Press Release
14 November 2023
Argo Blockchain plc
("Argo" or "the Company")
Q3 2023 Results
Argo Blockchain plc, a global leader in cryptocurrency mining (LSE: ARB; NASDAQ: ARBK), is pleased to announce its results for the quarter ended 30 September 2023.
Financial Highlights ($USD)
? Accrued $4.4 million in power credits from economic curtailment at Helios during periods of high electricity prices, which led to an increase in mining margin from 36% in Q2 2023 to 58% in Q3 2023
? Decreased average direct cost per Bitcoin mined by 33% from $17,566 per Bitcoin in Q2 2023 to $11,736 per Bitcoin in Q3 2023
? Reduced recurring non-mining operating expenses by 11% in Q3 2023 compared to the prior quarter
? Achieved a positive Adjusted EBITDA of $3.1 million for the quarter (Adjusted EBITDA of $5.4 million for the nine month period ending 30 September 2023)
? Mined a total of 370 Bitcoin and Bitcoin Equivalents (together, "BTC") during the quarter and generated $10.4 million of revenue
? Reduced debt owed to Galaxy Digital from $32 million to $27 million and ended the quarter with $70 million of debt outstanding
? Recorded a one-time non-cash charge of $1.2 million related to prior period sales taxes owed to the Canadian tax authorities based on new tax regulations
? Net loss was $9.9 million for Q3 2023
? The Company ended September 2023 with $8.0 million of cash and 32 BTC on its balance sheet.
Operating Highlights
? During the quarter, the Company completed the deployment of its BlockMiner machines, representing approximately 0.3 EH/s in aggregate across its two Quebec facilities
? The deployment of the BlockMiner machines increased the Company's total hashrate capacity to 2.8 EH/s
? The Company is involved in advanced discussions to sell certain non-core assets, and it continues to evaluate options for further reducing debt
Management Commentary
Argo's interim Chief Executive Officer, Seif El-Bakly, said, "I am pleased with Argo's operating and financial performance during the third quarter. The ability of our mining machines to curtail operations at Helios during periods of high electricity prices allowed us to generate significant power credits. These power credits enabled us to achieve a fleet-wide all-in direct cost of 3.5 - 4 cents per kilowatt hour for the quarter, which contributed to a higher mining margin and higher Adjusted EBITDA compared to the prior quarter."
Q3 Results Management Call
Argo will host a conference call to discuss its results at 10:00 ET / 15:00 GMT on Tuesday, 14 November 2023. The conference call is open to all existing and potential shareholders, and the live webcast of the call can be accessed via the Investor Meet Company platform. Questions can be submitted via the Investor Meet Company dashboard during the live presentation.
Investors can sign up to Investor Meet Company and add Argo Blockchain via the following link: https://www.investormeetcompany.com/argo-blockchain-plc/register-investor
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (UNAUDITED)
| | Three months ended 30 Sept 2023 (unaudited) | Three months ended 30 Sept 2022 (unaudited) | Nine months ended 30 Sept 2023 (unaudited) | Nine months ended 30 Sept 2022 (unaudited) |
|
| $USD | $'000 | $'000 | $'000 | $'000 |
|
| | | | | |
|
| Revenues | 10,407 | 13,097 | 34,403 | 47,741 |
|
| Direct costs | (8,770) | (7,852) | (23,863) | (18,055) |
|
| Power credits | 4,426 | 118 | 5,710 | 118 |
|
| Mining margin | 6,063 | 5,363 | 16,250 | 29,804 |
|
| | | | | |
|
