Argo Blockchain PLC Announces Private Placement With Institutional Investor

Rhea-AI Summary

Argo Blockchain plc (LSE:ARB)(NASDAQ:ARBK) has announced a private placement of ordinary shares and warrants with an institutional investor, raising gross proceeds of approximately £6.5 million. The company will issue 57,800,000 ordinary shares at £0.1125 per share, along with warrants to purchase an additional 57,800,000 shares at the same price, exercisable over five years. The issuance price represents a premium to recent volume-weighted average prices and a 10% discount to the closing price on July 29, 2024.

The net proceeds will be used for working capital, general corporate purposes, and debt repayment. H.C. Wainwright & Co. is acting as the exclusive placement agent. The placement shares are expected to be admitted to trading on the London Stock Exchange on or about July 31, 2024, bringing the total number of ordinary shares in issue to 636,352,148.

Positive

• Raised £6.5 million in gross proceeds through private placement
• Issuance price at a premium to 30, 60, and 90-day VWAPs
• Warrants provide potential for additional future funding
• Proceeds to be used for working capital and debt repayment

Negative

• 10% discount to the closing share price on July 29, 2024
• Potential dilution for existing shareholders if warrants are exercised

Insights

Financial Analyst

Argo Blockchain's private placement of £6.5 million is a significant development for the company's financial position. The issuance of 57,800,000 ordinary shares at £0.1125 per share, along with warrants, indicates a strategic move to strengthen their balance sheet. Here are key insights:

• The £0.1125 issuance price, while at a 10% discount to the closing price, is actually at a premium to recent volume-weighted average prices (VWAPs). This suggests investor confidence in Argo's future prospects.
• The inclusion of warrants with a five-year exercise period at the same price as the issued shares provides potential for additional capital infusion in the future, totaling up to another £6.5 million if fully exercised.
• The stated use of proceeds for working capital, general corporate purposes and debt repayment indicates a focus on improving the company's financial flexibility and reducing leverage.

However, investors should note the dilutive effect of this placement. The additional 57,800,000 shares will increase the total outstanding shares to 636,352,148, representing a dilution of approximately 9.1%. While this may pressure the stock in the short term, the improved financial position could support long-term value creation if managed effectively.

The involvement of H.C. Wainwright & Co. as the exclusive placement agent lends credibility to the transaction, potentially signaling institutional interest in the blockchain and cryptocurrency mining sector despite recent market volatility.

Blockchain Technology Expert

This private placement for Argo Blockchain, a prominent player in the cryptocurrency mining space, carries several implications for the company and the broader blockchain industry:

• Capital Intensive Nature: The need for additional funding underscores the capital-intensive nature of cryptocurrency mining operations. As mining difficulty increases and energy costs fluctuate, companies like Argo must continually invest in infrastructure and technology to remain competitive.
• Market Sentiment: The successful placement, especially at a premium to recent VWAPs, suggests that institutional investors maintain interest in the blockchain sector despite the crypto market's volatility. This could be seen as a positive indicator for the industry's long-term prospects.
• Strategic Positioning: By strengthening its balance sheet, Argo is potentially positioning itself to capitalize on market opportunities, such as acquiring discounted mining equipment or expanding operations during a period when smaller competitors might be struggling.

However, it's important to consider the broader context. The cryptocurrency mining industry faces ongoing challenges, including regulatory scrutiny, environmental concerns and the upcoming Bitcoin halving event. Argo's ability to navigate these challenges while effectively utilizing the new capital will be critical for its future success.

Investors should monitor how Argo deploys this capital, particularly in terms of energy efficiency improvements or diversification of operations, as these factors could significantly impact the company's competitiveness and sustainability in the evolving blockchain landscape.

Market Research Analyst

Argo Blockchain's private placement offers intriguing insights into the current state of the cryptocurrency mining market and investor sentiment:

• Investor Appetite: The successful placement, particularly with an institutional investor, suggests there's still appetite for exposure to the crypto mining sector, despite the recent market downturn. This could indicate a belief in the long-term viability of blockchain technology and cryptocurrencies.
• Valuation Metrics: The issuance price being at a premium to recent VWAPs but a discount to the current market price presents an interesting valuation dynamic. It might suggest that investors see current market prices as somewhat inflated, but still believe in the company's longer-term prospects.
• Industry Consolidation: With Argo securing additional funding, we might be witnessing a phase of industry consolidation. Stronger players like Argo could be positioning themselves to acquire assets or market share from struggling competitors, potentially reshaping the competitive landscape.

