Aduro Clean Technologies (CNSX:ACT; OTCQX:ACTHF) Research Update – May 2024

Arrowhead is updating its coverage on Aduro Clean Technologies Inc. with a fair value bracket of CAD 3.9 to CAD 5.6 per share (share price on May 17, 2024: CAD 1.33) derived using the blended valuation methodology.

• Aduro is an Ontario-based early-stage clean technology company that has developed a highly flexible and disruptive chemical recycling platform called Hydrochemolytic™ Technology (HCT). The company offers three water-based technologies – Hydrochemolytic Plastics Upcycling (HPU), Hydrochemolytic Bitumen Upgrading (HBU) and Hydrochemolytic Renewables Upgrading (HRU).
• In 2023, Aduro commissioned its continuous-flow plastic reactor (R2 Plastic), upon which the company has conducted over 240 test runs on various feedstock compositions. The key observations related to the test runs of waste polypropylene using the continuous-flow plastic reactor unit were:
  • Up to 95% of the carbon in polyolefin feedstock was converted into potential hydrocarbon feedstock.
  • Less than 5% of input ended up as non-recyclable material (carbon and fuel gas).
  • The entire feedstock was highly saturated, minimizing or avoiding the need for costly post-hydrogenation.
• As part of its customer engagement program (CEP), Aduro onboarded a multinational food packaging (MFP) company in March 2024. The MFP company is focused on recycling or recovering solid and plastic waste, increasing the use of biodegradable and recycled materials and minimizing the use of virgin plastic. The engagement will allow Aduro to conduct direct HCT tests on the specific types of plastic waste produced by the MFP company. This will help showcase the effectiveness of the HCT and develop a customized chemical recycling solution tailored to the specific needs for recycling food packaging plastic waste.
• ACT also onboarded a multinational building material (MBM) company to its CEP. The MBM company has extensive manufacturing operations in over 20 countries, with global distribution reach. This collaboration will include a technical evaluation project focused on assessing the potential of HCT for recycling cross-linked polymers, a key material in the client’s product range.
• Aduro’s strategic goals for the calendar year 2024 include:
  • Initiating the development of the next-generation process system with experimentation work, some materials and component scoping for the unit expected to be completed in H1 2024 and procurement, fabrication and assembly expected in the calendar year 2024.
  • Progressing on the five ongoing technology evaluation projects, solidifying key relationships and completing initial project scope work.
  • Accelerating and expanding its customer and industry partner engagement through technology demonstrations, data analysis and customer trials.
  • Expanding its patent and intellectual property portfolio through the refinement of chemical and process technology.
• In the first 9 months of 2024, Aduro generated revenue of CAD 235.3K from collaboration agreements with two confidential publicly traded organizations for execution of a proof of concept and evaluation of its HPU technology. The company had cash and cash equivalents of CAD 2.16M at the end of Q3 2024. The net proceeds from the exercise of warrants and options after Q3 2024 amounted to CAD 2.08M.
• The company appointed Marie Grönborg as an independent director in November 2023. Marie has over 30 years of global experience in the chemical and clean-tech industries. She has held executive-level positions in several companies and is on the boards of SSAB (Swedish steel company) and Eolus. Her experience in the chemical and clean-tech industry is a valuable addition to Aduro’s board.
• In October 2023, Aduro upgraded its trading tier on the OTC markets to OTCQX Best Market from the OTCQB Venture Market. The company will trade on the OTCQX under the symbol “ACTHF”.