Argo Blockchain PLC Announces Transformational Strategic Transaction with Galaxy

Announcing Transformational Strategic Transactions with Galaxy Digital Holdings, Ltd.

● Argo subsidiary to sell its Helios facility to Galaxy for $65m (£54m) and refinance asset-backed loans with a new $35m (£29m) loan with Galaxy

● Transactions will reduce total debt by $41m (£34m) and simplify Argo’s operating structure

● Argo will maintain ownership of all mining machines and Galaxy will host Argo’s fleet of Bitmain S19J Pros on Helios

● Transactions will strengthen Argo’s balance sheet, improve Argo’s liquidity position and enable the company to continue operations

LONDON, UK / ACCESSWIRE / December 28, 2022 / Argo Blockchain plc (LSE: ARB; NASDAQ: ARBK), a global leader in cryptocurrency mining, announces that it has entered into definitive agreements with Galaxy Digital Holdings, Ltd. (TSX: GLXY) (“Galaxy”) under which an Argo subsidiary will sell its Helios facility in Dickens County, Texas for $65m (£54m) and refinance its asset-backed loans. In addition, Galaxy has agreed to host Argos mining machines located on Helios. The transactions are expected to close on Wednesday, December 28, 2022.

Sale of Helios to Galaxy and New Asset-Backed Loan

Under a share purchase agreement, an Argo subsidiary will sell its Helios facility and real estate in Dickens County, Texas and related assets to Galaxy for $65 million (£54 million), subject to customary post-closing adjustments. In addition, Galaxy will provide Argo with a new asset-backed loan for an aggregate principal amount of $35m (£29m) with an initial term of 36 months. This funding will be secured by a security package that includes 23,619 Bitmain S19J Pro mining machines currently operating at Helios and certain machines located at Argos’ Canadian data centers. Argo has agreed to guarantee, on an unsecured basis, the subsidiaries’ obligations under the definitive agreements and, together with its other subsidiaries, has agreed to guarantee, on an unsecured basis, and provide certain additional collateral for the financing. The company has also committed to working with Galaxy to ensure a smooth transition on Helios and minimize any disruption to operations.

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The cash proceeds received from the sale of Helios, together with a portion of the borrowings under the asset-backed loan, will be used to repay all existing debt, prepayment interest and other charges of approximately $84 million (£70 million) and $1 million (£1 million); owed to NYDIG ABL LLC and North Mill Commercial Finance, LLC, respectively. In this repayment, approximately $6 million (£5 million) will be returned to the company from an escrow account controlled by NYDIG ABL LLC.

Host agreement

Under a two-year hosting agreement with Galaxy, Argos’ 23,619 Bitmain S19J Pro mining machines currently operating on Helios will remain operating on Helios. As the owner of Helios, Galaxy intends to enter into a fixed price power purchase agreement (“PPA”) with a licensed power supplier to provide power to the facility. The hosting agreement assumes that Argo will have access to this electricity at the PPA rate. Argo will pay Galaxy a hosting fee and will cooperate in designing a mitigation strategy to participate in certain demand response programs offered by the Electric Reliability Council of Texas, which manages the Texas power grid.

The hosting agreement allows Argo to keep its mining machines operating on Helios and reduce mining machine downtime from the sale of the Helios facility. Furthermore, the company believes that the immersion cooling system it developed and implemented at Helios provides a superior operating environment for these machines, which represent approx. 2.36 EH/s.

Renewed focus on Canadian operations

The Company’s Canadian assets are not affected by the agreements with Galaxy except for the use of certain mining machinery and other assets located in Quebec as collateral for the asset-backed loan. Initially, Argo plans to refocus its efforts on growing and optimizing operations at its two data centers in Quebec, which are powered entirely by low-cost hydropower. The company currently has approximately 140 PH/s hash rate capacity at its Baie-Comeau and Mirabel facilities, which have 15 MW and 5 MW of power capacity respectively.

Third quarter earnings results and suspension of trading on Nasdaq

In light of the transaction with Galaxy, the company will not report Q3 2022 earnings results at this time. The company is designated by the SEC as a foreign private issuer and is required to comply with regulatory requirements for registration in the domestic market. The UK Financial Conduct Authority requires half-yearly reporting of financial results.

As previously disclosed, the Company requested the suspension of trading of its ADSs and unsecured notes on Nasdaq on Tuesday, December 27, 2022. Trading on Nasdaq is expected to resume on Wednesday, December 28, 2022 when both the London Stock Exchange and Nasdaq are open for trading.

Management commentary

Peter Wall, Argo’s chief executive, said: “This transaction with Galaxy is a transformational transaction for Argo and benefits the company in a number of ways. It reduces our debt by $41m (£34m) and gives us a stronger balance sheet and improved liquidity to help ensure continued operations through the ongoing bear market. It also allows us to focus on optimizing our operations with significantly lower investment and operating requirements.”

Wall continued, “Argo will maintain ownership of its fleet of Bitcoin miners, which represent approximately 2.5 EH/s of total hashrate capacity. Our miners currently operating on Helios will continue to be hosted there by Galaxy, which is of high quality, institutional participant in the Bitcoin mining space.”

Business advisors

McDermott Will & Emery LLP and Fladgate LLP acted as legal advisors to Argo. Stifel GMP served as financial advisor, and Berkeley Research Group, LLC provided secondary independent financial advice to the Company. Houlihan Lokey served as financial advisor to Argo’s board.

Inside information and forward-looking statements

This announcement contains inside information and includes forward-looking statements that reflect the current views, interpretations, beliefs or expectations of the Company or, as applicable, the Board of Directors with respect to the Company’s financial results, business strategy and management’s plans and objectives 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 that include the words “remains confident”, “expects”, “intends”, “plans”, “believes”, “projects”, “anticipates”, “will”, “goals”, “goals”, “may” “would”, “could”, “continue”, “estimate”, “future”, “possibility”, “potential” or, in each case, their negative aspects, and similar statements of a future or forward-looking nature identify forward-looking statements . All forward-looking statements involve 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 the transactions with Galaxy, the Company may be unable to to secure sufficient additional financing to meet its operating needs, and the Company may not generate sufficient working capital to fund its operations in the next twelve months as anticipated. Forward-looking statements are not guarantees of future performance. Consequently, there are or will be important factors that may lead to the company’s actual results, prospects and results deviating significantly from those stated 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, these 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, 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 laws and regulations, the Company undertakes no public obligation 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 the Company files 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 Registration Statement on Form F-1.

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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 powered primarily by renewable energy. In 2021, Argo became the first climate-positive cryptocurrency mining company, signing the Crypto Climate Accord. Argo also participates in several Web 3.0, DeFi and GameFi projects through its Argo Labs division, further contributing to its business operations, as well as the development of the cryptocurrency markets. For more information, visit www.argoblockchain.com.

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SOURCE: Argo Blockchain PLC

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