Slide 1: Investor Presentation May 2011
Investor Presentation May 2011
Slide 2: Forward-looking statements
Certain statements in this presentation, and other written or oral statements made by or on behalf of us, are “forward-looking statements” within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management’s expect
Slide 3: Intrepid Potash: Strategically Located, Potash-Only Company
Intrepid Potash Strategically Located, Potash-Only Company Intrepid has an intense margin focus: Strategic marketing Capital investment to increase recoveries and productivity which is designed to lower per ton production cost Improve reliability and efficiency Innovate production methods 3 Florida
Slide 4: Current Potash Market
Strong agricultural commodity prices are supportive of farmer economics Balanced fertilization will be necessary to realize maximum yield expectations Solid fertilization rates and demand for potash is anticipated as farmers seek to maximize yield to capitalize on strong commodity prices Despite wet
Slide 5: Supply and Demand Fundamentals Lead to the Current Pricing Environment
Supply and Demand Fundamentals Lead to the Current Pricing Environment U.S. Mid-West (fob warehouse) $535-560 spot Saskatchewan (fob mine) $505-515 spot E.C.L. America cfr $426-476 spot SE Asia cfr $431-476 spot W. Europe (cfr import) $460-463 spot India (cfr Indian port) (standard) $336 contract As
Slide 6: Few Deposits, Fewer Global Producers
Few Deposits, Fewer Global Producers 7 2008, ‘09 & ‘10– MM KCL Equivalent Tons (2) (3) (2) (2) Sources: Public filings and select country data from Fertecon (1) Mosaic’s fiscal year ends on May 31, data has been adjusted to reflect calendar year (2) PCS has ownership stake. (3) PCS markets Intrepid
Slide 7: Potash Deliveries Track Population Growth
Potash Deliveries Track Population Growth 8 Long-term correlation of potash deliveries to historical global population growth Population growth continues Utilizing the 1.1% growth rate, provided by the US Census Bureau, in world population of 6.9 billion people: Each year – 75 million more people or
Slide 8: Population Growth Continues to Drive Grain Demand Over the Long-Term
Fundamentals of Increasing Population Continue to Drive Grain Demand Over the Long-Term 9 Note: Grains include corn, wheat, barley, oats and sorghum. Stock to use ratio is average inventory / consumption for that year; data updated monthly. Sources: United Nations Food and Agriculture Organization (
Slide 9: Farmers Understand the Agronomic Benefits of Potash
Farmers Understand the Agronomic Benefits of Potash Potash application rates were down in 2008 and 2009 A robust 2009 crop coupled with lower application rates meant that soils were being depleted of “banked” nutrients with the solid harvest in 2010 The solid 2010 crop likely resulted in a significa
Slide 10: Strong Returns for Farmers
Strong Returns for Farmers 11 - Non-land fixed costs include: labor, opportunity cost of unpaid labor, taxes, insurance, general overhead, and machine and equipment expenses. - Other variable costs include: seed, chemicals, fuel, lube, electricity, repairs, water, interest, custom operations, and dr
Slide 11: Why consider an investment in Intrepid Potash?
