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Dimension Five Technologies to acquire Aduro

2020-07-14 16:14 ET - News Release

Mr. Chris Parr reports


Dimension Five Technologies Inc. has entered into a binding letter of intent (LOI) with Aduro Energy Inc. to acquire 100 per cent of the issued and outstanding shares of Aduro from the shareholders of Aduro.

About Aduro Energy

Aduro Energy, established in 2012, is an Ontario-based private company that has developed a highly flexible clean energy platform featuring three water-based technologies: Hydrochemolytic Plastics Upgrading ("HPU"); Hydrochemolytic Renewables Upgrading ("HRU"); and Hydrochemolytic Bitumen Upgrading ("HBU").

New Technology, New Solutions

Originally conceived to radically enhance aspects of petroleum processing, the patented Aduro Energy solutions leverage unique properties of water to upgrade renewable oils as well as waste plastics and rubber to higher value products - cheaply and quickly. The approach is significantly more environment-friendly than established alternatives like energy-intensive pyrolysis, gasification, and decades-old methods applied to petroleum. Aduro Energy instead uses hydrochemolytics, a smart chemistry approach developed by the company. It bypasses traditional methods' reliance on high temperatures from 400 oC to as high as 1100 oC, and on hydrogen produced by conversion of natural gas at between 700 oC and 1000 oC. Although hydrochemolytics operates at only 260 oC - 390 oC, it achieves the same benefits by activating and tuning water to beneficially transform diverse feedstocks.

Aduro Energy Solutions

HPU. The Hydrochemolytic Plastics Upgrading technology was developed to address the mounting global problem of post-consumer plastics, foam, and rubber from used tires. These materials consist of large, durable molecules called polymers whose properties make them both useful to society and problematic to nature. Aduro Energy applies insights from its original work with petroleum to use HPU to disassemble polymers into smaller molecules, converting waste to resource. It does this through hydrochemolytics, a water-based green chemistry method that accomplishes in an hour what can take decades in nature. In some cases, the products can be purified and reused as feedstocks in the circular economy for producing new plastics or foams. Or, the polymer resource can instead be converted into hydrocarbon fuels. Either way, the application of HPU to recovered plastics, foams, and tire rubber serves to reduce the demand for crude oil while also diverting end-of-life and single-use waste materials from landfills and oceans.

HRU. The Hydrochemolytic Renewable Upgrading technology offers the possibility to transform renewable oils into renewable motor fuels, bio-jet fuel, and specialty chemicals. At the heart of this novel, patent-pending process is a highly scalable continuous-flow reactor that hydrochemolytically upgrades lipids regardless of fatty acid content. Feeds may include the inedible corn oil by-product from ethanol plants; oils from non-food seed crops grown on marginal lands; off-spec canola and soybean oils; tallow; and yellow and brown grease from restaurants that often flows into wastewater treatment plants. The products obtained may also be diverse: besides renewable fuels, the core conversion technology can be configured to produce renewable specialty chemicals such as vegan saturated fatty acids for personal hygiene and industrial applications. HRU also presents a pathway to renewable resins for coatings, adhesives, sealants, and foams for seat cushions or mattresses, replacing raw materials traditionally derived from petroleum.

HBU. The Hydrochemolytic Bitumen Upgrading technology is a completely new approach for transforming heavy crude oil and bitumen into lighter crude. Covered by four patents and patents pending, HBU takes direct aim at asphaltenes and related "heavy" components in petroleum. Their presence at levels up to 25% in Alberta bitumen make it extremely dense and viscous, precluding transport by pipeline unless modified by traditional approaches. By applying hydrochemolytics, HBU efficiently deconstructs the heavy components into lighter molecules, some even being in the diesel range. The upgraded crude has superior properties compared with Western Canadian Select (WCS), including reduced values for sulfur, metals, and acid number. Reduced viscosity means it can be transported through pipelines without dilution by light hydrocarbons. Compared with alternative upgrading technologies, the additional benefits of reduced emissions and low resource demands of HBU gives environmental and competitive advantages to Alberta producers of heavy oil and bitumen.

