UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 6-K
_____________________
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2023
Commission File Number: 001-40816
_____________________
Argo Blockchain plc
(Translation of registrant’s name into English)
_____________________
Eastcastle House
27/28 Eastcastle Street
London W1W 8DH
England
(Address of principal executive office)
_____________________
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒
Form
40-F ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): ☐
EXHIBIT INDEX
|
Exhibit
No.
1
|
Description
Interim
Half Year Results 2023 dated 29 August 2023
|
Press Release
29
August 2023
Argo Blockchain plc
("Argo"
or "the Company")
Interim Half Year Results 2023
Argo Blockchain plc, a global leader in cryptocurrency mining (LSE:
ARB; NASDAQ: ARBK), is pleased to announce its results for the six
months to 30 June 2023.
Highlights
●
Reduced non-mining operating costs and expenses by 21% in Q2 2023
compared to the prior quarter, resulting in a positive Adjusted
EBITDA of $1.0 million for the quarter (Adjusted EBITDA of $2.3
million for H1 2023)
●
Reduced
debt by $4 million during the quarter to $75 million as of 30 June
2023, a $68 million reduction from $143 million at 30 June
2022
●
Total
number of Bitcoin and Bitcoin Equivalent ("BTC") mined during H1
2023 was 947, a 1% increase over the BTC mined in H1 2022, despite
a 78% increase in the global hashrate from 30 June 2022 to 30 June
2023
●
Revenues
of $24.0 million for H1 2023, a decrease of 31% from H1 2022,
driven primarily by a decrease in Bitcoin price and the increase in
the global hashrate and associated network difficulty
●
Net
loss was $18.8 million for H1 2023, compared to a net loss of $39.6
million in H1 2022
●
The
Company ended June 2023 with $9.1 million of cash and 46 Bitcoin or
Bitcoin Equivalent (together, "BTC") on its balance sheet; post the
period end, the Company raised $7.5 million in gross proceeds via a
share placement in July 2023
Post-period highlights
●
Increased
total hashrate capacity to 2.6 EH/s with the deployment of 1,242
BlockMiner machines at its Quebec facilities
●
Expect
to deploy an additional 1,628 BlockMiners in the coming months,
increasing the Company's total hashrate capacity to 2.8
EH/s
●
In
July 2023, the Company raised $7.5 million of gross proceeds via a
share placement with institutional and retail investors in the UK;
the Company used a portion of these proceeds to repay approximately
$1.8 million in debt, and the Company's debt balance at the end of
July 2023 was $72 million
●
The
Company is involved in advanced discussions to sell certain
non-core assets, and it continues to evaluate options for further
reducing debt
Fixed Price Power Purchase Agreement at Helios
During H1 2023, the Company achieved a mining margin of 42%, which
is an increase from the mining margin in H2 2022 of 33%. One of the
primary drivers of the improved mining margin was the establishment
of a fixed price power purchase agreement ("PPA") at Helios in H1
2023, which covers a substantial portion of the facility's
electricity load. In addition to providing greater certainty of
power costs at Helios going forward, the fixed price PPA also
allows the Company to generate power credits via economic
curtailment. In Q2 2023, the Company generated approximately $1.1
million in power credits, and it expects to generate more
significant power credits during Q3 2023 as a result of the
continued heat wave in Texas.
Non-IFRS Measures
The following table shows a reconciliation of mining margin
percentage to gross margin, the most directly comparable IFRS
measure, for the six month periods ended 30 June 2023 and 30 June
2022.
|
|
Period ended
|
Period ended
|
|
|
30 June 2023
|
30 June 2022
|
|
|
(unaudited)
|
(unaudited)
|
|
|
$'000
|
$'000
|
|
|
|
|
|
Gross margin
|
(1,371)
|
(44,651)
|
|
Gross margin percentage
|
(6%)
|
(129%)
|
|
Depreciation
of mining equipment
|
12,047
|
14,081
|
|
Change
in fair value of digital currencies
|
(489)
|
55,011
|
|
|
|
|
|
Mining margin
|
10,187
|
24,441
|
|
Mining margin percentage
|
42%
|
71%
|
The following table shows a reconciliation of Adjusted EBITDA to
net (loss) / income, the most directly comparable IFRS measure, for
the six month periods ended 30 June 2023 and 30 June
2022.
|
|
Period ended
|
Period ended
|
|
|
30 June 2023
|
30 June 2022
|
|
|
(unaudited)
|
(unaudited)
|
|
|
$'000
|
$'000
|
|
|
|
|
|
Net Loss
|
(16,242)
|
(39,580)
|
|
Interest
expense
|
6,335
|
4,511
|
|
Income
tax credit
|
(2,321)
|
(8,286)
|
|
Severance
and restructuring
|
1,399
|
-
|
|
Foreign
Exchange
|
(1,403)
|
(13,319)
|
|
Depreciation/Amortisation
|
12,698
|
15,204
|
|
Share
based payment
|
1,889
|
3,654
|
|
Change
in fair value of digital currencies
|
(489)
|
55,011
|
|
Equity
accounting loss from associate
|
458
|
636
|
|
Adjusted EBITDA
|
2,324
|
17,832
|
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
|
|
Tancredi
Intelligent Communication
UK
& Europe Media Relations
|
|
|
Salamander
Davoudi
Emma
Valgimigli
Fabio
Galloni-Roversi Monaco
Nasser
Al-Sayed
|
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.
