITS WHAT IS OEE?

OEE is derived from three factors: OEE = Availability Rate X Performance Rate X Quality Rate Availability rate How much time per shift was the machine actually running? Performance rate How well did the machine perform (compared to the rated speed) when it was actually running? Quality rate How many products were good the first time?

Example losses

Unscheduled downtime Not scheduled to work Scheduled, no place to work No operator

Operating below maximum safe speed Ramp-up, rampdown due to minor stoppages

Low load factor, spillage Excess dilution Mis-aligned drilling

DEFINE TECHNICAL LIMITS SIX BIG LOSSES OF MACHINE TIME

The three primary factors of OEE are typically influenced by 6 key losses

Availability

Downtime losses

1 2

Set-ups/changeovers

Breakdowns/failures

Performance

Speed losses

3 4

Reduced speed Idling and minor stoppages Start-up/slow-down quality losses Scrap and rework

Quality

Quality losses

5 6

DEFINE TECHNICAL LIMITS OVERALL EQUIPMENT EFFECTIVENESS (OEE) GRAPHICAL REPRESENTATION

ILLUSTRATIVE

Availability ratio

Performance ratio

Quality ratio

OEE

50

Opening Setups/ Break- = time changeovers downs failures

Available time

Reduced speed

Idling = Operating and minor time stoppages

Startup/ slow down quality

Scrap and rework

Production time

2
Product mix Changeover speed Setup procedures

3
Low reliability Maintenance practices

4
Tool quality Equipment reliability Operating practices Crewing Repair time Equipment adjustment

5
Procedures /standards Training Equipment limits

6
Training Tool condition Raw material quality

Typical drivers

PUTTING IT ALL TOGETHER UNDERGROUND EXAMPLE

Hours per day (hours)
24 24 24

Bolter Drill

Mucker

Current fleet Performance

(Rounds per day)

Amount of equipment in fleet

5.0 6.0 2.5

13.6
7.9

20.0
7.2

16.8
8.9

Bolter

Drill

Mucker

X
Fleet Time-based OEE Percent of hours spent operating* 70% 70% 50%
41% 18% 37%

Bolter Drill Mucker

Bolter

Drill

Mucker

Individual equipment cycle time

Average hours per operating cycle
6.2 3.6 2.5

Bolter

Drill

Mucker

OEE can be split into its components Time Speed Quality Here, we could have split out the cycle time (speed) OEE to identify losses in cycle

BOLTER FLEET TIME-BASED OEE

average hours per equipment per shift*
100% = 2200 hours
100% 4% 4% 92% 7% 85% 22% 5% 3% 2% 12% 40%

Possible solution focus:

62%

Idle time Downtime Two items account for over 1/3 of lost time

Total Hours Blasting/Shift

Change Window

Hoist/end of Shift

11 Hour Shift

Un-Known

Total Collected

Down

Available

Getting to/Leaving Equipment

Tramming

Supplies

Idle

Operating

BOLTING IDLE TIME BREAKDOWN

Percent of fleet idle time
100% = 290 hours 100%

34%

16% 10% 9% 8% 8% 5% 5% 3%
Total No Place to Bolt

Possible Solution Focus: Communications Contingency decision making Top three items account for ~ 60% of total

1%
Electrical

Re-assigned Task

Set-up, Scale, Paper-work

Ventilation

Waiting to be mucked

Unknown

Communications

Misc.

Service Machine

BOLTING DOWNTIME BREAKDOWN

Percent of fleet down time*
100% = 538 hours
100% 58%

Rough breakdown from down sheets

Brakes 20% Feed chain 20% Feed rail 20% Steering 15% Hydraulic 10% Bolts 10% Other 5%

Possible solution focus: Design out/ eliminate failures in key items Identify key breakdown indicators (e.g. brake vibration) take preventative action before occurrence Reduce time waiting for mechanic for small fixes

12% 10% 7% 5% 4% 3% 1%

Total

In Shop Major Repair

Partial Down During Shift

Hydraulic

Drifter

Electrical

Down for PM

Unknown

Misc.

5 WHYS A TOOL TO IDENTIFY ROOT CAUSES

MANUFACTURING EXAMPLE

5-Why Analysis
Out of alignment

Root Cause

Why No. 1

Worn parts

Incorrect alignment

Why No. 2

Poor lubrication

Old parts

Incorrect setup No standardization

Why No. 3 Broken oil lines

Nonfunctional oilers

Old and new parts mixed

Lack of skill

Why No. 4

PMs not deep enough

Poor PM compliance

No parts room Poor training 5S program

No accountability

No set-up procedures

Why No. 5

Accountability

No parts available

No post set-up documentation

FISHBONE ANALYSIS ANOTHER TOOL TO IDENTIFY ROOT CAUSES

MANUFACTURING EXAMPLE MAN METHOD No root-cause analysis No auditing of processes

Lack of urgency

Poor training

PMs not updated No set-up standards PMs compliance low

Accountability

Not repairing problems when needed

Overall lack of procedures

Cylinder rebuild failures Shaft Gears Housing Alignment Poor tooling design Worn out metal Old coolant Damaged parts End of coil issues

MACHINE

MATERIAL

TRANSLATE DIAGNOSTIC RESULTS INTO VALUE DRIVER TREE

Underground development value driver tree - example
# Bolters

X
Available Bolting time # of Rounds Bolted # Drilled faces X % Blasted Operating days _ X Bolter cycle time Available Shift time X Bolter TimeOEE

M/round Meters per day X Rounds shot/day

Meters developed

Missed Drill rounds Potential Front-line KPIs # moves/shift # Brake failures # hydraulic hose failures Breakdown response time ...

VALUE DRIVER EXERCISE JOES DINER

Divide up in groups of 3-4 Build a value driver tree for the profitability of Joes Diner using starting point below Determine no more than 5 KPIs that would be effective in helping Joe improve his profits

Customer contribution Joes Diner profitability

Fixed costs

JOES VALUE DRIVER TREE ONE SOLUTION

Possible KPIs # Seats
# customers/seat (seat turns) Waste % Price/plate Plates/customer # Customers/server (server productivity) Square feet

# Customers

Customers/ day

x
Days open

# Customers/ seat Food profit/ plate

Customer contribution

Food profit/ customer

Contribution/ customer

_
Kitchen&service cost/customer

#plates/ customer Kitchen costs/ customer

Price/plate True food cost/plate Kitchen costs # customers $/server # Customers/ server

Standard food cost/plate 1- waste %

Joes profits

+
Service costs/ customer

Rent

Square footage

x
Fixed costs Management/ administration Utilities

$/square foot

# Customers/ seat # Servers/seat

+
+

$/day Days open

Advertising

WHAT YOU GET DIAGNOSTIC END-PRODUCT

Clear view of the 3-5 issues that need to be resolved first the vital few focal points for idea generation
Issues specific enough to begin identifying actionable solutions (vs. more issues) Confidence that solving the vital few will exceed the target Agreement with key project sponsors/mine managers on priorities
Absolutely critical for a successful step 2 There is a tendency to cheat step 1 Cheating leads to: Solving symptoms vs. causes Wasted time, frustration Missing your targets