REG - Argo Blockchain PLC - June 2022 Operational Update

Argo BlockchainAnnouncement

07/07/2022 07:17

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RNS Number : 5937R  Argo Blockchain PLC  07 July 2022

Press Release

7 July 2022

Argo Blockchain PLC

("Argo" or "the Company")

 

June 2022 Operational Update

 

Operational Update

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

During the month of June, Argo mined 179 Bitcoin or Bitcoin Equivalents
(together, BTC) compared to 124 BTC in May 2022. The increase in BTC mined is
primarily due to an increase in total hashrate capacity and greater uptime at
the Helios facility compared to the previous month.

Based on daily foreign exchange rates and cryptocurrency prices during the
month, mining revenue in June amounted to £3.38 million [$4.35 million*] (May
2022: £3.07 million [$3.89 million*]).

Argo generated this income at a Bitcoin and Bitcoin Equivalent Mining Margin
of 50% for the month of June (May 2022: 55%)(1). This reduction in mining
margin was driven primarily by the reduced price of Bitcoin and higher
electricity costs at Helios.

As of 30 June 2022, the Company held 1,953 Bitcoin, of which 210 were BTC
Equivalents.

(1) Bitcoin and Bitcoin Equivalent Mining Margin for May 2022 was previously
reported to be 62%; however, certain fee invoices for Helios had not been
received and were not included in that prior calculation.

Financing Update

During the month of June, the Company sold 637 Bitcoin at an average price of
approximately $24,500. Proceeds were used to fund operating expenses and
growth capital, as well as to reduce obligations under a BTC-backed loan
agreement with Galaxy Digital. This is in line with the Company's risk
management strategy that has been in place since January 2022. Throughout
2022, the Company has been selling a significant portion of monthly Bitcoin
production, steadily reducing its exposure to its BTC-backed loan, and
strengthening its balance sheet. As of 30 June 2022, the Company had an
outstanding balance of $22 million under the BTC-backed loan. The Company is
confident that it possesses sufficient liquidity to avoid any potential
liquidation of the BTC-backed loan if Bitcoin price continues to decline.

Since Q4 2021, the Company has been using derivatives to limit downside risk.
Further, in June 2022, the Company hired a full-time derivatives trader to
augment its in-house capabilities within risk and treasury management.

Helios Update

During the month of June, delivery and installation of the Company's S19J Pro
machines ordered from Bitmain has continued in line with the timetable set out
in September 2021. As of 30 June 2022, the Company has paid in excess of 95%
of the total purchase price for the Bitmain machines, which includes discounts
received as a result of the decrease in the price of Bitcoin. During the month
of June, the Company increased its total hashrate capacity to 2.2 EH/s. The
Company remains on track to install all 20,000 machines purchased from Bitmain
by October 2022.

Additionally, the Company continued to make progress in executing its machine
swap agreement with Core Scientific. As of 30 June 2022, 5,000 S19J Pro
machines have been delivered and installed under this agreement.

"Ongoing efforts to significantly upscale Argo's mining operations are
reflected in this month's numbers and our increased hashrate," said Peter
Wall, Argo's CEO. "These numbers, along with our continued installations of
the S19J Pro machines, put us in a solid position with regards to our mining
capacity.

"We have seen positive results from our risk management strategy through which
we have reduced the Company's exposure to its BTC-backed loan, and we have
hired a full-time derivatives trader. We believe the Company is well
positioned to navigate the current market conditions and further increase our
efficiencies."

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 realized
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 May 2022 and June 2022.

                                                                       Month Ended 31 May 2022         Mont
                                                                                                       h
                                                                                                       Ende
                                                                                                       d 30
                                                                                                       June
                                                                                                       2022
                                                  £ (000s)      $ (000s)       £ (000s)        $ (000s)
 Gross (loss)(1)                                  (11,934)      (14,919)       (14,925)        (18,657)
 Gross Margin¹(,2)                                (384%)        (384%)         (429%)          (429%)
 Depreciation of mining equipment                 2,012         2,516          2,350           2,937
 Charge in fair value of digital currencies       11,031        13,790         9,216           11,521
 Realised loss on sale of digital currencies      602           752            5,087           6,359

 Mining Profit(1)                                 1,711         2,139          1,728           2,160
 Bitcoin and Bitcoin Equivalent Mining Margin(1)  55%           55%            50%             50%

(1) Certain fee invoices for Helios had not been received and could not be
included in the prior calculations for: Gross (loss) (Previously reported in
May 2022 to be £11,719,569/$14,650,191), Gross Margin (Previously reported in
May 2022 to be 377%), Mining Profit (Previously reported in May 2022 to be
£1,926,383/$2,408,099) and Bitcoin and Bitcoin Equivalent Mining Margin
(Previously reported in May 2022 to be 62%).

 

(2) Due to unfavourable changes in the fair value of Bitcoin and Bitcoin
Equivalents in May 2022 and June 2022 there was a loss on change in fair value
of digital currencies.

* 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 "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. 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                          via Tancredi +44 203 434 2334

 Chief Executive
 finnCap Ltd
 Corporate Finance                   +44 207 220 0500

 Jonny Franklin-Adams

 Tim Harper

 Joint Corporate Broker

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

 Peter Krens
 OTC Markets
 Jonathan Dickson                    +44 204 526 4581

 jonathan@otcmarkets.com             +44 7731 815 896
 Tancredi Intelligent Communication

 UK & Europe Media Relations
 Emma Valgimigli                     +44 7727 180 873

 Fabio Galloni-Roversi Monaco        +44 7888 672 701

 Nasser Al-Sayed                     +44 7915 033 739

 argoblock@tancredigroup.com

 

About Argo:

Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain
technology company focused on large-scale cryptocurrency mining. With its
flagship mining facility 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 www.argoblockchain.com
(http://www.argoblockchain.com/) .

 

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