The Industry

The annual global market for the production and wholesale pricing of ethanol and biodiesel was sized at over 136 billion US dollars. By 2024, the market is expected to grow to almost 154 billion U.S. dollars. Market growth is projected to be driven by capacity additions and higher prices for alternative fuels.Source: https://www.statista.com/statistics/217179/global-biofuels-market-size/

The U.S. Energy Information Administration (EIA) projects that world energy consumption will grow by nearly 50% between 2018 and 2050. Most of this growth comes from countries that are not in the Organization for Economic Cooperation and Development (OECD), and this growth is focused in regions where strong economic growth is driving demand, particularly in Asia.Image: https://www.accesswire.com/users/newswire/images/597454/EIA--global-primary-energy-consumption-by-region-2010-2050.pngSource: https://www.eia.gov/todayinenergy/detail.php?id=41433

The Transaction

a. The Transaction is to be a share exchange or three-cornered amalgamation pursuant to which D5 will purchase all of the Aduro Shares from the Aduro Shareholders, and the Aduro Convertible Notes from their holders, in exchange for an aggregate of 40,000,000 D5 Shares and 80,000,000 Special Warrants. The Special Warrants will automatically convert on a one for one basis into D5 common shares upon the achievement of certain milestones in the development of the Aduro business. The Parties are to negotiate the Definitive Agreement and to use all commercially reasonable efforts to complete ancillary agreements, apply for and obtain CSE approval of the Transaction, and, in particular, take the following steps:

(i) as soon as is reasonably practicable, D5 will apply to the CSE for the consent to complete the Transaction described in the Letter of Intent;

(ii) as soon as is reasonably practicable, D5 will complete a financing of at least $500,000, a portion of which will be lent to Aduro prior to Closing to assist Aduro in its ongoing business development;

(iii) before or contemporaneous with Closing, Aduro will ensure that all Aduro options, Aduro Warrants any other rights to acquire Aduro Shares (other than the Aduro Convertible Notes) are converted or exercised, so that no rights to acquire Aduro Shares exist as at the Closing;

(iv) before or contemporaneous with Closing, Aduro will ensure that all Aduro Convertible Notes have been amended such that such notes will automatically be exchanged for a portion of the 80,000,000 Special Warrants on achievement of the first milestone described in the Letter of Intent; and

(iv) at the Closing Date, nominees of Aduro will be appointed as 4 of the 5 directors of D5, the publicly listed parent company of Aduro, and D5 will change its name to "Aduro Energy Inc."

The $500,000 financing mentioned above will be comprised of D5 shares to be issued at $0.05 per share and a substantial portion is intended to close within the next 30 days. Subscribers must acknowledge that $150,000 of the funds raised will be lent to Aduro prior to closing of the Transaction with limited security, to be repaid within one year only if the first milestone is not achieved. Subscribers in this $0.05 financing will have to acknowledge that there is no assurance the Transaction will be completed.

Additional Information

The LOI regarding the proposed Transaction and the Resulting Entity will be filed on SEDAR and will be available for viewing by all shareholders. If completed, the Transaction will constitute a "Fundamental Change" pursuant to CSE policies. The LOI incorporates the principal terms of the Transaction described herein, and in addition, such other terms and provisions of a more detailed structure and nature as the parties have agreed.

However, there is no guarantee that the Transaction will close. And if it does close, the Resulting Entity will have to qualify to list its shares for trading on the CSE under a Listing Application or similar disclosure document.

Trading Halt

Under CSE rules, trading in the Company's shares will remain halted until the Company either closes the Transaction or terminates the LOI.

(Not for dissemination in the United States of America)

About Dimension Five Technologies Inc.

Dimension Five Technologies Inc. based in Vancouver, British Columbia, Canada, is a public company listed on the Canadian Securities Exchange that has signed an LOI for an amalgamation transaction with Aduro Energy Inc.

We seek Safe Harbor.

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