Argo Blockchain PLC Announces Q3 2023 Results

Rhea-AI Summary

Argo Blockchain plc (ARB) Announces Q3 2023 Results with a 58% Increase in Mining Margin and Positive Adjusted EBITDA of $3.1 million. The Company Reduced Direct Cost per Bitcoin Mined by 33% and Decreased Non-Mining Operating Expenses by 11%.

Positive

• Argo Blockchain achieved a positive Adjusted EBITDA of $3.1 million for Q3 2023.
• The Company reduced the average direct cost per Bitcoin mined by 33% from $17,566 per Bitcoin in Q2 2023 to $11,736 per Bitcoin in Q3 2023.
• Argo Blockchain accrued $4.4 million in power credits from economic curtailment at Helios during periods of high electricity prices, resulting in a 58% increase in mining margin from 36% in Q2 2023 to 58% in Q3 2023.

Negative

• The net loss was $9.9 million for Q3 2023.

Q3 2023 Results

LONDON, UK / ACCESSWIRE / November 14, 2023 / Argo Blockchain plc ("Argo" or "the Company"), 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.

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

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FAQ

What are Argo Blockchain's Q3 2023 financial highlights?

Argo Blockchain accrued $4.4 million in power credits, decreased the average direct cost per Bitcoin mined by 33%, and achieved a positive Adjusted EBITDA of $3.1 million for Q3 2023.

How did Argo Blockchain reduce its non-mining operating expenses?

The Company reduced recurring non-mining operating expenses by 11% in Q3 2023 compared to the prior quarter.

What is Argo Blockchain's total hashrate capacity after deploying BlockMiner machines?

The deployment of the BlockMiner machines increased the Company's total hashrate capacity to 2.8 EH/s.

What was the net loss for Argo Blockchain in Q3 2023?

The net loss was $9.9 million for Q3 2023.