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Mar 30 2021
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Investment Memo: Aldoro Resources (ASX:ARN)
7 March 2022
What does ARN do?
Aldoro Resources (ASX:ARN) is a junior exploration company aiming to discover rubidium, lithium and nickel across a portfolio of projects in Western Australia.
What is the macro theme behind ARN?
Rubidium is currently used industrially in fibre optic cables. It also provides exposure as an up and coming battery metal with its use in sodium-ion batteries. Sodium-ion batteries have lower energy density than lithium-ion batteries, are faster to charge and more resilient to cold temperatures.
Nickel & lithium are critical raw-material in the production process of electric vehicle (EV) batteries. Nickel makes batteries energy dense, so that cars can run further on a single charge. lithium is the primary raw-material used in EV batteries. Nickel can also be found in everything from mobile phones to jet engines.
Why do we continue to hold in 2022?
- Rare exposure to rubidium on the ASX - Rubidium is used in a few high tech applications, and can be used in sodium-ion batteries. Rubidium is more expensive than gold because of how difficult it is to find, we believe it could evolve into a strategically important metal. ARN offers a rare exposure to this commodity on the ASX.
- Dr Minlu Fu backing the company - Fu made a strategic investment into ARN via a $2m placement @20c. Dr Fu has been heavily involved in a number of nickel, copper and gold discoveries and was also a strategic investor in another one of our portfolio companies Los Cerros at 3.5c.
- Leveraged to a new discovery - ARN’s Nickel-copper-PGE Project in the Murchison Region, sits on grounds synonymous with a specific type of nickel-copper resource that can also include platinum group elements (PGE). Other discoveries made in similar geological settings sold for multiple $B within 1-2 years of discovery. Voisey’s Bay sold for C$4.5BN just two and a half years after it made its discovery. Nova Bollinger sold for A$1.8BN, three years after its major discovery. Chalice’s Julimar discovery saw it reach A$3BN+ valuation.
What do we expect the company to deliver in 2022?
Objective #1: Drilling across the company’s rubidium/lithium projects:
- With an RC drilling program ongoing at the Niobe project, we want to see ARN go on and drill its other rubidium/lithium project (Wyemandoo) ~40km nearby.
Objective #2: Maiden JORC resource estimate at the rubidium/lithium project.
- We want to see ARN convert its current exploration target for its rubidium/lithium project (33,000-150,000 tonnes of rubidium oxide grades ranging from 0.07% to 0.15%) into a maiden JORC resource estimate.
Objective #3: Drilling at the company’s nickel project.
- EM surveys and more rock chip sampling as part of target generation works leading up to the next round of drilling at the company’s nickel project.
What could go wrong?
Exploration risk: All of ARN’s projects are still only prospects. With no confirmed resource or mineralised system there is a risk that after drilling nothing is found.
Financing risk: ARN as a junior explorer is heavily reliant on freshly raised capital to finance high-risk drilling programs. ARN is currently in the middle of multiple drilling programs. With this much exploration activity ARN is likely to need to raise capital to finance further exploration later in 2022. Market conditions are also important for ARN, a deterioration in conditions could mean accessing capital becomes a problem for ARN.
Commodity risk: Rubidium trades in an illiquid spot-market meaning it can be hard to model out a development project. There is also a risk that commodity prices fall and high-risk explorers like ARN fall out of favour.
What is our investment plan?
We have been holding ARN for almost a year now, the share price has performed well since entry so we have free carried, and now intend to hold our position into the 2022 drilling campaigns.
We may look to further de-risk our current position by 20% if the share price re-rates on a lithium or rubidium discovery, and then update our investment memo depending on drilling results and (hopefully) a JORC resource.
Disclosure: The authors of this memo and owners of Catalyst Hunter, S3 Consortium Pty Ltd, and associated entities, own 845,000 ARN shares and 220,000 ARN Options. S3 Consortium Pty Ltd has been engaged by ARN to share our commentary on the progress of our investment in ARN over time.