Why consider an investment in Intrepid Potash ? Strong Long-Term Industry Fundamentals The Only Western World Potash Pure-Play Margin Focused Decision Making Strategically Located Assets Diversified Markets and Customer Base with Enhanced Product Flexibility Well-Defined, Attractive Organic Growth O
Slide 12: Strategically Located Assets
Strategically Located Assets 13 Average Potash Consumption in Intrepid’s Markets is Greater than 5x of Intrepid’s Average Production Low High Sources: Association of American Plant Food Control Officials (AAPFCO), The Fertilizer Institute (TFI), Intrepid Potash. (1) AAPFCO, Fertecon, USDA. New Mexic
Slide 13: Potash Price Advantage: Strategically Located and Lower Royalties
Intrepid’s Potash Price Advantage: Strategically Located and Lower Royalties 14 (1) Sources: Green Markets and Fertecon Notes: (1) In calculating the average net realized sales prices for the first quarter of 2011, we assumed a freight rate of $25 per ton for Agrium based on historical reported resu
Slide 14: Diversified Markets and Customer Base with Increased Flexibility in Product Mix
Diversified Markets and Customer Base with Increased Flexibility in Product Mix Intrepid sells potash into three different markets: Agricultural - granular Industrial - standard Animal Feed - standard Industrial is primarily deliveries of standard potash to distributors to oil and gas drillers Abili
Slide 15: Capital Investment Strategy is Targeted on Improving Margin
Intrepid’s Capital Investment Strategy is Targeted on Improving Margin 16 Increased Recoveries Increased Reliability Increased Productivity Reduced Per Ton Costs
Slide 16: Capital Investment Strategy Focuses on Three Core Areas
Intrepid’s Capital Investment Strategy is Executed by Focusing on Three Core Areas Additional Granulation Capacity Moab Compactor North Compaction Upgrade Wendover Compactor Langbeinite Granulation Plant 17 Additional Mining Capacity Additional Mine Panels Additional Moab Horizontal Potash Caverns H
Slide 17: Major Capital Projects that Serve as the Foundation for Future Growth
Major Capital Projects that Further the Capital Investment Strategy Serve as the Foundation for Future Growth 18 Major Capital Projects Facility Key Expected Benefits Estimated Capex Range for Future Projects (1) Estimated in service date Potash Debottlenecking and Expansion Projects at Existing Fac
Slide 18: Additional Granulation Capacity - Utah
New compactor unit installed and in service at end of 2010 New product load out and screening system installed as part of compactor project Ability to granulate greater than 100 percent of annual production from Moab facility Project allows flexibility in production between granular and standard to
Slide 19: Additional Granulation Capacity - New Mexico
Engineering initiated related to the expansion of the current compaction plant to accommodate our anticipated production from the HB Solar Solution Mine North facility will have the capability of compacting 100 percent of West Mine production and 100 percent of anticipated HB Solar Solution Mine pro
Slide 20: Additional Mining Capacity is a Path to Return Long-Term Value
Productivity enhancement at the West Mine is a notable example Additional Mining Capacity is a Path to Return Long-Term Value to Shareholders 21 Addition of two new mining panels in the last two years Stacker / Reclaim has increased mine productivity by ~25 percent Tons hoisted from 2004 – 2010 have
Slide 21: HB Solar Solution Mine
$120 - $130 mm total estimated capital investment results in $700 per ton capex to reopen an existing mine compared to an estimated average cost of $1,400 per ton for greenfield projects HB Solar Solution Mine expected to be among the lower-cost potash mines in North America Same proven solar evapor
Slide 22: HB Solar Solution Mine: Project Timeline & EIS Process
HB Solar Solution Mine: Project Timeline & EIS Process 23 Draft EIS Published in the Federal Register on April 15, 2011, which began the 60-day public comment period Anticipate completing EIS review process and receiving the Record of Decision in the first quarter of 2012, reflecting updated timelin
