Posted by soojinhou > 2016-07-01 08:49 | Report Abuse

It's hard to evaluate bornoil because the company is not very transparent. Professional mining companies adhere to JORC standard which tells u ore that are economical to mine and those that are not. So it's not a matter of having a large ore reserve, but the cost must be economical as well. Bornoil also doesn't disclose all in cost and all in sustaining cost making it impossible to gauge how profitable is their operation. For those wishing to see how a transparent operation is run, you can refer to Cnmc Goldmine listed in Sgx. They have just acquired a majority stake in 11 gold concession license in kelantan and the acquisition enlarge their mining area many times. They will be running boring tests and issue JORC compliant resource report in due time.

Posted by ValueGrowthInvestor > 2016-07-01 09:22 | Report Abuse

I like this sentence: "How about Target Price ? Due to lack of understanding for the group's operation, I don't really know how to set the Target Price. "

Meaning it could be worth RM0.05 or RM5.00. You don't know. But you are sure it will go up. Comforting sentence.

But anyway, because you are Icon8888, the share price will be driven up regardless. That's the power of i3investor.

Posted by Icon8888 > 2016-07-01 09:29 | Report Abuse

stockmanmy called it "gut instinct", I called it "smell of money"

it does exist, you know ?

Posted by valueguru > 2016-07-01 09:47 | Report Abuse

Agree with soojinhou's comments.

Posted by Icon8888 > 2016-07-01 09:50 | Report Abuse

I agree too

I always find it difficult to disagree with what soojinhou said LOL

Posted by OngLai88 > 2016-07-01 10:04 | Report Abuse

Well done Icon8888. Thanks for the write up.

Posted by Santa > 2016-07-01 10:24 | Report Abuse

Whattt? No valuation? :( How about reverse valuation?

Net cash 71mil, 1.5bil warrant C outstanding with strike price RM 0.11. 1.5bil×0.11=RM 165 million. Add them up, net cash is RM236 mil.

Diluted share outstanding, 3 billion pieces. Market cap at RM 0.16 is 3bil×0.16=RM480 mil.

Market cap-net cash=480-236=RM 244 million. This is our sum of all future earnings. We can add in time value of money using PE ratio.

So...the main question, what PE to use? If PE 12, then RM244mil/12= RM20.33mil. Thats the earnings target for the coming year. Achievable? :D

Posted by Santa > 2016-07-01 10:26 | Report Abuse

Whattt? No valuation? :( How about reverse valuation?

Net cash 71mil, 1.5bil warrant C outstanding with strike price RM 0.11. 1.5bil×0.11=RM 165 million. Add them up, net cash is RM236 mil.

Diluted share outstanding, 3 billion pieces. Market cap at RM 0.16 is 3bil×0.16=RM480 mil.

Market cap-net cash=480-236=RM 244 million. This is our sum of all future earnings. We can add in time value of money using PE ratio.

So...the main question, what PE to use? If PE 12, then RM244mil/12= RM20.33mil. Thats the earnings target for the coming year. Achievable? :D

Posted by greatful > 2016-07-01 10:32 | Report Abuse

sorry folks, i do not believe about the gold exploration here until result seen. so far only speculation only. ignore me, i just talk alone

Posted by Santa > 2016-07-01 10:33 | Report Abuse

In fact, you can also see it this way. At PE 12, any earnings excess of RM 20.33 million is the upside of stock. How wonderful if we can just annualise the recent QR to get RM 40 mil profit.. :)

Posted by paperplane2016 > 2016-07-01 10:52 | Report Abuse

you forgot 1 thing lah con man.
They got MANY LANDS

Posted by fangyew > 2016-07-01 11:22 | Report Abuse

thank you

Posted by ronnietan > 2016-07-01 11:38 | Report Abuse

Thank you. An interesting and comprehensive report.

Posted by VenFx > 2016-07-01 11:40 | Report Abuse

Hmmm, in term of transparency from Bornoil... that's why its price action always low.
Still wait seeing.

Posted by rajatan > 2016-07-01 12:08 | Report Abuse

Thank you

Posted by paperplane2016 > 2016-07-01 12:57 | Report Abuse

santa is much smarter than me. He did a fair calculation

Posted by iloveshare128 > 2016-07-01 15:59 | Report Abuse

thanks for the info gathered, icon. Must have exhausted many candles last night, haha... btw, this stock looks attractive in one way but also poses certain level of risks to investors if you are wary enough. See below my concerns (just my 1.5 cent):

1) After the private placement in 2013/4, the company asked for another humongous fund from the shareholders via Rights Issue... I do understand that this is all because the company needs a lot of capex to run the mining business, and also because of its difficulty to borrow from the banks... but please think it into a second level, does this mean this kind of business requires a lot of funding (continuously) from the shareholders in future if they obtain more leases for gold mining? (I would say yes)... and does this translate into a statement that shareholders should be prepared with more $$$ to sign up for upcoming Rights Issues activity? (very likely as they can't get any bank loans).. of course you can sell the OR rights if you do not want to subscribe for the RI... but to me, to many fund-raising exercise like this is not conducive for investment... investors normally don't like it, and this may lead to the drop of share price when new RI is announced.

