Slide 1: Investor Presentation October 2012
Investor Presentation October 2012
Slide 2: Cautionary Statements Regarding Forward Looking Information
Cautionary Statements Regarding Forward Looking Information 2 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 developme
Slide 3: Intrepid Potash: Geographically Advantaged, Potash-Only Company
Intrepid Potash Geographically Advantaged, Potash-Only Company Intense margin focus: Highest margin North American potash producer Strategic marketing and production flexibility Capital investment is focused on production growth through incremental low cost tons 3 Florida New Mexico Texas Oklahoma K
Slide 4: Company Overview
Company Overview The largest U.S. producer of potash Only western world producer created and dedicated solely to potassium- related products Supplies ~1.5 percent of global demand and ~9.4 percent of U.S. demand One of only two global producers of sulfate of potash magnesia, marketed as Trio® Five a
Slide 5: Current Potash Market
Crop insurance programs should mitigate the impact from the drought conditions across the Midwest Market-by-market variability from weather impacts Summer fill purchasing activity progressing at a solid pace Tightening stocks-to-use ratio and decreased yields should drive global and U.S. planting in
Slide 6: Geographically Advantaged Assets
Geographically Advantaged Assets 6 Average Potash Consumption in Intrepid’s Markets is Greater than 5x of Intrepid’s Average Production Intrepid Conventional Mine Locations Low High Sources: Association of American Plant Food Control Officials (AAPFCO), The Fertilizer Institute (TFI), Fertecon, USDA
Slide 7: Intrepid's Potash Sales Price Advantage vs. North American Competitors
2005 2006 2007 2008 2009 2010 2011 2012 YTD Intrepid advantage vs. N.A. competitors $29 $43 $39 $88 $151 $61 $96 $64 Intrepid’s Potash Sales Price Advantage vs. North American Competitors 7 Notes: (1) Average net realized sales price is an operating performance measure calculated as gross sales less
Slide 8: Intrepid's Consistent Potash Margin Advantage
Intrepid’s Consistent Potash Margin Advantage 8 Intrepid’s potash cash margin advantage(1) has averaged $30 per ton over the last five years (1) Cash Margin Advantage Intrepid consistently generates more margin per ton sold than our North American competitors Notes: (1) Cash margin advantage is calc
Slide 9: Diversified Markets and Customer Base with Flexible Product Mix
Diversified Markets and Customer Base with Flexible Product Mix Trio® markets further diversify crops and customers Industrial market primarily consists of oil and gas drillers Potash used as a nutritional supplement in animal feed Ability to granulate ~80% of current production, providing flexibili
Slide 10: 2012 Capital Investment Budget of $225-$300 Million
Our 2012 Capital Investment Budget of $225 - $300 million Represents the Highest Level of Capital Investment in Our History Capital Projects are Focused on Growth, Flexibility & Margin 10 Growth Flexibility Margin Incremental low cost tons HB will represent an estimated 25 percent increase in potash
Slide 11: Major 2012 Capital Investments
Major 2012 Capital Investments HB Solar Solution Mine North Compaction Moab Cavern System Since Inception Intrepid has Invested Over Half a Billion Dollars into its Mines and Facilities 11 Major Capital Projects Milestones Facility Year Completed / Estimated Completion Horizontal Potash Cavern Syste
Slide 12: HB Solar Solution Mine – Production Growth through Incremental Low-Cost Tons
Five million tons of proven and probable reserves Capital investment of $200-$230 million Production cost per ton estimated to be $60 to $80 per ton, making HB one of the low cost potash mines in North America Estimated annual production potential – 150,000-200,000 tons with higher volumes in earlie
Slide 13: HB Solar Solution Mine – Production Growth through Incremental Low-Cost Tons
13 HB Solar Solution Mine – Production Growth through Incremental Low-Cost Tons Potash Pillar HB Solar Solution Mine Pond Liner Installation Construction commenced in March 2012 Invested $60.5 million through June 30, 2012 Engineering, design and procurement Pond construction Pipeline construction W
Slide 14: Additional Granulation Capacity is Key to Marketing and Production Flexibility
Upgrade of our existing granulation facility designed to increase capacity and further improve product quality New production from HB Solar Solution mine Increased production capacity from our West mine Total capital investment for the project is expected to be approximately $95 to $100 million 14 A
Slide 15: East Facility Recovery & Process Improvements Deliver Growth & Margin
East Facility Recovery & Process Improvements Deliver Growth & Margin East Facility Long-Term Improvement Plan Improve plant operating performance Improve potash and Trio® production levels Complete Commissioning of LRIP Increase overall plant throughput rates Increase feedstock to langbeinite plant
Slide 16: Langbeinite Recovery Improvement Project
Langbeinite Recovery Improvement Project – Focused on Capturing Growth & Margin Designed to increase Trio® recoveries to approximately 50 percent, resulting in: Production growth potential of 100,000 – 120,000 additional tons per year representing an annual ~75 percent increase in Trio® production R