Catalyst Hunter Investment Milestones
✅ Initial Investment @ 20c
✅ Top Slice
✅ Free Carry
✅ Increase Investment @ 20c
🔲 Free Carry
🔲 Take Profit
🔲 Price increases 250% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1,000% from initial entry
🔲 12 months capital gains tax discount
🔲 Hold remaining for 2 years
Our Past Commentary on Aldoro Resources
|Type||Date||Share Price $||Title|
|07-Mar-2022||$||ARN drilling to define a maiden JORC rubidium/lithium resource|
|27-Aug-2021||$ 0.430||ARN adds Rubidium target in battery metals exploration portfolio|
|06-Aug-2021||$ 0.540||Analysis: ARN Hits 1.7m of Massive Sulphides - Assays to Confirm Result|
|05-Aug-2021||$ 0.650||ARN Hits 1.7m of Massive Sulphides - Discovery Hole?|
|21-Jul-2021||$ 0.380||ARN Days Away From Nickel Drilling|
|07-Jul-2021||$ 0.440||ARN Adds Lithium to Nickel|
|26-May-2021||$||ARN to Spin out Gold Assets Ahead of Nickel Drilling Event|
|14-Apr-2021||$ 0.350||WA Nickel Explorer ARN Just Identified 2 New Drill Targets|
|Article||30-Mar-2021||$ 0.240||ARN Leveraged to a Nickel Discovery - Strategic Investor Secured|
Most recent catalysts for Aldoro Resources
Catalyst Hunter 07/03/2022
ARN drilling to define a maiden JORC rubidium/lithium resource
Our junior exploration investment Aldoro Resources (ASX: ARN) is chasing rubidium, lithium, nickel and copper. With the lithium price up over 500% this year and trading at all time highs, ARN has picked the perfect time to go in and drill its WA rubidium/lithium projects.
Catalyst Hunter 27/08/2021
ARN adds Rubidium target in battery metals exploration portfolio
ARN is actively running its nickel exploration having already made a promising nickel drill hit. ARN is still drilling targets right now, and has also found some down hole EM conductors during exploration. While we wait for news of more nickel results, ARN has announced today’s rubidium target and also has some interesting hard rock lithium projects it is exploring...
Analysis: ARN Hits 1.7m of Massive Sulphides - Assays to Confirm Result
As shareholders, we welcome news that Aldoro Resources Ltd (ASX: ARN) has hit 1.7m of massive to semi massive nickel-copper sulphides, 212m below the surface during maiden diamond drilling at its flagship Nickel-Copper-PGE project in WA.
Catalyst Hunter 05/08/2021
ARN Hits 1.7m of Massive Sulphides - Discovery Hole?
Aldoro Resources (ASX: ARN) just came out of a trading halt with news of a 1.7m hit of massive to semi massive sulphides, 212m below the surface.
Catalyst Hunter 21/07/2021
ARN Days Away From Nickel Drilling
Aldoro Resources (ASX: ARN) is now just days away from diamond drilling at its flagship Ni-Cu-PGE project.
Catalyst Hunter 07/07/2021
ARN Adds Lithium to Nickel
Aldoro Resources (ASX: ARN) has just acquired new lithium ground. Lithium is a key ingredient in electric vehicle batteries and demand is expected to surge as the world switches to electric vehicles over the next decade.
Catalyst Hunter 26/05/2021
ARN to Spin out Gold Assets Ahead of Nickel Drilling Event
Our nickel explorer Aldoro Resources (ASX: ARN) has announced a spin out of its gold assets into a new company that will list on the ASX.
Catalyst Hunter 14/04/2021
WA Nickel Explorer ARN Just Identified 2 New Drill Targets
Nickel explorer Aldoro Resources (ASX: ARN) has confirmed two high confidence, ‘walk up’ drill targets. This means ARN is edging closer to its planned nickel drilling event.
Jonathan Jackson 30/03/2021
ARN Leveraged to a Nickel Discovery - Strategic Investor Secured
Aldoro Resources Ltd (ASX: ARN) is in the process of de-risking its maiden nickel-PGE drilling event in WA. It’s the potential to make a large nickel discovery that attracted internationally renowned geologist Dr Minlu Fu to make a strategic investment in ARN.