Argo Blockchain PLC (LON:ARB) Transformational Strategic Transaction with Galaxy

Announcement of Transformational Strategic Transactions with Galaxy Digital Holdings, Ltd.

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

● Transactions will reduce total indebtedness by $41 million (£34 million) 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 at Helios

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

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 $65 million (£54 million) and refinance its asset-backed loans. Additionally, Galaxy has agreed to host Argo’s mining machines located at Helios. The transactions are expected to close on Wednesday, 28 December 2022.

Sale of Helios to Galaxy and New Asset-Backed Loan

Pursuant to an equity purchase agreement, an Argo subsidiary will sell its Helios facility and real property 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 in an aggregate principal amount of $35 million (£29 million) with an initial term of 36 months. This financing will be secured by a collateral package that includes 23,619 Bitmain S19J Pro mining machines currently operating at Helios and certain machines located at Argo’s Canadian data centers. Argo has agreed to guarantee, on an unsecured basis, its subsidiaries’ obligations under the definitive agreements, and along 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 at Helios and minimize any disruption to operations.

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

Hosting Agreement

Under a two-year hosting agreement with Galaxy, Argo’s 23,619 Bitmain S19J Pro mining machines currently operating at Helios will remain in operation at Helios. As the owner of Helios, Galaxy intends to enter into a fixed-price power purchase agreement (“PPA”) with a licensed retail electricity provider to procure electricity for the facility. The hosting agreement provides that Argo will have access to this electricity at the PPA rate. Argo will pay Galaxy a hosting fee and will collaborate on designing a curtailment strategy in order 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 at Helios and mitigate any 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 for a superior operating environment for these machines, representing approximately 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 machines 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 fully by low-cost hydroelectricity. The Company currently has approximately 140 PH/s of hashrate 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 earnings results for Q3 2022 at this time. The Company is designated by the SEC as a foreign private issuer and is required to comply with regulatory filing requirements in its home market. The UK Financial Conduct Authority requires semi-annual reporting of financial results.

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

Management Commentary

Peter Wall, Argo’s Chief Executive, said, “This transaction with Galaxy is a transformational one for Argo and benefits the Company in several ways. It reduces our debt by $41 million (£34 million) and provides us with a stronger balance sheet and enhanced liquidity to help ensure continued operations through the ongoing bear market. It also allows us to focus on optimizing our operations with significantly lower capex and opex requirements.”

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

Company Advisors

McDermott Will & Emery LLP and Fladgate LLP acted as legal advisers to Argo. Stifel GMP acted as a financial adviser, and Berkeley Research Group, LLC provided secondary independent financial advice to the Company. Houlihan Lokey acted as the financial adviser to Argo’s Board of Directors.

For further information please contact:

Argo Blockchain

Peter Wall

Chief Executive

[email protected]

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