Argo Blockchain PLC announces strategic actions to strengthen its balance sheet

● Argo signs LOI to amend existing equipment financing agreement

● Argo plans to sell 3,400 mining machines for cash of £6.0 million ($6.8 million)

● Argo intends to raise approximately £24 million ($27 million) via proposed subscription with a strategic investor

LONDON, UK / ACCESSWIRE / October 7, 2022 / Argo Blockchain plc, a global leader in cryptocurrency mining (LSE:ARB)(NASDAQ:ARBK), is pleased to announce several strategic actions intended to bring additional capital to the business and ensure that the company has the working capital necessary to to implement its current strategy and meet its commitments over the next twelve months.

As previously reported on September 9, 2022, the company has seen headwinds from both natural gas and electricity prices caused by the geopolitical situation in Europe and low levels of natural gas storage in the United States. These factors, combined with the decline in the price of Bitcoin since March 2022 and increased mining difficulty, have reduced the company’s profitability and free cash flow generation.

The company has been proactive in curtailing operations at its flagship Helios plant in Dickens County, Texas, during periods of high power prices and securing a more favorable short-term power purchase agreement (“PPA”) with a new power supplier. The company remains optimistic about securing a long-term, low-security, fixed-price PPA and is continuously reviewing its other expenses to identify and take additional steps to manage the company’s costs.

In addition to the Company’s measures to reduce costs and preserve capital, Argo’s Board of Directors (the “Board”) has made the decision to pursue a combination of financing opportunities to strengthen the Company’s balance sheet. Based on its cost reductions and the assumed completions of the transactions described below on the terms set forth in the letters of intent and currently expected timing, the Company believes that its working capital will be sufficient for its current needs, that is, at least for the next twelve months from the date of this announcement . The Company and the Board continue to believe that following these strategic steps, Argo will be both well positioned and capitalized to weather the current period of market dislocation. The board and the company will continue to closely monitor the company’s cash needs and available sources of capital.

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A. Amendment of existing financing agreement for equipment

The Company has executed a non-binding letter of intent (“NYDIG LOI”) to amend its existing equipment financing agreement with an affiliate of New York Digital Investment Group LLC (“NYDIG”). This change frees up approximately £5.0 million ($5.7 million) of restricted cash and changes the amortization schedule for the company’s existing borrowings. The transaction significantly reduces the company’s debt service payments and ties future payments for NYDIG loans used to finance digital mining equipment purchases to network mining profitability. In exchange, the company will give NYDIG an extended security package. The amended equipment financing agreement is expected to contain customary agreements for an agreement of this type. The company and NYDIG expect to finalize the change over the next few weeks, and a further announcement will be made in due course.

B. Sale of mining machinery

In addition, the company has signed an agreement to sell to a third party 3,400 new boxed Bitmain S19J Pro machines, representing ~340 PH/s of total hashrate capacity, for cash of £6.0 million ($6.8 million) . Argo will host these machines for the third party at Helios under a hosting services agreement that includes a profit sharing arrangement.

After accounting for these sales, the company expects to achieve a total hash rate capacity of 2.9 EH/s by the end of October 2022.

C. Conditional subscription of ordinary shares

The company has entered into a non-binding letter of intent with a strategic investor (“investor”) where the investor, subject to contract, due diligence and other usual conditions, has agreed to subscribe approx. 87 million ordinary shares at GBP £0.276 per ordinary share for gross proceeds of approximately GBP 24 million ($27 million) (the “Subscription”).

Subject to completion of the Subscription, the net proceeds of the Subscription will be used by the Company for working capital and general corporate purposes, including capital expenditures in connection with the continued development of the flagship Helios facility in Dickens County, Texas.

Assuming completion of the Subscription, the investor will own 15.46% of the company’s extended issued share capital.

The investor will have the right to nominate two new non-executive directors to the board, subject to the company’s approval. One of these new non-executive directors will replace an existing non-executive director. Following these appointments, the board will consist of seven board members.

The subscription is limited to the investor and this announcement should not be considered an offer or solicitation to purchase or subscribe for securities in the United States.

The company and investor expect to complete the Drawing within the next 30 days, and a further announcement will be made in due course.

Management commentary

Peter Wall, CEO of Argo Blockchain, said: “We have worked relentlessly to create and execute a strategy that will support our goal of sustainable growth for the company,” continued Wall. “We also understand the importance of maintaining flexibility in our approach to respond quickly to external factors. We are pleased to have a strong relationship with our lender NYDIG, who has worked with us to provide flexibility and to ensure long-term the company’s success.”

“Additionally, the sale of the 3,400 Bitmain machines generates short-term cash, and the subscription with a major strategic investor strengthens the balance sheet while adding significant expertise in Bitcoin mining and digital asset management to the board. After careful consideration, we are convinced that taking these steps will better position the company to navigate the current market conditions and preserve shareholder value.”

Operational update

The company’s next regular monthly operating update will be released on Tuesday, October 11, 2022.

Completion of transactions under letters of intent subject to the conclusion of final agreements

Argo and the respective parties in the letters of intent described above intend to negotiate and implement final agreements in the short term. However, no assurance can be given that any definitive agreements will be signed or that any transaction will be completed. In that case, the board will review other funding options, of which there are several available. Should Argo not be successful in completing additional financing, Argo will be cash-flow negative in the short term and will have to curtail or cease operations. The board remains convinced that the company will be able to complete the transactions described in this announcement, or if that is not possible, other financing transactions to provide the company with working capital sufficient for its current needs, that is for at least the next twelve months from the date of this announcement.

Inside information and forward-looking statements

This announcement contains inside information and includes forward-looking statements that reflect the current views, interpretations, beliefs or expectations of the Company or, as applicable, the Board of Directors with respect to the Company’s financial results, business strategy and management’s plans and objectives 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 that include the words “remains confident”, “expects”, “intends”, “plans”, “believes”, “projects”, “anticipates”, “will”, “goals”, “goals”, “may” “would”, “could”, “continue”, “estimate”, “future”, “possibility”, “potential” or, in each case, their negative aspects, and similar statements of a future or forward-looking nature identify forward-looking statements . All forward-looking statements involve 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 not be able to secure sufficient additional financing to meet its operating needs. Forward-looking statements are not guarantees of future performance. Consequently, there are or will be important factors that may lead to the company’s actual results, prospects and results deviating significantly from those stated 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, these 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, 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 laws and regulations, the Company undertakes no public obligation 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 the Company files 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.

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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 powered primarily by renewable energy. In 2021, Argo became the first climate-positive cryptocurrency mining company, signing 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.

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SOURCE: Argo Blockchain PLC

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