Equity Research Note: ‘Drilling de-risked; an opportunity to emerge as the ASX’s next battery metals company’

Last week, I had the opportunity to speak with the Chairman of the Board of Aldoro Resources (ASX:ARN), Mr Joshua Letcher. We spoke about the history of the company, the flagship Ni-Cu-PGE Narndee project (which is under-explored and globally significant) and the upcoming drilling campaign, which management is quietly confident about.

Following on from this discussion, I've produced a reasonably balanced and elaborate equity research note on the company (as per their request) with the aim to increase the visibility and awareness of ARN’s shares in the financial markets. This report, of course, represents my own personal opinion; ARN has neither limited nor in any other way influenced the content of this report.

READ THE EQUITY RESEARCH NOTE

Following this process, I'm excited, like many of the existing shareholders here, to see how the drilling campaign plays out over the coming weeks. Although ARN at this stage is a speculative investment (due to its nature as a junior explorer) I'm personally cautiously optimistic of the company's prospects due to the following factors:

• ARN is positioned in the right place at the right time, with battery metal demand firmly on the ascendency. This would be a major strength for Aldoro should drilling return favourable results as is predicted by management, and potentially place ARN in the spotlight of larger players as an M&A target.
• An extremely clean cap table also places ARN in an enviable position. With merely 80.5M shares on is-sue and 48% held by the Top 20, the company is positioned for a major re-rate should drilling be favourable.
• Pioneer Development Fund’s involvement with a significant holding and representation on the board via Lincoln Ho is reminiscent of other major mining success stories including VUL, RTR and CHN – up 5,087%, 621%, and 2,865% respectively since 3rd Jan 2020
• We are about to enter a period of heightened news flow and this is often a period of rising share price for companies as it presents not only the opportunity to highlight company defining discoveries but also expands the audience and awareness of the company within the industry and beyond.
• I am encouraged by the involvement of experienced and successful global technical experts in the drilling campaign, which highlights a further reason to be bullish on ARN. In addition to Dr Minlu Fu’s technical involvement in the Narndee Nickel-PGE project, Dr Fu and associates committed to invest $2 million into Aldoro at $0.20 per share which is a significant show of faith into the Narndee Nickel-PGE Projects prospectivity and Aldoro’s methodical derisking efforts prior to drilling the largest mafic-ultramafic complex in Australia.
• Although the company remains high-risk, historical ASX nickel sulphide success stories suggest that upside could be truly asymmetrical. Shares in Sirius were worth less than 6 cents in July 2012 before Mr Bennett and his team discovered the Nova-Bollinger nickel and copper resource in WA. Just 3 years later, in 2015, Sirius shares were valued at A$4.38 ($1.8 billion) with an acquisition by Independence Group (ASX:IGO).
• ARN is currently in a major bullish trend, above the 20 (34.5c), 50 (34c), and 200 (23c) day moving averages. In addition, ARN remains within a healthy RSI range and with a positive MACD.

Now it is time for ARN to "walk the walk" with impending drill results over the coming weeks incoming. Using modern exploration techniques, Chairman Joshua Letcher is confident of a company-making discovery. Should a discovery be made, it is safe to say that with only 80.5M shares on issue and a market capitalisation of merely 31M at 39 cents, Aldoro Resources is a potential multi-bagger target.

I've taken the opportunity to follow in the footsteps of some of the well-researched posters here, such as @wenty, and have added ARN to my own *** portfolio at 43.5 cents.

T.E.P.