REG - Argo Blockchain PLC - December Operational Update

Argo BlockchainAnnouncement

11/01/2023 07:00

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RNS Number : 3120M  Argo Blockchain PLC  11 January 2023

Press Release

11 January 2023

Argo Blockchain plc

("Argo" or "the Company")

December 2022 Operational Update

Argo Blockchain plc, a global leader in cryptocurrency mining (LSE: ARB;
NASDAQ: ARBK) is pleased to provide the following operational update for
December 2022.

During the month of December, Argo mined 147 Bitcoin or Bitcoin Equivalents
(together, BTC) compared to 198 BTC in November 2022. The decrease in BTC
mined was primarily due to the curtailment of mining operations at the Helios
facility in Dickens County, Texas in response to the widespread winter storm
that impacted much of the United States in late December. The Helios facility
draws power from the Texas grid and can reduce electricity usage during
extreme weather events or times of stress on the grid. During the winter
storm, Argo joined other Texas Bitcoin miners in reducing power usage by an
estimated 1,500 MW, according to the Texas Blockchain Council. Argo has always
committed to being a good community partner, and the Company is proud to have
contributed to the stability of the Texas power grid during the winter storm.

As of 31 December 2022, the Company held 141 Bitcoin, of which 116 were
Bitcoin Equivalents.

The Company's total hashrate capacity continues to be 2.5 EH/s.

Based on daily foreign exchange rates and cryptocurrency prices during the
month, mining revenue in December amounted to $2.49 million [£2.07 million*]
(November 2022 $3.46 million [£2.94 million*].

Argo generated this income at a Bitcoin and Bitcoin Equivalent Mining Margin
of 48% for the month of December (November 2022: 29%).

Sale of Helios to Galaxy

As previously announced on 29 December 2022, the Company closed on a series of
agreements with Galaxy Digital Holdings Ltd. (TSX: GLXY) ("Galaxy") to sell
its Helios facility to Galaxy for $65 million (£54 million), refinance
existing equipment financing loans with a new asset-backed loan from Galaxy in
the amount of $35 million (£29 million), and host Argo's mining machines at
Helios. The transactions improve the Company's balance sheet and liquidity by
reducing total indebtedness by $41 million (£34 million) and improving its
cash position. As of 31 December 2022, pro forma for the transactions, the
Company's total debt was approximately $79 million (£65 million), and its
bank balance was approximately $20 million (£16 million).

The transactions with Galaxy also streamline the Company's operations. Argo
maintains ownership of its entire fleet of mining machines, and Galaxy will
host the fleet of Bitmain S19J Pro machines at Helios. Additionally, Argo
maintains ownership of its two data centers in Quebec, which have a combined
power capacity of approximately 20 MW and attractive power prices.

In connection with the sale of Helios and shifting priorities for the Company,
Justin Nolan (Chief Growth Officer) and Theodore Papadakis (VP Data Center
Operations) have left Argo. Argo is grateful for their contributions to the
Company during their tenure and wishes them well in future endeavours.

Management Commentary

Argo's Chief Executive Peter Wall said, "While our mining results for December
were lower than anticipated, the primary driver was the winter storm which led
us to curtail operations at Helios. We made this decision in order to not only
reduce power usage on the grid, but also to prioritise the needs of the local
community and safety of our Helios employees. After the winter storm and
associated freezing temperatures had subsided, we safely brought Helios back
online and resumed operations."

Commenting on the Galaxy transaction, Wall said, "These agreements with Galaxy
mark the beginning of a new chapter for Argo. We built a world-class mining
facility at Helios, and I believe that Galaxy has the right team and resources
to build upon the foundation that Argo established. This deal also allows Argo
to continue our mining operations, both at Helios as a hosted customer, as
well as at our owned-and-operated facilities in Quebec. I look forward to
sharing more details on our growth strategy for 2023 and beyond in due
course."

Non-IFRS Measures

Bitcoin and Bitcoin Equivalent Mining Margin is a financial measure not
defined by IFRS. We believe Bitcoin and Bitcoin Equivalent Mining Margin has
limitations as an analytical tool. In particular, Bitcoin and Bitcoin
Equivalent Mining Margin excludes the depreciation of mining equipment and so
does not reflect the full cost of our mining operations, and it also excludes
the effects of fluctuations in the value of digital currencies and realised
losses on the sale of digital assets, which affect our IFRS gross profit. This
measure should not be considered as an alternative to gross margin determined
in accordance with IFRS, or other IFRS measures. This measure is not
necessarily comparable to similarly titled measures used by other companies.
As a result, you should not consider this measure in isolation from, or as a
substitute analysis for, our gross margin as determined in accordance with
IFRS.

The following table shows a reconciliation of gross margin to Bitcoin and
Bitcoin Equivalent Mining Margin, the most directly comparable IFRS measure,
for the months of November 2022 and December 2022.