From a broader market perspective, this transaction could be seen as a litmus test for investor sentiment towards the crypto mining sector. The successful placement might encourage other companies in the space to seek similar funding arrangements, potentially leading to increased M&A activity or capital raises in the sector.

However, it's important to note that while this placement provides Argo with additional financial flexibility, it doesn't necessarily signal an immediate turnaround for the crypto mining industry as a whole. Investors should continue to monitor broader trends such as Bitcoin price movements, regulatory developments and technological advancements in mining efficiency, as these factors will ultimately drive the sector's long-term viability and profitability.

LONDON, UNITED KINGDOM / ACCESSWIRE / July 30, 2024 / Argo Blockchain plc, (LSE:ARB)(NASDAQ:ARBK), is pleased to announce that it has entered into a securities purchase agreement for a private placement of its ordinary shares ("Ordinary Shares") and accompanying warrants to purchase Ordinary Shares to an institutional investor for gross proceeds of approximately GBP £6.5 million (the "Private Placement"). Pursuant to the Private Placement, the Company will issue 57,800,000 Ordinary Shares (the "Placement Shares") at a purchase price of GBP £0.1125 per Ordinary Share along with warrants to purchase up to 57,800,000 Ordinary Shares (the "Warrants"). The Warrants have an exercise price of GBP £0.1125 per share and an exercise period of five years.

The issuance price is at a premium to the 30 day VWAP, 60 day VWAP and 90 day VWAP and at a 10% discount to the closing middle market price of an Ordinary Share on the London Stock Exchange on 29 July 2024.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the Private Placement.

The net proceeds of the Private Placement will be used by the Company for working capital and general corporate purposes, including the repayment of indebtedness.

Application will be made for the Placement Shares and the shares issuable upon exercise of the Warrants (the "Warrant Shares"), if exercised, to be admitted to the Official List and to trading on the Main Market of the London Stock Exchange. Admission of the Placement Shares and the closing of the Private Placement are expected to occur on or about 31 July 2024 ("Admission"). The Placement Shares and Warrant Shares, if any, will rank pari passu with the existing Ordinary Shares of the Company.

Following Admission, the total number of Ordinary Shares in issue will be 636,352,148, and the total number of voting rights will therefore be 636,352,148. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements.

This announcement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward looking statements

This announcement contains "forward-looking statements," which can be identified by words like "may," "will," "likely," "should," "expect," "anticipate," "future," "plan," "believe," "intend," "goal," "seek," "estimate," "project," "continue" and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. The information in this announcement about future plans and objectives of the Company, including the expectation to complete the Private Placement and the expected expenditure of the net proceeds of the Private Placement, are forward-looking statements. The Company's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause the Company's actual results and financial condition to differ materially from those indicated in the forward-looking statements include, market and other conditions, the principal risks and uncertainties listed in the risk factors set forth in our Annual Report and Financial Statements and Form 20-F for the year ended December 31, 2023, and our Interim Report as of March 31, 2024.

For further information please contact:

Argo Blockchain plc
Investor Relations	ir@argoblockchain.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 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

SOURCE: Argo Blockchain PLC

View the original press release on accesswire.com

FAQ

How much did Argo Blockchain (ARBK) raise in its private placement on July 30, 2024?

Argo Blockchain raised approximately £6.5 million in gross proceeds through a private placement of ordinary shares and warrants with an institutional investor.

What is the exercise price and duration of the warrants issued by Argo Blockchain (ARBK) in the July 2024 private placement?

The warrants have an exercise price of £0.1125 per share and an exercise period of five years.

How many ordinary shares will Argo Blockchain (ARBK) have in issue after the July 2024 private placement?

Following the admission of the new shares, Argo Blockchain will have a total of 636,352,148 ordinary shares in issue.

What will Argo Blockchain (ARBK) use the proceeds from the July 2024 private placement for?

The net proceeds will be used for working capital, general corporate purposes, and the repayment of indebtedness.