Windfall Geotek (WIN) - "Expect More Deals in 2022"

Windfall Geotek (formerly known as Albert Mining) is a Canadian corporation offering a proven and industry-leading digital platform leveraging Artificial Intelligence (AI) technologies to significantly improve outcomes in the exploration, development, operations, and financing of mining projects. The principal market encompasses the global resource mining industry including virtually all forms of mineralization including oil and gas exploration. 

Matt Gordon caught up with Dinesh Kandanchatha, Chairman and Interim CEO, Windfall Geotek. Dinesh has over 2 decades of experience in start-ups and early-stage companies, helping raise over $100M, translating into over $1Bn in shareholder value. Mr. Dinesh has overseen multiple IPOs and acquisitions for several technology companies. He is the Founder, former President, and CTO of Patriot One Technologies. He currently serves as CEO at Macadamian Technologies. His educational credentials include a Bachelor's degree and an MBA from the University of Ottawa. He also serves as a Board Member and Advisor for multiple public and private organizations. 

Company Overview

Windfall Geotek is a corporation that provides AI-powered tools to assist in the discovery, exploration, development, and financing of mining operations. The company was founded in 1996 and is headquartered in Canada. SIMACT Alliance Copper Gold Inc and Tropic Diamonds Inc. are the company's subsidiaries. The company is listed on the Toronto Stock Exchange (TSX-V: WIN), the OTC Markets (OTCQD: WINKF), and the Frankfurt Stock Exchange (FWB: L7C2). Since 2004, the company has added value for over 30 client discoveries and more than 80 target generation projects around the world. 

Windfall Geotek is a market leader in artificial intelligence and machine learning for primary exploration. The company seeks to find out and leverage public data and proprietary data from its clients to create a more sustainable way of generating drill programs to create projects. The company takes equity participation in an NSR (Net Smelter Return) or provides services against it. 

Business Restructuring

2021 was a transformational year for Windfall Geotek. As a result of the pandemic, the company moved its business operations from Montreal to Toronto and Ontario. It carried out operations through a distributed workforce. This has led to a significant reorganization for the company along with added infrastructure work. This was due to the fact that the business operated from Montreal for the past 10-12 years. 

The company effectively transformed its business model from being a services company to a project generator. The company also appointed new leaders within the organization, further strengthening its technical team. Additionally, the company worked on its technology to cut down the project timelines from 12-18 weeks to a few days. The company is looking to further reduce the project timeline to a few hours. 

Currently, the company sits on a strong foundation from a technological perspective and business value proposition. The reduction in project timelines has a massive impact on the mining operations. This is because mining often has a fixed window for drilling. When a project’s time is reduced from 18 weeks to a few days, the client can build and potentially carry out multiple drill programs within a single drill season. 

The company’s previous model enabled clients to conduct business with Windfall Geotek once a year based on the old technology. Equipped with the current improvements, the client can carry out drilling, collect additional data and allow Windfall Geotek to assess the data, leading to a significant acceleration in determining whether a deposit features a resource or not. Quicker results directly lead to a significant capital cost reduction. 

Windfall Geotek augments the result with the public data. The company has plans to add and augment its own data along with the proprietary data this year. The company is looking to license the resultant data. This will enable the company to provide better insights for its clients through non-correlated project data. This will enable the clients to achieve faster validation of data, leading to faster outputs. This data can be further refined over time, leading to additional value generation. 

Targeting Growth

Windfall Geotek is looking to increase the number of transactions in 2022. The company has been successful in growing the number of deals from the initial one per quarter to one deal per month in the past 7 months. The increase in the number of deals will enable the company to transform from a services provider to a partnership by way of equity. This will lead to added leverage in conversations for the company. 

The company is currently developing a standardized template of engagement in the form of commercial contracts. The rate of business was previously determined by the technology, however, currently, the slower contracts are serving as a bottleneck. 

The company is applying lessons from the previous year to ensure that customers won’t feel pressured to make a commitment without knowing the end result. It is developing a standard template for contracts that will determine the value sharing between the parties. As a result, the company would be able to accelerate the contracts. 

Windfall Geotek is looking to grow its business through the stacking of projects. In the first half of 2021, the company chose projects carefully due to limited resources and capital. It selected projects that had strong prospects and the potential to generate significant shareholder value. 

Following the recent investment changes, the company is now focusing on project volume. Its economic base has improved over the past year which enables the company to carry out deals that wouldn’t be under consideration in the previous year. The company no longer needs to carry out aggressive negotiations on individual deals. 

The company’s economic model is now focused on having several good deals which may turn into multi-hundred-million dollar projects. The company begins by analyzing extensive data sets to identify a prospect. Following this, the company brings together parties to generate a project which creates revenue in the form of a 20% stake along with an NSR.

