Q3 2023 Results

Argo Blockchain PLC
14 November 2023
 

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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