Slide 23: Improving Langbeinite Recovery Is a Key Opportunity
Intrepid believes the market recognizes the combined value of the nutrients in Trio®, potassium, magnesium and sulfate, and, as a result, Intrepid expects the pricing opportunity in the premium market to strengthen Improving the Recovery of Langbeinite from our Current Ore Stream Presents a Key Oppo
Slide 24: Langbeinite Recovery Improvement Project
Langbeinite Recovery Improvement Project Construction on the dense media separation plant has begun Permit application for granulation plant has been declared administratively complete Expected to increase Trio® recoveries from the current design of 30-35 percent to approximately 50 percent, thereby
Slide 25: Final Thoughts
26 Final Thoughts Strong Long-Term Industry Fundamentals The Only Western World Potash Pure-Play Margin Focused Decision Making Strategically Located Assets Diversified Markets and Customer Base with Enhanced Product Flexibility Well-Defined, Attractive Organic Growth Opportunities that Lower Per-To
Slide 26: Appendix
POTASH Appendix
Slide 27: Conversion Rates
28 Conversion Rates 1 metric tonne = 1.102 short tons 1 product ton of potash (KCL or KCL Equivalent) = 61% K20 1 product ton of langbeinite = 22% K20 1 product ton of SOP = 50% K20
Slide 28: Calculation of Adjusted EBITDA
Calculation of Adjusted EBITDA 29 Non-GAAP Reconciliation Adjusted Earnings before income taxes, interest, depreciation and amortization (“EBITDA”) is computed as net income adjusted for the add back of income tax expense, interest expense including derivatives, depreciation, depletion, amortization
Slide 29: Calculation of Adjusted Net Income
Calculation of Adjusted Net Income 30 Non-GAAP Reconciliation Adjusted net income is calculated as net income adjusted for significant non-cash and unusual items. Examples of non-cash and unusual charges include insurance settlements from property and business losses, non-cash gains or losses associ
Slide 30: Solid Financial Performance
31 Solid Financial Performance Adjusted EBITDA(1) (In millions) Balance Sheet as of March 31, 2011 (1) This is a financial measurement not calculated based on U.S. Generally Accepted Accounting Principles (Non GAAP). Non-GAAP reconciliation available in the appendix to this presentation. Net Income
Slide 31: Selected Financial Data
32 Selected Financial Data Adjusted Net Income (1) (In millions) Adjusted EBITDA (1) (In millions, except gross margin percentage) Net Sales (In millions) Earnings Per Share (Diluted) This is a financial measurement not calculated based on U.S. Generally Accepted Accounting Principles (Non GAAP). No
Slide 32: Historical Quarterly Production and Sales Summary
33 Historical Quarterly Production and Sales Summary 2008 2009 2010 2011 Quarter ended September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, Production Volume (In thousands of short tons) Potash 200 201 137 131 112 124 172 16
Slide 33: Production Volume History & Outlook
35 Intrepid Production Volume History & Outlook Tons (000’s) Intrepid’s Potassium Production Volume Growth Estimated Productive Capacity at Full Operating Rates(1) Historical ® ® Productive capacity is affected by operating rates, recoveries, mining rates and the amount of development work that Intr
Slide 34: Average Net Realized Sales Price Advantage
Intrepid Average Net Realized Sales Price Advantage 36 Source: Company Reports, Intrepid Quarterly Net Realized Sales Prices Q1 ‘10 Q2 ‘10 Q3 ‘10 Q4 ‘10 Q1 ‘11 Intrepid $354 $376 $343 $363 $442 Mosaic $323 $305 $300 $300 $325 Agrium $307 $322 $297 $327 $360* Potash Corp. $291 $280 $277 $293 $332 * I
Slide 35: The Only Western World Potash Pure-Play
37 Potash Salt Nitrogen Complementary Business Agrium Potash Phosphates The Only Western World Potash Pure-Play K+S Potash Potash Phosphates Nitrogen Potash Corp Mosaic Uralkali Potash Intrepid Comparables Revenue by Product - North America Comparables Revenue by Product - International ICL Potash F
Slide 36: Why Potash Only?
