Argo Blockchain Plc current report, Q3 FY2023

Argo Blockchain plc — Form 6-K Summary

Business Context and Reporting Period

Argo Blockchain plc, a cryptocurrency-mining company, filed this Form 6-K for July 2023. The filing reports the results of a non-pre-emptive equity placing and a concurrent retail offer announced on 19 July 2023.

Key Financial and Capital Metrics

ItemReported amount or detail
Institutional placing51,340,000 new ordinary shares at 10 pence per share; gross proceeds of approximately £5.134 million.
Retail offer6,160,000 new ordinary shares at 10 pence per share; gross proceeds of approximately £616,000.
Total capital raise57,500,000 new ordinary shares; gross proceeds of approximately £5.75 million and net proceeds of approximately £5.39 million.
Issue price discountApproximately 14% below the 30-trading-day VWAP through 18 July 2023 and 25.92% below the 18 July 2023 closing mid-price.
Post-admission share capital535,325,166 ordinary shares and voting rights, assuming admission occurs as expected.
Use of proceedsReduction of outstanding indebtedness and pursuit of strategic growth projects.
Revenue, profit, cash flow and marginsThe filing does not provide current-period revenue, profitability, cash-flow, margin or operating-performance figures.

Material Changes Versus the Prior Comparable Period

  • The company is issuing 57.5 million new shares, representing approximately 12.03% of existing issued share capital according to the main announcement. The Pre-Emption Group disclosure describes the percentage as approximately 12.3%; investors should reconcile this discrepancy.
  • The transaction will increase the company’s share count to 535,325,166 and dilute existing shareholders.
  • The company expects to use approximately £5.39 million of net proceeds to reduce debt and fund strategic growth projects. The filing does not quantify the debt reduction or provide post-transaction leverage.
  • The capital raise was described as oversubscribed by new and existing shareholders.

Outlook, Risks and Unusual Items

  • Admission to the FCA standard listing and trading on the London Stock Exchange was expected by 8:00 a.m. on 24 July 2023, subject to applicable conditions, including the effectiveness of admission and the placing agreement remaining in force.
  • The filing does not provide formal financial guidance or specific operating targets.
  • Forward-looking risks include failure to realize expected benefits from transactions with Galaxy, inability to secure sufficient additional financing, and insufficient working capital to fund operations for the next twelve months.
  • The capital raise was conducted at a substantial discount to recent market prices and was non-pre-emptive, creating dilution for existing shareholders.
  • The announcement contains significant jurisdictional and securities-selling restrictions and states that no prospectus or public offering is being made in the restricted jurisdictions described in the filing.

Important Facts for Investors to Verify

  • Confirm that admission and settlement occurred as expected on or before 24 July 2023 and that all 57.5 million shares were issued.
  • Reconcile the stated dilution percentages of 12.03% and 12.3% in the announcement and Pre-Emption Group disclosure.
  • Verify the actual application of the approximately £5.39 million net proceeds, including the amount used to reduce indebtedness.
  • Review the company’s latest financial statements for cash balances, debt maturities, liquidity, working-capital requirements and any need for additional financing.
  • Assess the effect of the discounted issuance on existing shareholders and the company’s future capital requirements.
  • Review the risk factors in the company’s 2022 Form 20-F, particularly those relating to cryptocurrency prices, mining economics, financing, Galaxy-related transactions and working capital.