Slide 17: Summary
17 Summary The Only Western World Potash Pure-Play The Highest Per Ton Average Net Realized Sales Price and Margin of any North American Potash Producer Geographically Advantaged Assets Serving Diversified Markets and Customer Base Growth, Flexibility and Margin-Focused Decision Making Capital Inves
Slide 18: Appendix
Appendix ® Supplying a Growing America™
Slide 19: Financial Overview
Financial Overview 19 Adjusted EBITDA(1) (In millions) Balance Sheet as of June 30, 2012 (1) This is a financial measurement not calculated based on U.S. Generally Accepted Accounting Principles (Non-GAAP). Non-GAAP reconciliation available in the appendix to this presentation. Net Income (In millio
Slide 20: Financial Outlook as of August 1, 2012
Financial Outlook as of August 1, 2012 20 Three Months Ended Year Ended September 30, 2012 December 31, 2012 Potash Production (tons) 180,000 - 200,000 785,000 - 825,000 Sales (tons) 220,000 - 250,000 820,000 - 870,000 Cash COGS, net of by - product credit ($/ton) $170 - $185 $175 - $190 Total COGS
Slide 21: Intrepid Production Volume History & Estimated Productive Capacity
(1) Productive capacity is affected by achieving the benefit of designed capacity and recovery improvement investments, operating rates, recoveries, mining rates, and the amount of development work that Intrepid performs. Therefore, actual production rates for mining companies tend to be lower than
Slide 22: Non-GAAP Reconciliation: Calculation of Adjusted EBITDA
Non-GAAP Reconciliation Calculation of Adjusted EBITDA (in thousands) 22 Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is a non-GAAP financial measure that is calculated as net income adjusted for the add back of interest expense (including derivatives
Slide 23: Non-GAAP Reconciliation: Calculation of Adjusted Net Income
Non-GAAP Reconciliation Calculation of Adjusted Net Income (in thousands) 23 Adjusted net income is a non-GAAP financial measure that is calculated as net income adjusted for significant non-cash and infrequent items. Examples of non-cash and infrequent items include insurance settlements from prope
Slide 24: Historical Quarterly Production and Sales Summary
Historical Quarterly Production and Sales Summary 24 2010 March 31 June 30 September 30 December 31 March 31 June 30 September 30 December 31 March 31 June 30 Potash 172 165 166 224 234 209 173 197 218 170 Trio® 57 39 32 31 31 44 35 31 30 33 Potash 243 129 221 216 196 225 190 183 203 184 Trio® 70 63
Slide 25: Why Potash Only? Market Structure for Key Fertilizer Nutrients
Why Potash Only? Market Structure for Key Fertilizer Nutrients Potash Nitrogen Phosphate (5) Producing Countries 12 ~60 ~40 Key Inputs Potash ore Natural gas Phosphate rock Sulfuric acid Ammonia % of Overall Fertilizer Market (1) 17% 59% 24% Market Share of Top 5 Producers(2) 64% 13% Ammonia 39% Ure
Slide 26: Global Industry Susceptible to Production Interruptions & Supply Shocks
Depleted Conventional Mines Mines Currently With Less than 15 Years Reserve Life Theodore, Amelie, Marie Louis mines- France Pasquasi and San Cataldo mines - Italy Salzdetfurth, Friedrichshall, Bergmannssegen-Hugo, Siegfried-Giesen, and Niedersachen-Riedel - Germany Trona, California Horizon-Amax, W
Slide 27: Current Crop Economics Offer Historically Strong Returns
- 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 drying. - Land costs are shown as
Slide 28: Fundamentals of Increasing Population Continue to Drive Grain and Potash Demand
Fundamentals of Increasing Population Continue to Drive Grain and Ultimately Potash Demand Over the Long Term 28 Note: Grains include corn, wheat, barley, oats and sorghum. Stocks-to-use ratio is ending inventory / consumption for that year; 2012E data updated monthly. Sources: United Nations Food a
Slide 29: Potash Production and North American Inventory Levels
Potash Production and North American Inventory Levels 29 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 20,000 35,000 50,000 65,000 80,000 500 2,500 4,500 1
Slide 30: United States Potash Consumption
United States Potash Consumption 30 Sources : Fertecon, United States Department of Agriculture (USDA). Potash consumption is shown in fertilizer years (July – June). Grains stocks include barley, corn, oats, sorghum and wheat. Potash fertilizer consumption has remained relatively constant with an a
Slide 31: Nutrient Removal Has Increased Dramatically in the US
Nutrient Removal Has Increased Dramatically in the US 31
Slide 32: To Reach Recommended Application Levels, Brazil, India and China Must Increase Demand
To Reach Recommended Application Levels, Brazil, India and China Must Increase Demand 32 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 33: Return on Potash Investment for Corn & Soybeans
Return on Potash Investment for Corn & Soybeans 33 Forward looking ROI assumes 122.8 bu/acre and $7.27/bu for corn, 35.3 bu/acre yield and $15.22 for soybeans, $505/ton KCL (crop prices based on Dec. ‘12 futures price minus $0.30 basis as of 10/4/12, KCL price based on Green Markets Midwest FOB ware