Interim Management Report
Argo entered 2023 on the heels of a transformational series of
transactions with Galaxy Digital Holdings Ltd. ("Galaxy") that
strengthened our balance sheet, improved our liquidity position,
and positioned Argo for profitable mining. As part of the
transactions, the Helios facility and real property in Dickens
County, Texas were sold to Galaxy for $65 million and
existing asset-backed loans were refinanced with a new $35 million
three-year asset-backed loan with Galaxy. The transactions reduced
total indebtedness by $41 million and allowed Argo to simplify its
operating structure.
Importantly, the Company maintained ownership of its entire fleet
of more than 27,000 mining machines. Its roughly 23,600 Bitmain
S19J Pro mining machines at Helios are continuing to operate in
that facility pursuant to a hosting agreement with Galaxy. During
the first quarter of 2023, the Company completed the transition of
operations at Helios to the Galaxy team, and Argo has been working
closely with them to optimize mining operations and performance.
Currently, approximately 2.4 EH/s of total hashrate capacity is
deployed at Helios.
The hosting agreement with Galaxy provides Argo with pass-through
access to the power that Galaxy obtains through its power purchase
agreement ("PPA") for Helios, and the Company pays an incremental
hosting fee based on actual electricity usage. Argo also has the
ability to share in the proceeds when Helios undergoes economic
curtailment in order to monetize its fixed price PPA during periods
of high power prices. One of the primary benefits of bitcoin mining
is its flexible load consumption, which can be curtailed during
times of peak demand. This helps to stabilize the Texas power grid
and reduce price volatility for consumers. During Q2 2023, the
Company generated proceeds of approximately $1.1 million from
economic curtailment at Helios; this helps to offset the reduced
BTC production from heat-related curtailment during the summer
months and improves mining margin.
During the first quarter of 2023, following the resignation of
Peter Wall from his roles as Interim Executive Chairman and Chief
Executive officer, the Board appointed Chief Operating Officer Seif
El-Bakly to serve as Interim CEO, and Matthew Shaw became Chairman
of the Board. Additionally, after a formal recruitment process led
by an executive search firm, the Board appointed Jim MacCallum as
Chief Financial Officer in April 2023.
With the new management team in place, the Company has focused on
three key pillars: financial discipline, operational excellence,
and strategic partnerships for growth.
Financial discipline
The sale of the Helios facility significantly changed the Company's
operating profile and presented an opportunity to dramatically
decrease both operating expenses and G&A. During the first
quarter, Argo reduced its non-mining operating expenses by 68%
compared to its run rate during the second half of 2022. These cost
reductions are particularly important in the current inflationary
environment. In the second quarter, non-mining operating expenses
were further reduced by an additional 21%, and these cost savings
are expected to be sustained. Cash generation and preservation are
high priorities for the Company.
In addition to reducing operating expenses, the Company continues
to explore opportunities to strengthen its balance sheet and reduce
indebtedness while maintaining profitable mining operations. To do
this, the Company is evaluating the sale of certain non-core
assets, including investments held on the balance sheet, excess
inventory and real estate. In the second quarter, the Company sold
approximately $1.0 million in ether tokens and used the proceeds to
pay down debt owed to Galaxy. Additionally, post the period end,
the Company issued 57.5 million shares in exchange for $7.5 million
of gross proceeds, a portion of which will be used to repay debt
owed to Galaxy.
Operational excellence
Argo continues to operate both of its owned data centers in Quebec,
Canada. The Baie Comeau site is over 40,000 square feet and has 15
MW of 99% renewable power capacity sourced from the nearby Baie
Comeau hydroelectric dam. The Company's Mirabel facility, located
adjacent to the Mirabel airport near Montreal, has approximately
30,000 square feet of mining space with 5 MW of 99% renewable power
capacity sourced from Hydro-Quebec.
Optimization of both capacity and existing operations at both
Quebec facilities continues. In June 2023, the Company began to
receive and deploy its BlockMiner mining machines ordered from ePIC
Blockchain Technologies. As of 31 July 2023, the Company has
deployed 1,242 BlockMiners at its Quebec facilities (representing
approximately 130 PH/s) and expects to deploy the remaining 1,628
machines (an additional 170 PH/s) by the end of Q4
2023.
Growth & strategic partnerships
While the Company's primary focus in H1 2023 was on financial
discipline and operational excellence at its existing facilities,
management continues to explore opportunities where mining
can be paired with stranded or wasted energy. There is tremendous
potential for energy generators to utilize mining as a balancing
and optimization tool, particularly in the energy transition where
limitations currently exist in the ability to store renewable
energy. Argo is evaluating several projects with companies across
the energy value chain.
For the remainder of 2023, the Company will continue to focus on
strengthening the balance sheet and growing the business with a
strong emphasis on financial discipline and operational excellence.
On behalf of the Board, I would like to thank all of our
shareholders and stakeholders. I am excited for Argo to continue in
its mission of powering the world's most innovative and sustainable
blockchain infrastructure in this next stage of the Company's
development.
Sincerely,
Matthew Shaw
Chairman of the Board
Responsibility Statement
We confirm that to the best of our knowledge:
●
the
Interim Report has been prepared in accordance with International
Accounting Standards 34, Interim Financial Reporting;
and
●
gives
a true and fair view of the assets, liabilities, financial position
and profit/loss of the Group; and
●
the
Interim Report includes a fair review of the information required
by DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the set of
interim financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the
year.
