REG - Argo Blockchain PLC - Sale of Mirabel Quebec Data Center & Feb Op Update

Argo BlockchainAnnouncement

05/03/2024 07:00

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RNS Number : 5461F  Argo Blockchain PLC  05 March 2024

Press Release

5 March 2024

Argo Blockchain plc

("Argo" or "the Company")

Sale of Mirabel, Quebec Data Center for $6.1 Million

February Operational Update

Argo Blockchain plc (LSE: ARB; Nasdaq: ARBK), a global leader in
cryptocurrency mining, is pleased to announce that it has entered into an
agreement for the sale of its data center located in Mirabel, Quebec (the
"Mirabel Facility") for total consideration of $6.1 million (the
"Transaction"). All references to $ are to USD,  being derived from the
Canadian dollar amounts at an exchange rate of 0.74.

 

The Mirabel Facility has five megawatts of electrical capacity, implying a
$1.2 million per megawatt sales price for the Transaction. The net proceeds
from the Transaction are expected to first repay the Mirabel Facility's
outstanding mortgage in full, with the remainder expected to be used to repay
debt owed to Galaxy Digital Holdings, Ltd. ("Galaxy") (TSX: GLXY).

 

The Transaction is expected to strengthen Argo's balance sheet, reducing
outstanding debt by $5.4 million. The Galaxy debt balance as of 29 February
2024, with pro forma adjustments for the Transaction and subsequent debt
repayment, is $14.0 million, a 60% reduction from the original Galaxy debt
balance of $35.0 million.

 

Pro Forma Unaudited Debt Balances:

 

 $ in millions         Interest Rate  9/30/2023  12/31/2023  2/29/2023  Transaction  Pro Forma 2/29/2024
 Senior Notes          8.75%          $40.0      $40.0       $40.0      -            $40.0
 Galaxy Debt           SOFR + 11%     27.2       23.5        18.0       (4.0)        14.0
 Mirabel Mortgage      Prime + 0.5%   1.6        1.5         1.4        (1.4)        -
 Baie Comeau Mortgage  Prime + 0.5%   1.5        1.4         1.2        -            1.2
 Total                                $70.3      $66.4       $60.6      $(5.4)       $55.2

 

 

Importantly, the Transaction enables the Company to delever the balance sheet
with minimal impact to the Company's revenue. Following the Transaction, Argo
will maintain ownership of all mining machines currently located at the
Mirabel Facility. The Company is in the process of relocating the machines to
its Baie Comeau facility and anticipates selling certain prior generation
machines representing approximately 140 PH/s. Going forward, the Company's
total hashrate capacity is expected to be 2.7 EH/s.

 

The Transaction has significant operational benefits for Argo. It allows the
Company to streamline its operations by locating all self-mining machines at
its Baie Comeau facility. Additionally, the Transaction reduces the Company's
non-mining operating expenses by $0.7 million annually.

 

The Transaction is expected to close by the end of March 2024 upon the
successful completion of customary closing conditions, including entry into a
definitive share purchase agreement and certain regulatory approvals.

 

Management Commentary

Argo's Chief Executive Officer, Thomas Chippas, said, "This Transaction
demonstrates the Company's continued commitment to strengthening the balance
sheet through a focus on aggressive deleveraging and reducing non-mining
operating expenses. We are able to exit the Mirabel Facility with a high
multiple on its power capacity, and we also realize a premium on this real
estate asset while maintaining a strong hashrate capacity of 2.7 EH/s."

February Operational Update

During the month of February, the Company mined 92 Bitcoin, or 3.2 Bitcoin per
day. This 21% reduction in daily Bitcoin production compared to the prior
month was primarily due to a maintenance-related outage at the Cottonwood
substation which is owned and operated by an unaffiliated third party. Total
downtime from the outage was approximately 77 hours, or 11% of the month. The
maintenance was completed on 21 February 2024, and normal operations have
resumed. Additionally, Bitcoin production in February was negatively impacted
by a 5% higher average network difficulty compared to the prior month.

Mining revenue in February 2024 amounted to $4.5 million, a decrease of 15%
compared to the prior month (January 2024: $5.3 million).

As of 29 February 2024, the Company held digital assets worth the equivalent
of 14 Bitcoin.

Argo CEO Thomas Chippas said, "Despite the decrease in Bitcoin production due
to maintenance on the Cottonwood substation, we expect that our realized power
prices at Helios for February will be significantly lower than normal due to
favorable power market conditions. Lower power prices will have a beneficial
impact to our mining profit, mining margin, and operating cash flow for the
month."

Inside Information and Forward-Looking Statements

This announcement contains inside information and includes forward-looking
statements which reflect the Company's 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 Annual Report
on Form 20-F.

For further information please contact:

 Argo Blockchain
 Investor Relations                  ir@argoblockchain.com (mailto:ir@argoblockchain.com)
 Tennyson Securities
 Corporate Broker                    +44 207 186 9030

 Peter Krens
 Fortified Securities
 Joint Broker                        +44 74930989014

 Guy Wheatley, CFA                   guy.wheatley@fortifiedsecurities.com
                                     (mailto:guy.wheatley@fortifiedsecurities.com)
 Tancredi Intelligent Communication

 UK & Europe Media Relations
 Salamander Davoudi                   argoblock@tancredigroup.com (mailto:argoblock@tancredigroup.com)

 Helen Humphrey

 About Argo:

Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain
technology company focused on large-scale cryptocurrency mining. With mining
operations in Quebec and 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. For more information,
visit www.argoblockchain.com (http://www.argoblockchain.com/) .

 

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