Non-dilutive Grant Financing Bodes Well for Aduro Clean Technologies

Public companies need money, of that there is no doubt. For companies in the pre-revenue stage of development, that need is often urgent and constant and can lead to necessary but potentially harmful financing decisions. There are all kinds of predatory lending options, and many forms of financing can put the company into an endless cycle of debt and dilution. So it may be worth taking note of public companies that are doing it right, building the organization frugally but effectively, taking advantage of financing opportunities like partnerships and grants to advance toward the revenue stage as needed.

Aduro Clean Technologies Inc. (CSE: ACT) (OTCQB: ACTHF) (FSE: 9D50) is one example of just such a company. Aduro has been developing its Hydrochemolytic™ platform technology for the last few years, capable of effectively and efficiently turning waste or low-value feedstocks, such as post-consumer plastic and tar-like bitumen oil, into usable high-value products like new plastic and light crude oil. The company’s recent announcement of a C$1.15 million grant from the National Sciences and Engineering Research Council (“NSERC”) Alliance and Mitacs Accelerate Grants Program (“Mitacs”) is beneficial in many ways, with non-dilutive financing rolled up with a useful partnership all in one package. Let’s take a look at the company and the deal.

One of Aduro’s main verticals is plastic recycling. It is estimated that somewhere around 10% of the world’s plastic gets recycled. Maybe another 10% could be recycled but never makes it to a recycling center for a variety of reasons. But somewhere in the neighborhood of 80% simply cannot be recycled by current technologies, due to the nature of the plastic itself or due to impurities like food, organic waste, plasticizers, and fillers. Aduro’s Hydrochemolytic™ technology has been proven capable of handling many of these issues and may be the answer to unlocking the value of that unusable 80% of plastic feedstock.

The grant, received in partnership with the University of Western Ontario, is funding a three year program to study the particular effects of various contaminants on Aduro’s plastic recycling process. The goal is to maximize the effectiveness of the system to remove or reduce the need for extensive and expensive sorting and cleaning processes that currently inhibit the widespread recycling of the majority of plastics.

Over the course of three years, Aduro will be contributing funds to the program on a 1-to-3 basis with NSERC and Mitacs. For every one dollar spent by Aduro, the agencies will be pitching in three dollars to the program. The research will be carried out on campus and is led by distinguished biochemical engineering professors there, in the University’s state-of-the-art facilities.

The benefits for Aduro are obvious and numerous. Access to the facilities and to the combined institutional knowledge of the school and the staff is incredibly useful. Having a team dedicated to maximizing the effectiveness of a technology that is already a vast improvement on existing approaches to recycling is very beneficial. And perhaps most importantly in today’s job market, Aduro is afforded the opportunity to cultivate young scientific and engineering talent with an expertise in its Hydrochemolytic approach to plastic recycling. Under the leadership of Dr. Paul Charpentier and Dr. Cedric L. Briens, the project will employ over three years: two postdoctoral fellows, three Ph.D. students, five Masters of Engineering, one research engineer, and eight undergraduate students. The professors are already experts in the field, and the program will be developing more.

While this program gets underway, Aduro is very busy with reactor projects designed to demonstrate the large-scale viability of Hydrochemolytic technology. The first plastic recycling reactor project, dubbed R2, is expected to be completed in the next few weeks. A similar project will be coming online in the Netherlands in early 2023. These two reactors are designed as customer engagement tools where Aduro can demonstrate the technology to potential large scale clients, testing various feedstocks and providing the desired end-product materials.

These reactors will not only set the stage for future sales, they will also provide crucial data for the next reactor project, R3. This is a scaled up version already in the planning phase with customer/partner Switch Energy, capable of processing 2,000 kg/day of materials. At that point, Aduro anticipates being ready to build commercial-scale projects for customers developed through these earlier stages.

Concurrently, Aduro is in the R2 phase with its bitumen processing reactors. Much of the oil derived from operations like the prolific Alberta oil sands is very heavy, tar-like, and difficult to transport. The Hydrochemolytic process is capable of efficiently and effectively turning that bitumen into higher value and movable light crude.

Aduro has, step by step, been proving its revolutionary technology. From theory to the lab to the field, the company has grown methodically without over-promising or reckless expansion. Grants and programs like the Mitacs/NSERC/University of Western Ontario collaboration are a prime example of the company’s commitment to smart, non-dilutive growth. Keep an eye out for further developments as Aduro moves into the revenue-producing commercialization stage.