Slide 1: Investor Presentation September 2011
Investor Presentation September 2011 Supplying a Growing America™
Slide 2: Cautionary Statements Regarding Forward-Looking Information
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: Strategically Located, Potash-Only Company
Intrepid Potash Strategically Located, Potash-Only Company 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 Innovative production methods 3 Florida New Mexico T
Slide 4: Company Overview
Company Overview 4 The largest U.S. producer of potassium fertilizer Only western world producer created and dedicated solely to potash-related products Supplies ~1.5% of global demand and ~9.4% of U.S. demand 1 of 2 global producers of sulfate of potash magnesia, marketed as Trio® 5 active producti
Slide 5: Current Potash Market
Robust agricultural commodity prices are supportive of farmer economics Strong summer warehouse fill expected to continue through September Timing of fall weather window will determine harvest dates, warehouse depletion / demand, and farmers ability to apply fertilizer Solid fertilization rates and
Slide 6: A Fundamental Shift Has Occurred in the Potash Market Over the Last Ten Years
A Fundamental Shift Has Occurred in the Potash Market Over the Last Ten Years U.S. Mid-West (fob warehouse) $560-590 spot Saskatchewan (fob mine) $545-557 spot E.C.L. America cfr $499-508 spot SE Asia cfr $499 spot W. Europe (cfr import) $459-472 spot India (cfr Indian port) (standard) $426-481 Cont
Slide 7: Few Deposits, Fewer Global Producers
Few Deposits, Fewer Global Producers 7 2010 Production– 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 8: Potash Deliveries Track Population Growth and Global Demand is Growing
Potash Deliveries Track Population Growth and Global Demand is Growing 8 Long-term correlation of potash deliveries to historical global population growth Population growth continues Utilizing the 1.1% growth rate in world population of 6.9 billion people: Each year there are approximately 75 millio
Slide 9: Fundamentals of Increasing Population Continue to Drive Grain Demand
Fundamentals of Increasing Population Continue to Drive Grain Demand Over the Long-Term 9 Note: Grains include corn, wheat, barley, oats and sorghum. Stocks to use ratio is average inventory / consumption for that year; data updated monthly. Sources: United Nations Food and Agriculture Organization
Slide 10: Strong Returns for Farmers
Strong Returns for Farmers 10 - 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 Opp
Slide 12: Strategically Located Assets
Strategically Located Assets 12 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: Intrepid's Potash Price Advantage: Strategically Located and Lower Royalties
2005 2006 2007 2008 2009 2010 2011 YTD Intrepid average net realized sales price $162 $179 $194 $486 $541 $363 $453 Intrepid advantage vs. N.A. competitors $29 $43 $39 $88 $151 $61 $88 (2) Intrepid’s Potash Price Advantage: Strategically Located and Lower Royalties 13 Sources: Green Markets and Fert
Slide 14: Diversified Markets and Customer Base with Increased Flexibility in Product Mix
Intrepid sells into three different markets: Industrial is primarily deliveries of standard potash to distributors to oil and gas drillers Ability to granulate ~80% of current production, providing flexibility to meet end market demand Market Product Size Agricultural Granular Industrial Standard An
Slide 15: Capital Investment Strategy is Targeted on Improving Margin
Intrepid’s Capital Investment Strategy is Targeted on Improving Margin 15 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 Wendover Compactor Langbeinite Granulation Plant North Compaction Upgrade 16 Additional Mining Capacity Additional Mine Panels Additional Moab Horizontal Potash Caverns H
Slide 17: Additional Granulation Capacity is Key to Marketing and Production Flexibility
Intrepid is focused on upgrading the efficacy of its granulation capacity throughout its operations Increased granulation capacity provides flexibility in production between granular and standard and allows Intrepid to right size production to meet market demand 17 Additional Granulation Capacity is
Slide 18: 2011 Capital Investment Budget of $140 to $165 million
2011 Capital Investment Budget of $140 to $165 million 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 Additi
Slide 19: HB Solar Solution Mine
Based on third-party feasibility study. HB Solar Solution Mine expected to be among the lower-cost potash mines in North America Same proven solar evaporation and solution mining technology as used in Moab Will share some infrastructure with existing Carlsbad operations Production cost per ton estim
Slide 20: Langbeinite Recovery Improvement Project: A Market Building Opportunity