●
the
Interim Report includes a fair review of the information required
by DTR 4.2.8R of the Disclosure and Transparency Rules, being the
information required on related party transactions.
The Interim Report was approved by the Board of Directors and the
above responsibility statement was signed on its behalf
by:
Matthew Shaw
Chairman of the Board
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
|
|
|
Period ended
|
Period ended
|
|
|
|
30 June 2023
|
30 June 2022
|
|
|
|
(unaudited)
|
(unaudited)
|
|
|
Note
|
$'000
|
$'000
|
|
|
|
|
|
|
Revenues
|
|
23,996
|
34,644
|
|
Direct
costs
|
|
(15,093)
|
(10,203)
|
|
Power
credits
|
|
1,284
|
-
|
|
Mining margin
|
|
10,187
|
24,441
|
|
Depreciation
of mining equipment
|
|
(12,047)
|
(14,081)
|
|
Change
in fair value of digital currencies
|
6
|
489
|
(55,011)
|
|
Gross margin
|
|
(1,371)
|
(44,651)
|
|
|
|
|
|
|
Operating
costs and expenses
|
|
(7,863)
|
(11,653)
|
|
Restructuring
|
|
(1,399)
|
-
|
|
Foreign
exchange
|
|
1,403
|
13,319
|
|
Depreciation/amortisation
|
|
(651)
|
(1,123)
|
|
Share
based payment
|
|
(1,889)
|
(3,654)
|
|
Operating loss
|
|
(11,770)
|
(47,762)
|
|
|
|
|
|
|
Fair
value change of investments
|
|
-
|
(368)
|
|
Gain on
settlement of contingent consideration
|
|
-
|
5,239
|
|
Gain on
sale of investment
|
|
-
|
172
|
|
Finance
cost
|
|
(6,335)
|
(4,511)
|
|
Equity
accounted loss from associate
|
|
(458)
|
(636)
|
|
|
|
|
|
|
Loss before taxation
|
|
(18,563)
|
(47,866)
|
|
|
|
|
|
|
Tax
credit
|
5
|
2,321
|
8,286
|
|
|
|
|
|
|
Net Loss
|
|
(16,242)
|
(39,580)
|
|
Other comprehensive loss
Items which may be subsequently reclassified to profit or
loss:
|
|
|
|
|
-
Currency translation reserve
|
|
(1,562)
|
(5,726)
|
|
-
Equity accounted OCI from
associate
|
|
-
|
(10,793)
|
|
-
Fair value loss on intangible digital assets
|
|
-
|
(537)
|
|
|
|
|
|
|
Total other comprehensive loss, net of tax
|
|
(1,562)
|
(17,056)
|
|
|
|
|
|
|
Total comprehensive loss
|
|
(17,804)
|
(56,636)
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
477,825,166
|
469,182,463
|
|
Basic earnings per share*
|
|
$(0.03)
|
$(0.08)
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
As at
|
As at
|
As at
|
|
|
|
30 June 2023
|
31 December 2022
|
1 January 2022
|
|
|
|
(unaudited)
|
(audited)
|
(audited)
|
|
|
Note
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Investments
at fair value through income and loss
|
|
419
|
414
|
543
|
|
Investments
accounted for using the equity method
|
|
2,529
|
2,863
|
18,642
|
|
Intangible
assets
|
6
|
1,464
|
2,103
|
7,560
|
|
Property,
plant and equipment
|
7
|
70,333
|
76,992
|
150,571
|
|
Right
of use assets
|
|
536
|
525
|
472
|
|
Total non-current assets
|
|
75,281
|
82,897
|
177,788
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Trade
and other receivables
|
8
|
4,395
|
6,802
|
85,481
|
|
Digital
assets
|
9
|
-
|
443
|
108,956
|
|
Cash
and cash equivalents
|
|
9,148
|
20,092
|
15,923
|
|
Total current assets
|
|
13,543
|
27,337
|
210,360
|
|
|
|
|
|
|
|
Total assets
|
|
88,824
|
110,234
|
388,148
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share
capital
|
10
|
634
|
634
|
622
|
|
Share
premium
|
10
|
202,103
|
202,103
|
196,911
|
|
Share
based payment reserve
|
|
10,389
|
8,528
|
2,531
|
|
Foreign
currency translation reserve
|
|
(30,457)
|
(28,895)
|
1,623
|
|
Fair
value reserve
|
|
-
|
-
|
551
|
|
Other
comprehensive income of equity accounted associates
|
|
-
|
-
|
8,744
|
|
Accumulated
surplus (deficit)
|
|
(184,865)
|
(168,623)
|
71,623
|
|
Total equity
|
|
(2,196)
|
13,747
|
282,605
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade
and other payables
|
11
|
9,913
|
10,023
|
10,233
|
|
Loans
and borrowings
|
12
|
14,407
|
11,605
|
31,558
|
|
Deferred
tax
|
|
3,390
|
2,648
|
386
|
|
Income
tax
|
|
-
|
-
|
10,360
|
|
Contingent
consideration
|
|
-
|
-
|
10,889
|
|
Lease
liability
|
|
5
|
5
|
10
|
|
Total current liabilities
|
|
27,715
|
24,281
|
63,436
|
|
|
|
|
|
|
|
Non - current liabilities
|
|
|
|
|
|
Deferred
tax
|
|
4,265
|
7,941
|
730
|
|
Issued
debt - bond
|
12
|
37,943
|
37,809
|
36,303
|
|
Loans
and borrowings
|
12
|
20,544
|
25,916
|
4,575
|
|
Lease
