Argo Blockchain to raise £24m for working capital

British mining company Argo Blockchain intends to raise £24m through the purchase by an unnamed strategic investor of 87 million ordinary shares.

Argo announces strategic actions in today’s RNS:

-Signed LOI to amend existing equipment financing agreement

-Intends to raise ~£24m ($27m) via Proposed Subscription

-Plans to sell 3,400 mining machines for £6.0m ($6.8m)

Link to full RNS: https://t.co/dUpNDIb2Nu

— Argo (@ArgoBlockchain) October 7, 2022

According to the statement, the firm faced a decline in profitability and cash flow due to adverse market conditions. The company decided to take a number of steps to bolster working capital.

“Our profitability has been hit from two sides: from higher energy prices and a decline in Bitcoin prices, which has led to a cash shortage,” explained Peter Wall, CEO of Argo.

Regarding the share purchase, the parties signed a non-binding agreement. If the deal closes, the investor’s stake in Argo will be 15.46%, and he will receive two seats on the seven-member board.

As part of other steps, the company reached an agreement with NYDIG to amend the existing credit agreement. It is expected that their implementation will free up around £5m for Argo. The deal is expected to close within the next few weeks.

The London-based firm also signed a deal to sell 3,400 new Bitmain Antminer S19J Bitcoin miners. For equipment with a total hashrate of about 340 PH/s, the company will receive £6m. Argo will install the devices for a third party at the Helios data centre in Texas (USA) on a paid-hosting basis.

Despite the deployment of the batch of equipment, the company plans to reach a hashrate of 2.9 EH/s by the end of October.

“Assuming all deals close, we are confident that we have the liquidity and balance to weather the next 12 months,” said Wall.

At the time of writing, Argo’s shares on the London Stock Exchange (LSE) had fallen nearly 15%. Since the start of the year, the company’s shares have fallen by more than 75%.

In September, Arcane Research analysts concluded that public mining companies maintain financial resilience, despite unfavorable market conditions.

However, the vast majority of them posted an unallocated loss on the balance sheet, experts noted. Argo was the exception.

In the same month, Compute North, not publicly traded, filed for bankruptcy.

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