Aduro Clean Technologies Inc.

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”.

Release Highlights

• Aduro is pleased to share exciting results from preliminary tests achieved with deconstructing crosslinked polymers, using the Company’s Hydrochemolytic™ Technology.™
• Test results yields up to 84% of lower-molecular-weight hydrocarbons, predominantly in the C8 to C28 range. This confirms the effectiveness of HCT in breaking down crosslinked polymers, which have high thermal stability and complex decomposition pathways, into valuable hydrocarbons.
• This work solidifies Aduro’s pathway into the building materials sector, but also opens the door to the very sizable USD 6.4 billion XPLE industry. Accordingly, the Company is actively engaged in discussions with potential partnerships in these sectors.

Release Highlights:

• Aduro is pleased to announce its participation in the upcoming Chemelot Circular Hub event on May 15, 2024, at the Brightlands Chemelot Campus in Geleen, Netherlands.
• Eric Appelman, Chief Revenue Officer, will introduce the Aduro Hydrochemolytic™ technology, a unique approach to chemical recycling.
• The Chemelot Circular Hub (CCH) is a leading example of industrial collaboration and innovation in sustainable chemistry to transform the industry towards greater sustainability and efficiency.

Report Highlights:

• During Q3 2024, Aduro generated CAD 103,628 in revenue, an increase of 78% as compared to revenue of CAD 58,290 generated in Q3 2023. Year-to-date revenue for the nine-months ending February 29th, 2024 increased 304% as compared to the nine-months ending February 28th, 2023.
• Aduro maintains a strong cash position of CAD 2,156,359 as of February 29th, 2024, with additional gross proceeds of CAD 2,081,094 from the exercise of warrants and options, further strengthening Aduro’s balance sheet.
• Significant developments of its Hydrochemolytic™ Technology have been rigorously tested with the continuous flow Plastic reactor. Since its launch in 2023, the reactor has conducted numerous tests on various polypropylene feedstocks, demonstrating exceptional conversion efficiency, up to 95%, into valuable hydrocarbon resources.

Release Highlights:

• Aduro is joining a delegation at the fourth meeting of the Intergovernmental Negotiating Committee on Plastic Pollution (INC-4) in Ottawa, Canada from April 23-29th, 2024.
• INC-4 welcomes over 4,200 delegates who will finalize agreements on various aspects within the plastic industry, from design, capacity building, and waste management.
• The treaty hopes to promote a circular economy for plastics, emphasizing recycling and reusability to prevent plastic pollution while retaining their beneficial properties.

Release Highlights:

• Aduro is pleased to announce its participation at two industry conferences (CHEMREC I 2024 and RMC 2024) focused on the advancement of advanced chemical recycling and renewable materials.
• CHEMREC I (April 28 – May 2, 2024 – Malaga, Spain) will be the 1st International Conference exclusively dedicated to the thermochemical recycling of plastic waste. This discussion will include techno-economic analyses and life cycle assessments.
• Renewable Materials Conference (June 11 -13, 2024 – Siegburg / Cologne, Germany) is the world’s largest conference on chemicals and materials based on biomass, carbon capture and utilization (CCU), and chemical recycling. Aduro is one of six nominees in attendance for the Renewable Material of the Year Award 2024.