liability
|
|
553
|
540
|
499
|
|
Total liabilities
|
|
91,020
|
96,487
|
105,543
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
88,824
|
110,234
|
388,148
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
Share capital
|
Share premium
|
Currency translation reserve
|
Share based payment reserve
|
Accumulated deficit
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Balance at 1 January 2023
|
634
|
202,103
|
(28,895)
|
8,528
|
(168,623)
|
13,747
|
|
Loss
for the period
|
-
|
-
|
-
|
-
|
(16,242)
|
(16,242)
|
|
Other
comprehensive income
|
-
|
-
|
(1,562)
|
-
|
-
|
(1,562)
|
|
Foreign
exchange movement
|
-
|
-
|
-
|
(28)
|
-
|
(28)
|
|
Stock
based compensation charge
|
-
|
-
|
-
|
1,889
|
-
|
1,889
|
|
Balance at 30 June 2023
|
634
|
202,103
|
(30,457)
|
10,389
|
(184,865)
|
(2,196)
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
Share capital
|
Share premium
|
Currency translation reserve
|
Share based payment reserve
|
Fair value reserve
|
Other comprehensive income of associates
|
Accumulated surplus/ (deficit)
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Balance at 1 January 2022
|
622
|
196,911
|
1,623
|
2,531
|
551
|
8,744
|
71,623
|
282,605
|
|
Loss
for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(39,580)
|
(39,580)
|
|
Other
comprehensive income
|
-
|
-
|
(5,726)
|
-
|
(537)
|
(10,793)
|
-
|
(17,056)
|
|
Foreign
exchange movement
|
-
|
-
|
-
|
1,301
|
(14)
|
-
|
-
|
1,287
|
|
Stock
based compensation charge
|
-
|
-
|
-
|
3,654
|
-
|
-
|
-
|
3,654
|
|
Common
stock issuance
|
2
|
138
|
-
|
-
|
-
|
-
|
-
|
140
|
|
Common
stock options/warrants exercised
|
10
|
5,054
|
-
|
-
|
-
|
-
|
-
|
5,064
|
|
Balance at 30 June 2022
|
634
|
202,103
|
(4,103)
|
7,486
|
-
|
(2,049)
|
32,043
|
236,114
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
Period ended
|
Period ended
|
|
|
|
30 June 2023
|
30 June 2022
|
|
|
|
(unaudited)
|
(unaudited)
|
|
|
Note
|
$'000
|
$'000
|
|
Cash flows from operating activities
|
|
|
|
|
Loss
before tax
|
|
(18,563)
|
(47,866)
|
|
Adjustments for:
|
|
|
|
|
Depreciation/Amortisation
|
|
12,698
|
15,204
|
|
Foreign
exchange movements
|
|
(1,403)
|
(13,319)
|
|
Finance
cost
|
|
6,335
|
4,511
|
|
Fair
value change in digital assets
|
|
-
|
40,371
|
|
Realised
(gain)/loss in digital assets
|
|
(489)
|
6,372
|
|
Investment
fair value movement
|
|
-
|
368
|
|
Gain on
investment
|
|
-
|
(173)
|
|
Impairment
of intangible digital assets
|
|
-
|
3,904
|
|
Share
of loss from associate
|
|
458
|
636
|
|
Gain on
settlement of contingent consideration
|
|
-
|
(5,239)
|
|
Share
based payment expense
|
|
1,889
|
3,654
|
|
Working capital changes:
|
|
|
|
|
Increase
in trade and other receivables
|
8
|
(892)
|
(1,204)
|
|
(Decrease)/Increase
in trade and other payables
|
11
|
(973)
|
3,098
|
|
Decrease
in digital assets
|
|
443
|
21,593
|
|
Net cash flow (used in)/from operating activities
|
|
(497)
|
31,910
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Proceeds
from sale of intangibles/investments
|
|
989
|
173
|
|
Purchase
of tangible fixed assets
|
7
|
(1,301)
|
(63,893)
|
|
Mining
equipment prepayments
|
|
-
|
(45,972)
|
|
Net cash used in investing activities
|
|
(312)
|
(109,692)
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds
from borrowings
|
16
|
811
|
86,065
|
|
Lease
payments
|
|
-
|
(17)
|
|
Loan
repayments
|
|
(3,381)
|
(10,890)
|
|
Interest
paid
|
|
(5,247)
|
(4,511)
|
|
Proceeds
from shares issued
|
|
-
|
151
|
|
Net cash from (used in)/from financing activities
|
|
(7,817)
|
70,798
|
|
Net decrease in cash and cash equivalents
|
|
(8,626)
|
(6,984)
|
|
Effect
of foreign exchange changes in cash
|
|
(2,318)
|
2,261
|
|
Cash
and cash equivalents, beginning of period
|
|
20,092
|
15,923
|
|
Cash and cash equivalents, end of period
|
|
9,148
|
11,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
1. COMPANY INFORMATION
Argo Blockchain plc ("the company") is a public company, limited by
shares, and incorporated in England and Wales. The registered
office is Eastcastle House, 27/28 Eatcastle Street, London,
England, W1W 8DH. The company was incorporated on 5 December 2017
as GoSun Blockchain Limited.
