We refer to the earlier announcements dated 6 August 2020 and 10 August 2020 in relation to the above subject matter.

The Board of Directors of Borneo Oil Berhad wishes to provide further additional information and explanatory notes with regards to the following items as previously announced :

4. To elaborate how much Gold can be extracted from the total resources of 22,200 oz. and the basis of estimation.

4.1 Based on metallurgical tests conducted, up to 90% of the gold can be extracted and from this 30% by gravity and 70% by Carbon In Leach (CIL).

      i.e out of 90% of 22,200 oz = 19,980 oz of gold extractable.

          By gravity : 30% of 19,980 oz = 5,994 oz of gold extractable

          By CIL : 70% of 19,980 oz = 13,986 oz of gold extractable

4.2 There are 2 methods to extract Gold, either :-

      (a) Carbon In Leach (CIL) circuit (preferred method based on metallurgical test result) (please refer to chart as enclosed); or 

      (b) Heap Leaching process (not preferred). Based on test work conducted, only 30% gold can be extracted, due to high clay content and low permeability.

4.3 Metallurgical testing is an ongoing process tied to the exploration program.

8. Risk Factors for the Exploration and Mining Works 

8.1 Weather

Malaysia has a tropical equatorial climate with seasonal bouts of heavy rainfall which may in some extreme situations cause floodings and landslides. Open pit mining and its infrastructures may face risks of pit floodings and landslips which will cause disruption/operational risks to the mining works.

8.2 Unforseen geological condition(s)

Sometimes it may be crucial to change the mine design and/or mine plan on a timely manner to address  geotechnical risk.  The value of open pit mining operation is primarily driven by ore vs. waste strip ratio.  The less waste to move to extract ore, the higher the revenue that open pit mine generates.  Open pit slope geometry (or slop angles) is at the core of mine design and is determined based on rock mechanics principles by geotechnical engineers.  It is in their custody to design stable slopes to produce the most value for the excavation.  In a large open pit, a change of a slope angle by one degree can result in either increase or decrease of waste volume, which has a notable impact on total costs.

8.3 Metallurgical challenges

Gold occur as deposits called lodes, or veins, in fractured rock.Chemical differences in the fluids and rocks, as well as physical differences in the rocks, create many different types of lode deposits.

8.4 Changes in Government policies

Changes in government policies over mining and the environment may cause mining permits to be suspended or mining leases to be subjected to new and stringent rules and regulations. 

8.5 Standard industrial risks associated with gold mining

The nature of gold mining is a medium to high financial risk industrial activity. It will normally take a duration of many years from the start of exploration to full production.

8.6 Fluctuations in gold prices.

Gold prices is tied to the US Dollar and geopolitical events. Any strenghts or weaknesses in the US Dollar will affect the price of gold. The fluctuation in gold prices has a direct correlation on the profitability that is associated with the profitability and currency risks in the mining works.