Talk to one of the Malgems to activate it, beat it down to less than 50%, then use the Crest of Barahlt to master it. Go show your new pet to Borrin, then take the Malgem to one of the piles of smoking rocks. He will attack it and release an Angered Cinder, which you must now kill (seems the Malgem is not programmed for that). Repeat twice more. Return to Borrin.