On 21 December 2017, the company changed its name to Argo
Blockchain Limited and re-registered as a public company, Argo
Blockchain plc.
On 12 January 2018, Argo Blockchain plc acquired a 100% subsidiary,
Argo Innovation Labs Inc. (together "the Group"), incorporated in
Canada.
On 22 November 2022, the Group formed Argo Operating US LLC and
Argo Holdings US Inc.
On 21 December 2022, Argo Innovation Facilities (US) Inc became
Galaxy Power LLC. On 28 December 2022, the Group sold Galaxy Power
LLC.
The principal activity of the group is Bitcoin mining.
The ordinary shares of the Group are listed under the trading
symbol ARB on the London Stock Exchange. The American
Depositary Receipt of the Group are listed under the trading symbol
ARBK on Nasdaq. The Group bond is listed on the Nasdaq Global
Select Market under the trading symbol ARBKL.
2. BASIS OF PREPARATION
The condensed consolidated interim financial statements for the six
months ended 30 June 2023 have been prepared in accordance with IAS
34 'Interim Financial Reporting' and presented in US dollars which
is further described in Note 3. They do not include all the
information required in annual financial statements in accordance
with IFRS and should be read in conjunction with the consolidated
financial statements for the year ended 31 December 2022, which
have been prepared in accordance with International Financial
Reporting Standards as issued by the IASB. The report of the
auditors on those financial statements was
unqualified.
The financial statements have been prepared under the historical
cost convention, except for the measurement to fair value certain
financial and digital assets and financial
instruments.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing these
condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the financial statements for
the year ended 31 December 2022.
3. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these condensed consolidated interim financial statements are
consistent with those of the previous financial year, except the
change in presentational currency from British Pounds to US Dollars
and recognition of power credits within Mining Margin in the
Statement of Comprehensive Income. The Group changed its
presentational currency to US Dollars due to the fact its revenues,
direct costs, capital expenditures and debt obligations are now
predominantly denominated in US Dollars.
In order to satisfy the requirements of IAS 8 and IAS 21 with
respect to a change in the presentation currency, the statutory
financial information as previously reported in the Group's Annual
Reports have been restated from GBP into US Dollars using the
procedures outlined below:
●
Assets
and liabilities were translated to US Dollars at the closing rates
of exchange at each respective balance sheet date
●
Share
capital, share premium and other reserves were translated at the
historic rates prevailing at the dates of transactions
●
Income
and expenses were translated to US Dollars at an average rate at
each of the respective reporting years on a monthly basis. This has
been deemed to be a reasonable approximation to exchange rates at
the date of the transactions.
●
Differences
resulting from the retranslation were taken to currency translation
reserve within equity
●
All
exchange rates used were extracted from the Group's underlying
financial records
Power credits: The Group recognized power credits in relation to
selling power back to the power grid. The hosting facility
sells some of the Group's power back to the power grid when
economically feasible.
Going Concern
The preparation of consolidated financial statements requires an
assessment on the validity of the going concern assumption. 2022
was a challenging year for Bitcoin miners: the depressed price of
Bitcoin and the elevated global hashrate caused hashprice, the
primary measure of mining profitability, to reach all-time lows in
Q4 2022. In addition, global events resulted in disruption to
fossil fuel energy markets which resulted in a significant increase
in electricity prices. The low hashprice and elevated power prices
significantly reduced Argo's profitability and its ability to
generate free cash flow. During Q4 2022, the Group evaluated
several strategic alternatives to restructure our balance sheet and
improve our cash flow.
On 28 December 2022, the Group announced a series of transactions
with Galaxy Digital Holdings, Ltd. ("Galaxy") that improved the
Group's liquidity position and enabled the Group to continue its
mining operations. As part of the transactions, Argo sold the
Helios facility and real property in Dickens County, Texas to
Galaxy for $65 million and refinanced existing asset-backed loans
via a new $35 million, three-year asset-backed loan with Galaxy.
The transactions reduced total indebtedness by $41 million and
allowed Argo to simplify its operating structure.
While the Galaxy transactions strengthened the Group's balance
sheet, material uncertainties exist that may cast significant doubt
regarding the Group's ability to continue as a going concern and
meet its liabilities as they come due. The significant
uncertainties are:
1) The Group's debt service obligations of approximately $17.8
million to 31 August 2024. Please see the net debt tables under the
Group and Company cash flow statements for further information of
the Group's exposure to liabilities and net position at the year
end.
2) The Group's exposure to Bitcoin prices, power prices, and
hashprice, each of which have shown volatility over recent years
and have a significant impact on the Group's future profitability.
The Group may have difficulty meeting its liabilities if there are
significant declines to the hashprice assumption or significant
increases to the power price, particularly where there is a
combination of both factors. The Directors' assessment of going
concern includes a forecast drawn up to 31 August 2024 using the
Group's estimate of the forecasted hashprice. Power costs are now
also partially fixed per kilowatt hour as Galaxy has hedged the
majority of the power obligations at Helios and, as per the hosting
agreement in place, the Group has access to this power. Anticipated
power costs based on this arrangement are reflected in the forecast
prepared.
Offsetting these potential risks to the Group's cash flow are the
Group's current cash balance, the Group's ability to generate
additional funds by issuing equity for cash proceeds and selling
certain non-core Group assets.