                                                                                                                    Month Ended 30 November 2022                                                              Mont
                                                                                                                                                                                                              h
                                                                                                                                                                                                              Ende
                                                                                                                                                                                                              d 31
                                                                                                                                                                                                              Dece
                                                                                                                                                                                                              mber
                                                                                                                                                                                                              2022
                                                                            £(000s)                           $(000s)                                      £(000s)                                      $(000s)
    Gross profit/(loss)                                     (1,462)                                     (1,724)                 (704)                                                             (847)
    Gross Margin                                            (50%)                                       (50%)                   (34%)                                                             (34%)
    Non mining revenue                                      (33)                                        (39)                    (25)                                                              (30)
    Depreciation of mining equipment                        1,849                                       2,180                   1,795                                                             2,159
    Change in fair value of digital currencies((1))         1                                           1                       (96)                                                              (116)
    Realised (profit)/loss on sale of digital currencies    493                                         581                     20                                                                24

    Mining Profit                                           848                                         1,000                   990                                                               1,190
    Bitcoin and Bitcoin Equivalent Mining Margin            29%                                         29%                     48%                                                               48%

(1) Due to unfavourable changes in the fair value of BTC there was a loss on
the change in fair value of digital currencies in November 2022. Due to
favourable changes in the fair value of BTC there was a gain on the change in
fair value of digital currencies in December 2022.

* Dollar values translated from pound sterling into U.S. dollars using the
noon buying rate of the Federal Reserve Bank of New York as at the applicable
dates

Inside Information and Forward-Looking Statements

This announcement contains inside information and includes forward-looking
statements which reflect the Company's or, as appropriate, the Directors'
current views, interpretations, beliefs or expectations with respect to the
Company's financial performance, business strategy and plans and objectives of
management for future operations. These statements include forward-looking
statements both with respect to the Company and the sector and industry in
which the Company operates. Statements which include the words "remains
confident", "expects", "intends", "plans", "believes", "projects",
"anticipates", "will", "targets", "aims", "may", "would", "could", "continue",
"estimate", "future", "opportunity", "potential" or, in each case, their
negatives, and similar statements of a future or forward-looking nature
identify forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties because they relate to events
that may or may not occur in the future, including the risk that the Company
may receive the benefits contemplated by its transactions with Galaxy, the
Company may be unable to secure sufficient additional financing to meet its
operating needs, and the Company may not generate sufficient working capital
to fund its operations for the next twelve months as contemplated.
Forward-looking statements are not guarantees of future performance.
Accordingly, there are or will be important factors that could cause the
Company's actual results, prospects and performance to differ materially from
those indicated in these statements. In addition, even if the Company's actual
results, prospects and performance are consistent with the forward-looking
statements contained in this document, those results may not be indicative of
results in subsequent periods. These forward-looking statements speak only as
of the date of this announcement. Subject to any obligations under the
Prospectus Regulation Rules, the Market Abuse Regulation, the Listing Rules
and the Disclosure and Transparency Rules and except as required by the FCA,
the London Stock Exchange, the City Code or applicable law and regulations,
the Company undertakes no obligation publicly to update or review any
forward-looking statement, whether as a result of new information, future
developments or otherwise. For a more complete discussion of factors that
could cause our actual results to differ from those described in this
announcement, please refer to the filings that Company makes from time to time
with the United States Securities and Exchange Commission and the United
Kingdom Financial Conduct Authority, including the section entitled "Risk
Factors" in the Company's Registration Statement on Form F-1.

For further information please contact:

 

 Argo Blockchain
 Peter Wall                          ir@argoblockchain.com

 Chief Executive
 finnCap Ltd
 Corporate Finance                   +44 207 220 0500

 Jonny Franklin-Adams

 Seamus Fricker

 Joint Corporate Broker

 Sunila de Silva
 Tennyson Securities
 Joint Corporate Broker              +44 207 186 9030

 Peter Krens
 Tancredi Intelligent Communication

 UK & Europe Media Relations
 Salamander Davoudi                   argoblock@tancredigroup.com

 Emma Valgimigli

 Fabio Galloni-Roversi Monaco

 Nasser Al-Sayed

 

About Argo:

Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain
technology company focused on large-scale cryptocurrency mining. With mining
facilities in Quebec, mining operations in Texas, and offices in the US,
Canada, and the UK, Argo's global, sustainable operations are predominantly
powered by renewable energy. In 2021, Argo became the first climate positive
cryptocurrency mining company, and a signatory to the Crypto Climate Accord.
Argo also participates in several Web 3.0, DeFi and GameFi projects through
its Argo Labs division, further contributing to its business operations, as
well as the development of the cryptocurrency markets. For more information,
visit (http://www.argoblockchain.com/) www.argoblockchain.com
(http://www.argoblockchain.com/) .

 

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