38 Why Potash Only? (1) Potash Corp. (2) Potash percentage represents 2007, nitrogen and phosphate percentages represent 2005 figures from Integer Research Ltd. (3) Estimated by Intrepid Potash based on publicly available historic production data. Operating capacity rates for nitrogen and phosphate
Slide 37: Depleted Conventional Mines and Supply Shocks
39 Depleted Conventional Mines Mines Currently With Less than 15 Years Reserve Life Theodore, Amelie, Marie Louis mines in France Pasquasi and San Cataldo mines in Italy Salzdetfurth, Friedrichshall, Bergmannssegen-Hugo, Siegfried-Giesen, and Niedersachen-Riedel German mines Trona, California Severa
Slide 38: Carlsbad Potash Area
40 Carlsbad Potash Area
Slide 39: United States Potash Consumption
United States Potash Consumption 41 Sources : Fertecon, United States Department of Agriculture (USDA). Potash consumption is shown in fertilizer years (July – June). Grains stocks include: Barley, Corn, Oats, Sorghum, Wheat Potash fertilizer consumption has remained relatively constant, with an ann
Slide 40: Ethanol Has Become a Steady State Demand Driver
Ethanol Has Become a Steady State Demand Driver Ethanol demand has driven growth in corn use over the last decade Other uses have remained relatively flat Ethanol accounts for approximately 36% of total corn use Ethanol Production reached record levels in recent months, fueled by a one year extensio
Slide 41: Potash Is Well Positioned to Gain Greater Share of Nutrient Investment
Potash Is Well Positioned to Gain Greater Share of Nutrient Investment 43 Little indication on the horizon of a major price shock from nitrogen given the relatively flat natural gas strip Nitrogen price and natural gas curve have diverged Sources: Green Markets, Bloomberg Recent Prices as of 5/13/11
Slide 42: Potash Production and North American Inventory Levels
44 Potash Production and North American Inventory Levels N. American Inventory (000s Tons KCL Equivalent) Sources: IPNI, Fertecon, Intrepid Potash®. Potash Production (000s Tons KCL Equivalent) (1) Global Production North American Production 5,000 15,000 25,000 35,000 45,000 55,000 65,000 75,000 500
Slide 43: Nutrient removal of various crops
Nutrient removal of various crops 45 N P2O5 KCl Eq. *Based on 2009 world yield for Oil Palm and 2009 US Yields for all others Sources: UN Food and Agriculture Organization (FAO), International Plant Nutrition Institute, International Potash Institute, USDA lb/acre* Corn (grain) Cotton (lint) Rice So
Slide 44: Removal of KCl by Selected Crops
Removal of KCl by Selected Crops: Steady in the United States - Growing Significantly Worldwide 46 Sources: International Plant Nutrition Institute, UN Food and Agriculture Organization, USDA USA Removal of KCl Equivalent by Various Crops ROW Removal of KCl Equivalent by Various Crops 7,261 8,466 -
Slide 45: United States Harvested Crop Acreage
United States Harvested Crop Acreage 47 Sources: UN Food and Agriculture Organization, USDA 72.4 68.8 69.3 70.9 73.6 75.1 70.6 86.5 78.6 79.6 81.3 72.4 73.0 72.5 72.5 74.0 71.3 74.6 64.1 74.7 76.4 76.8 53.1 48.5 45.8 53.1 50.0 50.1 46.8 51.0 55.7 49.9 53.6 23.1 23.8 23.1 23.6 21.7 22.4 21.4 21.7 21.
Slide 46: Brazil, India and China Must Increase Demand
49 To Reach Recommended Application Levels, Brazil, India and China Must Increase Demand China Brazil India sources: IPNI, Potash Corp. (MM Tons KCL) Goal to attain self-sufficiency of food supply History of under-application of potash Need to increase yields Increasing land use for agricultural pur
Slide 47: Fertilizer Use Below Recommended Rates
50 Fertilizer Use Below Recommended Rates Source: Morgan Stanley, Agricultural Products Research, September 4, 2008. 146% Shortfall 86% Shortfall 288% Shortfall Global Application Rates (lb/acre) 60 112 24 59 17 66 0 20 40 60 80 100 120 Nitrogen Phosphate Potash Current Average Application Rate Scie
Slide 48: Return on Potash Investment for Corn & Soybeans
Return on Potash Investment for Corn & Soybeans 51 ROI assumes 158.7 bu/acre and $5.97/bu for corn, 43.4 bu/acre yield and $12.81 for soybeans, $548/ton KCL (crop prices based on Dec. 2011 futures price minus $0.30 basis) as of 5/13/11 Input Costs for Corn ($/bu) Input Costs for Corn ($/acre) Return