Based on information from Management, the Directors have considered
the period to 31 August 2024, as a reasonable time period given the
variable outlook of cryptocurrencies and the Bitcoin halving due in
May 2024. Based on the above considerations, the Board believes it
is appropriate to adopt the going concern basis in the preparation
of the Financial Statements. However, the Board notes that the
significant debt service requirements and the volatile economic
environment, indicate the existence of material uncertainties that
may cast significant doubt regarding the applicability of the going
concern assumption and the auditors made reference to this in their
audit report on the financial statements for the year ended 31
December 2022.
4. ADOPTION OF NEW AND REVISED STANDARDS AND
INTERPRETATIONS
The Group has adopted all recognition, measurement and disclosure
requirements of IFRS, including any new and revised standards and
Interpretations of IFRS, in effect for annual periods commencing on
or after 1 January 2023. The adoption of these standards and
amendments did not have any material impact on the financial result
or position of the Group.
Standards which are in issue but not yet effective:
At the date of authorisation of these financial statements, the
following Standards and Interpretation, which have not yet been
applied in these financial statements, were in issue but not yet
effective.
|
Standard or Interpretation
|
Description
|
Effective date for annual accounting period beginning on or
after
|
|
IAS
1
|
Non-current
Liabilities with Covenants
|
1
January 2024
|
The Group has not early adopted any of the above standards and
intends to adopt them when they become effective.
No deferred tax asset has been recognised in respect of tax losses
carried forward on the basis that there is insufficient certainty
over the level of future profits to utilise against this
amount.
Income tax expense
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities as
follows:
5. TAXATION
|
|
Period ended
30 June 2023 (unaudited)
|
Period ended
30 June 2022 (unaudited)
|
|
|
$'000
|
$'000
|
|
Income tax credit - foreign tax
|
-
|
(7,785)
|
|
Deferred tax credit
|
(2,321)
|
(501)
|
|
Taxation credit in the financial
statements
|
(2,321)
|
(8,286)
|
|
|
|
Period ended
30 June 2023 (unaudited)
|
Period ended
30 June 2022 (unaudited)
|
|
|
|
$'000
|
$'000
|
|
Loss
before taxation
|
|
(18,563)
|
(47,866)
|
|
Expected
tax recovery based on a weighted average of 25% (2022 - 25%) (UK,
US and Canada)
|
|
(4,640)
|
(21,325)
|
|
|
|
|
|
|
Expenses
not deductible in determining taxable profit
|
|
512
|
52
|
|
Capital
allowances in excess of depreciation
|
|
-
|
(7,250)
|
|
Other
tax adjustments
|
|
(2,543)
|
15,064
|
|
Losses
utilised re prior years
|
|
-
|
(9,106)
|
|
Origination
and reversal of temporary differences
|
|
3,117
|
5,116
|
|
Unutilised
tax losses carried forward
|
|
1,233
|
9,162
|
|
Taxation credit in the financial statements
|
|
(2,321)
|
(8,286)
|
6. INTANGIBLE ASSETS NOTE
|
Group
|
|
Goodwill
|
Digital assets
|
Website
|
2023 Total
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Cost
|
|
|
|
|
|
|
At 1
January 2023
|
|
96
|
5,942
|
873
|
6,911
|
|
|
|
|
|
|
|
|
Foreign
exchange movements
|
|
16
|
69
|
19
|
104
|
|
Disposals
|
|
-
|
(1,868)
|
-
|
(1,868)
|
|
At 30
June 2023
|
|
102
|
4,143
|
892
|
5,147
|
|
|
|
|
|
|
|
|
Amortisation and impairment
|
|
|
|
|
|
|
At 1
January
|
|
-
|
4,045
|
762
|
4,807
|
|
Foreign
exchange movement
|
-
|
47
|
17
|
64
|
|
Disposal
|
|
-
|
(1,243)
|
-
|
(1,243)
|
|
Fair
value gain
|
-
|
(34)
|
-
|
(34)
|
|
Amortisation
charged during the period
|
-
|
-
|
88
|
88
|
|
At 30
June 2023
|
|
-
|
2,524
|
803
|
3,327
|
|
Balance
at 1 January 2023
|
|
97
|
1,917
|
42
|
2,111
|
|
Balance At 30 June 2023
|
112
|
1,327
|
25
|
1,464
|
|
Intangible
digital assets are cryptocurrencies owned but not mined by the
Group. The Intangible digital assets are recorded at cost on
the day of acquisition. Changes in fair value are recorded in the
fair value reserve in other comprehensive income.