Langbeinite Recovery Improvement Project: A Market Building Opportunity Initial investment to recover langbeinite from the East Mine in 2005 Langbeinite Recovery Improvement Project represents the next step in the development of Intrepid’s langbeinite business Optionality to add on to the project to
Slide 21: Langbeinite Recovery Improvement Project
Langbeinite Recovery Improvement Project Construction on the dense media separation plant and the granulation plant well underway Dense media separation plant to be tied into existing facility in September Expected to increase Trio® recoveries from the current levels of approximately 30-35 percent t
Slide 22: Final Thoughts
23 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 23: Appendix
POTASH Appendix
Slide 24: Conversion Rates
25 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 25: Solid Financial Performance
26 Solid Financial Performance Adjusted EBITDA(1) (In millions) Balance Sheet as of June 30, 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 26: Selected Financial Data
27 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 27: Calculation of Adjusted EBITDA
Calculation of Adjusted EBITDA 28 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 28: Calculation of Adjusted Net Income
Calculation of Adjusted Net Income 29 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 29: Historical Quarterly Production and Sales Summary
30 Historical Quarterly Production and Sales Summary Quarter ended September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, Potash 200 201 137 131 112 124 172 165 166 224 234 209 Trio® 50 34 42 45 60 45 57 39 32 31 31 4
Slide 30: Estimated Long-Life Reserves
31 Estimated Long-Life Reserves (1) Product / Operations Date Mine Opened Current Extraction Method Minimum Remaining Life (years) Muriate of Potash Solar Moab 1965 Solution 125 Wendover 1932 Shallow Brine 30 HB Solar Solution Mine(2) N/A Solution 28 Conventional Carlsbad West 1931 Underground 158 C
Slide 31: Intrepid Production Volume History & Outlook
32 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 32: Intrepid Average Net Realized Sales Price Advantage
Intrepid Average Net Realized Sales Price Advantage 33 Source: Company Reports, Intrepid Quarterly Net Realized Sales Prices Q2 ‘10 Q3 ‘10 Q4 ‘10 Q1 ‘11 Q2 ’11 Intrepid $376 $343 $363 $442 $462 Mosaic $305 $300 $300 $325 $366 Agrium $322 $297 $327 $360* $420* Potash Corp. $280 $277 $293 $332 $377 *
Slide 33: The Only Western World Potash Pure-Play
34 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 34: Why Potash Only?
35 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 35: Global Industry Susceptible to Production Interruptions & Supply Shocks
36 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 36: Carlsbad Potash Area
37 Carlsbad Potash Area
Slide 37: United States Potash Consumption
United States Potash Consumption 38 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 38: Ethanol Has Become a Steady Demand Driver
Ethanol Has Become a Steady Demand Driver Ethanol demand has driven growth in corn use over the last decade Other uses have remained relatively flat Ethanol accounts for approximately 37% of projected total corn use over the next decade US ethanol production has reached record levels in the last two
Slide 39: Potash Production and North American Inventory Levels
40 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) Global Production North American Production 5,000 15,000 25,000 35,000 45,000 55,000 65,000 75,000 500 1,0
Slide 40: Farmers Recognize the Agronomic Benefits of Potash
Farmers Recognize 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 significan
Slide 41: Nutrient Removal of Various Crops
Nutrient removal of various crops 42 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 42: Removal of KCl by Selected Crops
Removal of KCl by Selected Crops: Steady in the United States - Growing Significantly Worldwide 43 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 43: United States Harvested Crop Acreage
United States Harvested Crop Acreage 44 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 44: World Harvested Area Increasing
World Harvested Area Increasing 45 Source: UN Food and Agriculture Organization USA Total Area Harvested ROW Total Area Harvested - 50 100 150 200 250 300 350 400 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Million Acres Legumes, Roots, Tubers & Tree Nuts Fruits and Vegetables Fiber Crops Oil
Slide 45: Brazil, India and China Must Increase Demand to Reach Recommended Application Levels
46 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 46: Fertilizer Use Below Recommended Rates
47 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 47: Return on Potash Investment for Corn & Soybeans
Return on Potash Investment for Corn & Soybeans 48 ROI assumes 148.1 bu/acre and $7.06/bu for corn, 41.8 bu/acre yield and $13.96 for soybeans, $575/ton KCL (crop prices based on Dec. 2011 futures price minus $0.30 basis as of 09/09/11) Input Costs for Corn ($/bu) Input Costs for Corn ($/acre) Retur