| Depreciation of mining equipment | (6,181) | (763) | (18,228) | (14,844) |
|
| Change in fair value of digital currencies | (635) | (2,491) | (146) | (57,502) |
|
| Gross margin | (753) | 2,109 | (2,124) | (42,542) |
|
| | | | | |
|
| Operating costs and expenses | (3,079) | (11,541) | (10,942) | (23,195) |
|
| Restructuring and one-time items | (1,526) | - | (2,925) | - |
|
| Foreign exchange | (144) | 2,232 | 1,259 | 15,551 |
|
| Depreciation and amortisation | (528) | (4,729) | (1,179) | (5,852) |
|
| Share based payment | (920) | (2,754) | (2,809) | (6,408) |
|
| Operating loss | (6,950) | (14,683) | (18,720) | (62,446) |
|
| | | | | |
|
| Finance cost | (2,763) | (2,560) | (9,100) | (7,071) |
|
| Other income | 75 | (798) | 75 | (994) | |
| Equity accounted loss from associate | (259) | - | (717) | (636) |
|
| Revalue of contingent consideration | - | - | - | 5,239 |
|
| Loss before taxation | (9,897) | (18,041) | (28,462) | (65,908) |
|
| | | | | |
|
| Tax recovery | - | - | 2,321 | 8,286 |
|
| Net loss | (9,897) | (18,041) | (26,141) | (57,622) |
|
| Currency translation reserve | 699 | (30,792) | (863) | (36,518) |
|
| Equity accounted OCI from associate | - | 173 | - | (10,620) |
|
| Fair value loss on intangible digital assets | - | 537 | - | - |
|
| Total other comprehensive income (loss) | 699 | (30,082) | (863) | (47,138) |
|
| | | | | |
|
| Total comprehensive loss | (9,198) | (48,123) | (27,004) | (104,760) |
|
| | | | | |
|
| Weighted Average Shares outstanding '000 | 523,450 | 477,825 | 493,201 | 472,174 | |
| Basic earnings per share* | $(0.02) | $(0.04) | $(0.05) | $(0.12) |
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| | As at | As at |
| | 30 September 2023 (unaudited) | 31 December 2022 (unaudited) |
| $USD | $'000 | $'000 |
| ASSETS | | |
| Non-current assets | | |
| Investments at fair value through income and loss | 426 | 414 |
| Investments accounted for using the equity method | 2,198 | 2,863 |
| Intangible assets | 785 | 2,103 |
| Property, plant and equipment | 63,923 | 76,992 |
| Right of use assets | 526 | 525 |
| Total non-current assets | 67,858 | 82,897 |
| Current assets | | |
| Trade and other receivables | 8,033 | 6,802 |
| Digital assets | 139 | 443 |
| Cash and cash equivalents | 7,987 | 20,092 |
| Total current assets | 16,159 | 27,337 |
| | | |
| Total assets | 84,017 | 110,234 |
| EQUITY AND LIABILITIES | | |
| Equity | | |
| Share capital | 710 | 634 |
| Share premium | 209,545 | 202,103 |
| Share based payment reserve | 11,321 | 8,528 |
| Foreign currency translation reserve | (29,758) | (28,895) |
| Accumulated surplus (deficit) | (194,764) | (168,623) |
| Total equity | (2,946) | 13,747 |
| Current liabilities | | |
| Trade and other payables | 9,802 | 10,028 |
| Loans and borrowings | 13,735 | 11,605 |
| Deferred tax | 3,820 | 2,648 |
| Total current liabilities | 27,357 | 24,281 |
| Non - current liabilities | | |
| Deferred tax | 4,806 | 7,941 |
| Issued debt - bond | 38,077 | 37,809 |
| Loans and borrowings | 16,180 | 25,916 |
| Lease liability | 543 | 540 |
| Total non-current liabilities | 59,606 | 72,206 |
| | | |
| Total equity and liabilities | 84,017 | 110,234 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| | Nine months ended | ||
| | 30 September 2023 (unaudited) | ||
| $USD | $'000 | ||
| Cash flows from operating activities | | ||
| Loss before tax | (28,462) | ||
| Adjustments for: | | ||
| Depreciation and amortisation | 19,407 | ||
| Foreign exchange movements | (1,259) | ||
| Finance cost | 9,100 | ||
| Fair value change in digital assets | 635 | ||