The
Intangible digital assets held are detailed in the table
below:
|
|
|
As at 30 June 2023
|
|
Coins/tokens
|
Fair value
|
|
|
Crypto asset name
|
|
|
$'000
|
|
|
Polkadot - DOT
|
|
32,955
|
170
|
|
|
Ethereum - ETH
|
|
213
|
70
|
|
|
Solana - SOL
|
|
17
|
6
|
|
|
LAYR
|
|
12,048
|
125
|
|
|
ASTRA
|
|
1
|
200
|
|
|
Alternative coins
|
|
392,971
|
756
|
|
|
At 30 June 2023
|
|
438,205
|
1,327
|
|
|
|
|
|
|
|
|
|
|
|
|
7. TANGIBLE FIXED ASSETS
|
Group
|
Office
Equipment
|
Mining and Computer Equipment
|
Machine
Components
|
Leasehold Improvements
|
Data centres
|
Equipment
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
57
|
142,901
|
20,938
|
116
|
13,295
|
104
|
176,410
|
|
Foreign exchange movement
|
3
|
4,489
|
985
|
5
|
625
|
5
|
6,112
|
|
Additions
|
-
|
-
|
3,300
|
-
|
-
|
1,301
|
4,601
|
|
Transfer to another class
|
513
|
-
|
-
|
530
|
(3,803)
|
2,760
|
-
|
|
Disposals
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
At 30 June 2023
|
572
|
145,390
|
25,222
|
652
|
10,117
|
4,710
|
187,124
|
|
Depreciation and impairment
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
17
|
79,248
|
18,233
|
105
|
1,801
|
14
|
99,419
|
|
Foreign exchange movement
|
1
|
3,726
|
857
|
-
|
5
|
85
|
4,674
|
|
Depreciation charged during the period
|
145
|
12,047
|
-
|
74
|
103
|
328
|
12,698
|
|
Disposals
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
At 30 June 2023
|
163
|
95,021
|
19,091
|
179
|
1,910
|
427
|
116,791
|
|
Carrying amount
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
40
|
62,653
|
2,705
|
11
|
11,494
|
89
|
76,992
|
|
At 30 June 2023
|
409
|
51,369
|
6,132
|
472
|
8,208
|
3,743
|
70,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. TRADE AND OTHER RECEIVABLES
|
|
As at
30 June 2023 (unaudited)
|
As at 31 December 2022 (audited)
|
|
|
$'000
|
$'000
|
|
Trade and other receivables
|
706
|
-
|
|
Prepayments
|
2,214
|
5,978
|
|
Other taxation and social security
|
1,473
|
824
|
|
Total trade and other receivables
|
4,393
|
6,802
|
The directors consider that the carrying amount of trade and other
receivables is equal to their fair value.
9. DIGITAL ASSETS
|
Group
|
Period ended
30 June 2023
(unaudited)
$'000
|
Year ended
31 December 2022
(audited)
$'000
|
|
Opening Balance
|
443
|
102,632
|
|
Additions
|
|
|
|
Crypto assets mined
|
-
|
263
|
|
Crypto asset purchased and received
|
23,982
|
60,069
|
|
Total additions
|
23,982
|
60,332
|
|
Disposals
|
|
|
|
Crypto assets purchased & received
|
-
|
419
|
|
Crypto assets sold
|
(24,448)
|
(107,456)
|
|
Total disposals
|
(24,448)
|
(107,037)
|
|
Fair value movements
|
|
|
|
Gain/(loss) on crypto asset sales
|
23
|
(55,315)
|
|
Movements on
crypto assets held
|
-
|
(169)
|
|
Total fair value movements
|
23
|
(55,484)
|
|
Closing Balance
|
-
|
443
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group mined crypto assets during the period, which are recorded
at fair value on the day of acquisition. Movements in fair value
are recorded in change in fair value of digital currencies on the
statement of comprehensive loss.
10. ORDINARY SHARES
The Group had 477,825,166 Ordinary shares outstanding at 30 June
2023 and 31 December 2022.
Subsequent to June 30, 2023, the Group issued 57,500,000 ordinary
shares for net proceeds of $7M.
The Group has in issue 10,544,406 warrants and options at 30 June
2023 (2022: 18,396,397).
The Group granted 6,616,487 restricted stock units (RSUs) and
1,973,892 performance stock units (PSUs) in 2023. The
RSUs/PSUs vest over 3 years from grant date. PSUs have
performance conditions that must be met as a condition of
vesting. The grant price of the RSUs/PSUs was
£0.1288.
11. TRADE AND OTHER PAYABLES
|
|
As at
30 June 2023 (unaudited)
|
As at
31 December 2022 (audited)
|
|
|
$'000
|
$'000
|
|
Trade payables
|
2,040
|
3,253
|
|
Accruals and other payables
|
7,365
|
6,099
|
|
Other taxation and social security
|
507
|
690
|
|
Total trade and other creditors
|
9,912
|
10,043
|
The directors consider that the carrying value of trade and other
payables is equal to their fair value.
12. LOANS AND BORROWINGS
|
|
|
|
|
Non-current liabilities
|
As at
30 June 2023 (unaudited)
$'000
|
As at
31 December 2022 (audited)
$'000
|
|
Issued debt - bond
|
37,943
|
37,809
|
|
Long term loan
|
18,200
|
23,131
|
|
Mortgages
|
2,344
|
2,785
|
|
Lease Liability
|
553
|
540
|
|
Total
|
59,040
|
64,265
|
|
Current liabilities
|
|
|
|
Loans
|
13,415
|
10,475
|
|
Mortgages
|
992
|
1,130
|
|
Lease Liability
|
5
|
5
|
|
Total
|
14,412
|
11,610
|
|
|
|
|
|
|
The mortgages are secured against the two buildings at Mirabel and
Baie Comeau and are repayable over periods from 39 months to 42
months at an interest rate of lender prime + 0.5%.
In November 2021, the Group issued an unsecured 5-year bond with an
interest rate of 8.75%. The bonds mature on 30 November
2026.