2) How efficient is Bornoil in terms of translating these funds into actual net profit? This is yet to be seen. But you can see that their investment in machines, equipments and other facilities require hundreds of millions. And how fast can they earn back this money? I like what sifu KC Chong has said in the past, the earning growth must be at least proportional (if not better) than they money they invested. For instance, if a company used 100M to generate additional 3M income, this is only 3% and it is better to put the money into FD.

3) Transparency of this company. Many have noted that the management remains very clandestine/secretive when publishing the details. This poses the risk of what our "Boh Chow CCCC AAA" friend has always been talking about... we can be dreaming our Utopia with wishful thinking but we also have to weigh on the potential downsides, if any (to be neutral).

4) Over liquidity of outstanding shares in the open market. To me, the less the floating shares in the open market, the better. This is not difficult to understand - many mentioned that the trading volume today broke 100M shares and are still very excited about it.. but please do not forget that this share has 2970millions outstanding shares so it is only about 3% of total shares that are being traded. At extremely high quantity of outstanding shares, many tend to sell for profit-taking/quick gain and this is very likely to obstruct the rise of the share price.

Posted by speakup > 2016-07-01 16:31 | Report Abuse

I remember Dali asked many uncles & aunties to load up on Bornoil, so many uncles & aunties trapped in Bornoil now, how to up?

Posted by Icon8888 > 2016-07-01 16:36 | Report Abuse

Dear Iloveshare, Thank you for your input. Appreciate it

Posted by tyran > 2016-07-01 17:46 | Report Abuse

good article icon!
ou're right about the management's secretive stance, would be so much better if they took the time to explain their figures rather than leave so much to our well-intention-ed speculation

Posted by mango2 > 2016-07-01 18:10 | Report Abuse

Icon, maybe u should correct the below misleading paragragh:

"At the rate it is going, it will probably take them another two years to finish processing. As 345,183 MT of ores produced more than 600 kg of gold (the group has sold some gold along the way). Can the remaining ore produce at least another 600 kg of gold for the group ?"

This is because most of the 600 kg of gold is bought by Bornoil, not produced by them, based on the following facts / logical deduction:-

1) Bornoil produce only about 2 kg of gold dore per mth, and as pure gold is purified from this gold dore, hence it is not possible for Bornoil to produce so much gold from such tiny monthly production of gold dore
2) With the high expense in gold mining, it is not possible for Bornoil to produce 600+kg gold and keep it for future sale, without incurring loss in the financial report (Mining expense money out but no income in). But we do not see any loss in Bornoil recent qtr report.
3) Bornoil admit in their 2016 Annual Report that they do gold trading.

Posted by paperplane2016 > 2016-07-01 18:18 | Report Abuse

The revenue so high. If buy and sell gold, cant classified as revenue, faham account8ng keh tak bongok

Posted by OPMS > 2016-07-01 18:24 | Report Abuse

wakaka paperplane turn to chilli pepper..

Posted by Icon8888 > 2016-07-01 18:29 | Report Abuse

mango, sorry I don't think I will amend the article. I believe my view is correct, just as you think yours is. However, I have cut and paste your comments into the article so that readers can weigh the two side arguments and decide for themselves which one to follow

please refer to the article

Posted by mango2 > 2016-07-01 18:33 | Report Abuse

I have the above reasons to think my view if correct, then what is your reasons to make u think your view is correct. In this way readers can better dedice for themselves.

Posted by OPMS > 2016-07-01 18:37 | Report Abuse

Icon, I love all your unbiased articles. Giving people free insights into certain companies.

Posted by Icon8888 > 2016-07-01 18:45 | Report Abuse

I thought I have made it very clear in my Concluding Remarks section ? Please refer below

"....I was particularly wary of the inventory data. Was it really referring to gold dug out from the ground ? If yes, it would be very valuable. However, there were forum members which debated that it could represent gold acquired for trading purpose. If that was the case, we are looking at potentially very thin profit margin when they were sold off.

The above major concern was addressed when the annual report for the financial year ended 31 January 2016 was released few weeks ago. This particular paragraph gave me a lot of comfort.

[ cut and paste of Annual Report paragraphs ]

Even though the company still hasn't explicitly stated that the gold is not bought from market for trading purpose, the way they presented it more or less confirmed that it originated from own mining operation (you don't brag about the value of gold you bought from somebody else. You didn't get it for free, you pay for it !!!) "


=======
mango2 I have the above reasons to think my view if correct, then what is your reasons to make u think your view is correct. In this way readers can better dedice for themselves.
01/07/2016 18:33

Posted by mango2 > 2016-07-01 19:07 | Report Abuse

From your statement "....I was particularly wary of the inventory data. Was it really referring to gold dug out from the ground ? If yes, it would be very valuable. However, there were forum members which debated that it could represent gold acquired for trading purpose. If that was the case, we are looking at potentially very thin profit margin when they were sold off, "

I take it that u are not sure at first.