| Realised loss in digital assets | (489) | ||
| Share of equity accounted loss from associate | 717 | ||
| Share based payment expense | 2,809 | ||
| Working capital changes: | | ||
| Increase in trade and other receivables | (4,532) | ||
| Decrease in trade and other payables | (117) | ||
| Decrease in digital assets | 306 | ||
| Net cash flow (used in)/from operating activities | (1,885) | ||
| Investing activities | | ||
| Proceeds from sale of intangibles/investments | 989 | ||
| Purchase of tangible fixed assets | (1,590) | ||
| Net cash used in investing activities | (601) | ||
| Financing activities | | ||
| Proceeds from borrowings | 811 | ||
| Loan repayments | (8,417) | ||
| Interest paid | (8,015) | ||
| Proceeds from shares issued | 7,518 | ||
| Net cash from (used in)/from financing activities | (8,103) | ||
| Net decrease in cash and cash equivalents | (10,589) | ||
| Effect of foreign exchange changes in cash | (1,516) | ||
| Cash and cash equivalents, beginning of period | 20,092 | ||
| Cash and cash equivalents, end of period | 7,987 | ||
|
|
|
| |
Non-IFRS Measures
The following table shows a reconciliation of mining margin percentage to gross margin, the most directly comparable IFRS measure, for the periods ended 30 September 2023 and 30 September 2022.
| | Three months ended | Three months ended | Nine months ended | Nine months ended |
| | 30 September 2023 | 30 September 2022 | 30 September 2023 | 30 September 2022 |
| | (unaudited) | (unaudited) | (unaudited) | (unaudited) |
| $USD | $'000 | $'000 | $'000 | $'000 |
| |
| | | |
| Gross margin | (753) | 2,109 | (2,124) | (42,542) |
| Gross margin percentage | (7%) | 16% | (6%) | (89%) |
| Depreciation of mining equipment | 6,181 | 763 | 18,228 | 14,844 |
| Change in fair value of digital currencies | 635 | 2,491 | 146 | 57,502 |
| | | | | |
| Mining margin | 6,063 | 5,363 | 16,250 | 29,804 |
| Mining margin percentage | 58% | 41% | 47% | 62% |
The following table shows a reconciliation of Adjusted EBITDA to net (loss) / income, the most directly comparable IFRS measure, for the periods ended 30 September 2023 and 30 September 2022.
| | Three months ended | Three months ended | Nine months ended | Nine months ended |
| | 30 September 2023 | 30 September 2022 | 30 September 2023 | 30 September 2022 |
| | (unaudited) | (unaudited) | (unaudited) | (unaudited) |
| $USD | $'000 | $'000 | $'000 | $'000 |
| Net loss | (9,897) | (18,041) | (26,141) | (57,622) |
| Interest expense | 2,763 | 2,560 | 9,100 | 7,071 |
| Depreciation and amortisation | 6,709 | 5,492 | 19,407 | 20,696 |
| Income tax | - | - | (2,321) | (8,286) |
| Restructuring and one-time items | 1,526 | - | 2,925 | - |
| Foreign exchange | 144 | (2,232) | (1,259) | (15,551) |
| Share based payment | 920 | 2,754 | 2,809 | 6,408 |
| Change in fair value of digital currencies | 635 | 2,491 | 146 | 57,502 |
| Equity accounting loss from associate | 259 | - | 717 | 636 |
| Adjusted EBITDA | 3,059 | (6,976) | 5,383 | 10,854 |
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 |
| Tennyson Securities | |
| Corporate Broker Peter Krens | +44 207 186 9030 |
| Fortified Securities | |
| Joint Broker Guy Wheatley, CFA | +44 7493 989014 guy.wheatley@fortifiedsecurities.com |
| Tancredi Intelligent Communication UK & Europe Media Relations | 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 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. For more information, visit www.argoblockchain.com.
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