Windfall Geotek’s first project was the Grand Pacific Resources Inc. Grand Pacific is currently undergoing the regulatory approval process and is going public in the next 4-6 weeks. The deal was signed in April 2021 and over the past year, Windfall Geotek built the project, found a partner, and managed the regulatory and venture-related aspects of the project. The company also helps in bringing the project to the public market and working with the partner to build a resource. 

Based on the first project’s timeline, the company is now looking to work on 3-4 such projects in a year, eventually leading to a large project portfolio. Given the 20% ownership, the company has high stakes in the project’s success. It is looking to minimize the likelihood of a failed project through its technology and operational team. 

Fee Component

In 2022, Windfall Geotek is looking to achieve a break-even point on the fee side of its business. Last year, the company was able to recover 60% of its burn rate through fees. The company has the backing of a strong, committed group of core investors that support the company through capital resources. 

In mid-2021, the company signed several multi-year contracts. The majority of these contracts have a 4-year timeline with a minimum amount paid by the client each year. These contracts have enabled the company to build a cash flow certainty that ensures that its burn rate is fully covered. The company expects to break even by April-May 2022. 

Over time, the company is looking to have sufficient multi-year contracts that will provide a 4-5 year forward visibility on its burn rate while also being covered through the services component of the business. The growth in the company’s team has had a direct impact on its monthly expenses. It has a current monthly expenditure of $135,000-$150,000 along with some discretionary expenses. 

The company’s notable clients include Playfair Mining Ltd, Puma Exploration, and Aurcrest Gold Inc. A comprehensive list of projects and drilling validation is available on the company’s website. The company has a decade-long experience working in the junior mining space. 

Entering the Senior Space

Windfall Geotek has plans to expand its business into the Senior mining space. According to the company, several large Seniors are looking to partner up on greenfields exploration. Windfall Geotek is looking to bring these companies on board as a stakeholder rather than a customer. 

The company has added an Advisory Board to its existing structure. The Chairperson for the board is Steve Appleton, a Senior Leader at Fortescue Future Industries. Steve has extensive experience working in the iron ore and copper space. The company’s latest addition to its Board was Parmjot Gill who is known to lead the Sustainable Mining Advisory Industry Association for Canada. It has plans to 2-3 additional Senior Leaders from Major mining firms in the near future. 

Windfall Geotek is looking to gain small positions in large companies by helping them validate projects. Validation of projects will lead to a bigger stake for the company over time. 

The company also seeks to partner with larger companies. It will help the clients through the analysis of existing data sets and charge a fee for successful identification. Additionally, the company will also bring a capital pool to the project. It plans to continue offering services to the Junior market while targeting the Senior space through a dedicated sales team. 

The company is currently in the process of bringing in senior executives that have experience working on sustainable mining with the Majors in large consulting firms. This will provide Windfall Geotek access to the Senior mining space. 

It is currently focused on base metals. In case a project does not enter production, it would still have progressive investments over the course of several years which would create value for Windfall Geotek’s shareholders. Given the lower base costs, the company is confident in generating an upside over the next 12 months. 

A Focus on Sustainability

Windfall Geotek is looking to transform the market through its business model. It has built a technology bay on base metals. The company is also looking towards sustainable exploration. This is an important move as the mining industry has seen a major shift towards greener mining operations, especially in nickel, cobalt, and base metals. 

The sustainable primary exploration features 3 variables. The first one is a low or zero-carbon operation. The second variable is focused on minimizing the impact on land and the environment. The third aspect is based on sustainable technologies around base metals along with the electrification of markets. 

Windfall Geotek has a partnership with Dragonfly Inc. to help develop Artificial Intelligence-driven unmanned aerial systems for landmine detection in defense, humanitarian, and other sectors. This partnership will also expand the capabilities of both firms to augment public data and improve mining surveys. 

The company produces MD&A (Management discussion and analysis) each quarter. It is looking to provide additional data on existing positions and projects. This data can serve as an invaluable tool for potential investors. 

The company has a strong balance sheet and offers a diversified project generator model that offers short-term returns through the appreciation of individual partnered companies. It also provides long-term appreciation in the form of generated projects with the company’s partners and NSRs. 

The company’s projects from the second half of the previous year are now coming out with drill results. These results will lead to added credibility and validation. The company has built a good pipeline of Senior mining companies and expects to announce new partnerships over the next 6 months. The company is looking to secure a minimum of 2 contracts every month, now that its technology has evolved to handle the increased workflow.

‍To find out more, go to the Windfall Geotek website