In December 2022, the Group entered into a loan agreement with
Galaxy Digital LLC for USD$35 million (£29m). The Galaxy
Digital LLC loan is payable monthly based on an amortization
schedule over 32 months with an interest rate of the secured
overnight financing rate by the Federal Reserve Bank of New York
plus 11%. The loan is secured by the Group's property, plant and
equipment.
In May 2023, the Group entered into a loan agreement with First
Insurance Funding for USD $811k. The loan is payable over 10
months with an interest rate of 9.2%.
13. FINANCIAL INSTRUMENTS
|
|
As at
30 June 2023 (unaudited)
$'000
|
As at
31 December 2022 (audited)
$'000
|
|
Carrying amount of financial assets
|
|
|
|
Measured
at amortised cost
|
|
|
|
-
Mining equipment prepayments
|
-
|
5,978
|
|
-
Trade and other receivables
|
2,178
|
824
|
|
-
Cash and cash
equivalents
|
9,148
|
20,092
|
|
Measured at fair value - Digital Assets
|
-
|
443
|
|
Total carrying amount of financial assets
|
11,328
|
27,337
|
|
|
|
|
|
Carrying amount of financial liabilities
|
|
|
|
Measured at amortised cost
|
|
|
|
-
Trade and other
payables
|
9,913
|
10,022
|
|
-
Short term
loans
|
11,407
|
11,605
|
|
-
Long term loans
-
Issued Debt -
bonds
|
20,544
|
25,916
|
|
37,943
|
37,809
|
|
-
Lease
liabilities
|
553
|
540
|
|
Total carrying amount of financial liabilities
|
83,365
|
85,892
|
Fair Value Estimation
Fair value measurements are disclosed according to the following
fair value measurement hierarchy:
-
Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1)
-
Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that
is, as prices), or indirectly (that is, derived from prices) (Level
2)
-
Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level 3).
This is the case for unlisted equity securities.
The following table presents the Group's assets and liabilities
that are measured at fair value at 30 June 2023 and 31 December
2022.
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Financial assets at fair value through profit or loss
|
|
|
|
|
|
Equity holdings
|
26
|
-
|
393
|
419
|
|
Intangible
assets - crypto assets
|
-
|
1,327
|
-
|
1,327
|
|
Digital assets
|
-
|
-
|
-
|
-
|
|
Total at 30 June 2023
|
26
|
1,327
|
393
|
1,746
|
|
|
|
|
|
|
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Financial assets at fair value through profit or loss
|
|
|
|
|
|
Equity holdings
|
73
|
-
|
89
|
162
|
|
Intangible
assets - crypto assets
|
-
|
2,129
|
-
|
2,129
|
|
Digital assets
|
-
|
443
|
-
|
443
|
|
Total at 31 December 2022
|
73
|
2,572
|
89
|
2,734
|
All financial assets are in listed/unlisted securities and digital
assets.
There were no transfers between levels during the
period.
The Group recognises the fair value of financial assets at fair
value through profit or loss relating to unlisted investments at
the cost of investment unless:
There
has been a specific change in the circumstances which, in the
Group's opinion, has permanently impaired the value of the
financial asset. The asset will be written down to the impaired
value;
There
has been a significant change in the performance of the investee
compared with budgets, plans or milestones;
There
has been a change in expectation that the investee's technical
product milestones will be achieved or a change in the economic
environment in which the investee operates;
There
has been an equity transaction, subsequent to the Group's
investment, which crystallises a valuation for the financial asset
which is different to the valuation at which the Group invested.
The asset's value will be adjusted to reflect this revised
valuation; or
An
independently prepared valuation report exists for the investee
within close proximity to the reporting date.
14. COMMITMENTS
The Group's material contractual commitments relate to the hosting
services agreement with Galaxy Digital Qualified Opportunity Zone
Business LLC, which provides hosting, power and support services at
the Helios facility. Whilst management do not envisage terminating
agreements in the immediate future, it is impracticable to
determine monthly commitments due to large fluctuations in power
usage and as such a commitment over the contract life has not been
determined. The agreement is for services with no identifiable
assets, therefore, there is no right of use asset associated with
the agreement.
As the company disclosed on February 8, 2023, it is currently
subject to a class action lawsuit. The case, Murphy vs Argo
Blockchain plc et al, was filed in the Eastern District of New York
on 26 January 2023. The company refutes all of the allegations and
believes that this class action lawsuit is without merit. The
company is vigorously defending itself against the action. We are
not currently subject to any other material pending legal
proceedings or claims.
15. RELATED PARTY TRANSACTIONS
Key management compensation - all amounts in $000's
Key management includes Directors (executive and non-executive) and
senior management. The compensation paid to related parties in
respect of key management for employee services during the period
was made only from Argo Blockchain PLC, amounting to: $60k (2022 -
$26) paid to Webslinger Advisors Inc. in respect of fees of Matthew
Shaw (Non-executive director); and Alex Appleton through Appleton
Business Advisors Limited was paid $22 (2022 - $126) during the
period.
Total director fees and remuneration, paid directly and indirectly,
totalled $280 (2022: $406).
16. SUBSEQUENT EVENTS
In July 2023, the Company issued 57,500,000 ordinary shares for net
proceeds of $7M.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
Date:
29 August,2023
|
ARGO BLOCKCHAIN PLC
By:
/s/ Jim
MacCallum
Name:
Jim MacCallum
Title:
Chief Financial Officer
|
Argo Blockchain (NASDAQ:ARBK)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Argo Blockchain (NASDAQ:ARBK)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024