However u are later assured by the Annual Report in "that the way they presented it more or less confirmed that it originated from own mining operation"

So your reason is based merely on perception derived from the Annual Report, not on any valid facts / logical deduction.

I think that is not good enough, Icon. U can do better than that.

Posted by Superstock2016 > 2016-07-01 23:05 | Report Abuse

http://klse.i3investor.com/blogs/Superstocks/99401.jsp

Posted by paperplane2016 > 2016-07-01 23:19 |

Post removed.Why?

Posted by paperplane2016 > 2016-07-01 23:21 |

Post removed.Why?

Posted by paperplane2016 > 2016-07-01 23:22 | Report Abuse

No wonder ppl said Malaysia education lvl real deteriorate. Now I know.

Posted by paperplane2016 > 2016-07-01 23:24 |

Post removed.Why?

Posted by paperplane2016 > 2016-07-01 23:25 | Report Abuse

OK? Mango?

Posted by paperplane2016 > 2016-07-01 23:26 | Report Abuse

No heart feeling icon. But you call yourself guru, windy being. Simple things also wanna talk so long. U guna oral or not.
Sorry lab, I top 10 last yr, now top3. I deserve to lansi you first.

Posted by YOLOOOO > 2016-07-01 23:41 | Report Abuse

LMFAO paperlane comments hahaha

Posted by mango2 > 2016-07-01 23:44 | Report Abuse

Ah plane, why so angry? Price didn't go up much even though "good" qtr?
May be u should think about that, rather than ask me to take accounting class. U want to sponsor me keh? oh so nice of u.

Posted by value88 > 2016-07-01 23:55 | Report Abuse

Quote from recent Bornoil's quarterly report "..the Board is optimistic of much better and improved performance in the coming quarters.." unquote.

I noticed it is seldom for a management to make such statement saying next few quarters will have much better performance, unless they are really confident that it would happen.
That reminds me of Geshen's management whom also claimed the same thing in it's Q2 FY15 quarterly report. Quote " The Group envisages improved performance over the next quarter" unquote. It's EPS really rose significantly from 2.99sen to 9.6sen in subsequent quarter and it's stock price shot up after Q3 result.

Bornoil's reporting is not transparent and hence we can't really do a good valuation based on the available info, but if hanging on the management's confident statement above, it may worth to consider to bet small on this counter.

Posted by paperplane2016 > 2016-07-02 00:03 |

Post removed.Why?

Posted by paperplane2016 > 2016-07-02 00:05 | Report Abuse

You know why they dare not disclose so mUch?? You all must understand this is a sensitive business. I believe there must be some clause on confidential that they can't disclose too many details.
Remember who they jv with?? I believe some info they can't disclose in details one.

Posted by paperplane2016 > 2016-07-02 00:07 | Report Abuse

And yeah. Icon do point out important point. Management rarely, in Malaysia rarely said we are confident to get better results one.

Posted by paperplane2016 > 2016-07-02 00:08 | Report Abuse

They will only say that, when they can be 100% sure result is there Liao in 2q. As when publish this 1q result, they are in 2q position Liao. So I guarantee you, next q is even ! much better than 1q. So?

Posted by mango2 > 2016-07-02 01:28 | Report Abuse

Ah Plane, since u are so nice to concern about my accounting, shouldn't u be the nice one to sponsor me? kyy? no lah, afraid my england not good enough for his standard. Maybe u could be so nice to improve my england before I apply to kyy?

Posted by sharktank > 2016-07-02 10:49 | Report Abuse

Buy!

Posted by very_goat > 2016-07-02 22:41 | Report Abuse

http://news.gold-eagle.com/article/gold-prices-road-10000/293

Posted by paperplane2016 > 2016-07-02 23:54 | Report Abuse

England or English?? Boy....you need more than just accounting. How any sent you back kindergarten first??

Posted by mango2 > 2016-07-03 08:41 | Report Abuse

Aiya, where is your sense of humour? Anywhere, have enough of "constructive" chit-chat with u, have a nice day and good luck with your Bornoil. Bye.

Posted by RainT > 2016-07-03 18:33 | Report Abuse

Did anyone notice that the gross profit margin for quarter 1 2017 is just 0.8%

In quarter 1 2016 it was 42%

Meaning what the company buy/costs of production then they only can profit 0.8% only

Posted by RainT > 2016-07-03 18:46 | Report Abuse

In the annual report year 2016 it stated oil, gas , energy and mining revenue
This company also got do oil related business ?

Posted by mango2 > 2016-07-03 23:08 | Report Abuse

Icon, no need for us to debate anymore.
Borneo Oil chairman Tan Kok Chor had confirmed Bornoil only produced some 27.35 kg of gold in the last financial year ended Jan 31, 2016.


"He said via wholly-owned subsidiary Borneo Oil and Gas Corp Sdn Bhd (BOG), the group produced some 27.35 kg of gold from its mining operations in Merapoh, Pahang, in the last financial year ended Jan 31, 2016."

http://www.thestar.com.my/business/business-news/2016/06/10/borneo-oils-gold-mining-venture-pays-off/

Hence the balance 500+ kg gold in the inventory must have been purchased. Now everything is clear I think.