Intrepid Potash New Capital Investments Support Future ...Sep 07, 2012 · Intrepid Potash, Inc....

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Intrepid Potash New Capital Investments Support Future

Opportunities

Intrepid Potash New Capital Investments Support Future

Opportunities

MMSA – Colorado SectionSeptember 7, 2012

MMSA – Colorado SectionSeptember 7, 2012

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Supplying a Growing America™

Presentation OverviewPresentation Overview

� Company Overview

� Capital Investment Overview

� Presentation of Select Capital Investment Projects

– HB Solar Solution Mine (Carlsbad)

– Langbeinite Recovery Improvement Project (Carlsbad)

– Compactor Upgrades

– Moab

– Wendover

– Carlsbad North Plant

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Intrepid Potash, Inc. OverviewIntrepid Potash, Inc. Overview

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� 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 active production facilities – growing to six with the construction of the HB Solar Solution mine

� Balance sheet strength provides ability to execute on robust capital investment program and disciplined business development activity

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Intrepid PotashGeographically Advantaged, Potash-Only CompanyIntrepid PotashGeographically Advantaged, Potash-Only Company

� Highest margin North American potash producer

� Strategic marketing and production flexibility

� Capital investment is focused on production growth

through incremental low cost tons

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Florida

New Mexico

Texas

Oklahoma

Kansas

Nebraska

SouthDakota

Montana

Wyoming

Colorado

Utah

Idaho

Arizona

Nevada

Washington

California

Oregon

Kentucky

Maine

New York

Pennsylvania

Michigan

Vermont

NewHampshire

Virginia

WestVirginia

OhioIndianaIllinois

NorthCarolinaTennessee

SouthCarolina

Alabama

Mississippi

Arkansas

Louisiana

Missouri

Iowa

Minnesota

Wisconsin

Georgia

NorthDakota

Carlsbad Reserve Development Assets

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HB Solar Solution Mine Development Property

Operating Solar Evaporation Solution Mine

Operating Conventional Mine

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Includes:

Oil & Gas

Flux

� 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 flexibility to meet

end market demand

Capital Investment for Diversified Markets and Flexible Product MixCapital Investment for Diversified Markets and Flexible Product Mix

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Potash Sales for 2011

Industrial

AgriculturalAnimalFeed

Includes:

Barley

Citrus

Corn

Cotton

Hay

Nuts

Potatoes

Rice

Soybeans

Tobacco

Vegetables

Wheat

Product Size 2011 2012 YTD

Agricultural Granular 79% 79%

Industrial Standard 14% 14%

Animal Feed Standard 7% 7%

Includes:

Cattle

Pet Food

Pork

Poultry

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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 & MarginCapital Projects are Focused on Growth, Flexibility & Margin

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GrowthGrowth FlexibilityFlexibility MarginMargin

� Incremental low cost tons

� HB will represent an

estimated 25 percent

increase in potash

production volumes

Pro

ject

Ben

efi

tsP

roje

ct

Ben

efi

ts

� Capability to respond to

changing market and

customer demands

� Produce products with

best margin profile

� Increased recoveries

from langbeinite ore

� Lower per ton operating

costs

� Langbeinite dense media

separation plant

� Modernization of plant

assets

� Focus on cash cost

component of production

� Langbeinite granulation

� Moab compaction

� North compaction

� Wendover compaction

� HB Solar Solution Mine

� Langbeinite Recovery

Improvement Project

� Expansion and creation

of Moab horizontal

potash caverns

Majo

r C

ap

ital

Pro

jects

Majo

r C

ap

ital

Pro

jects

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$22$12

$31

$94$104 $93

$136

$225 - $300

$0

$50

$100

$150

$200

$250

$300

2005 2006 2007 2008 2009 2010 2011 2012E

An

nu

al C

ap

ita

l In

vestm

en

t in

$m

m

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 FacilitiesSince Inception Intrepid has Invested Over Half a Billion Dollars into its Mines and Facilities

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Select Capital Investment Projects to be PresentedSelect Capital Investment Projects to be Presented

� HB Solar Solution Mine (Carlsbad)

� Langbeinite Recovery Improvement Project (Carlsbad)

� Compactor Upgrades (Utah and Carlsbad)

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HB Solar Solution MineHB Solar Solution Mine

� Why Invest in Solution Mining?

� Project Overview

� Benefits of Capital Investment

– Production Growth

– Incremental Reduction in Overall Cost per Ton at Carlsbad Operations

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Why Invest in Solution Mining?Why Invest in Solution Mining?

�A proven, effective and safe mining technique

�Maximizes recovery of a potash deposit after conventional mining is completed

�Used successfully around the world – including Intrepid’s facilities in Utah

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Understanding How Solution Mining WorksUnderstanding How Solution Mining Works

� Pumps inject a salt-saturated brine underground to dissolve and recover potash in previously mined areas

� Potash is preferentially dissolved and extracted from existing pillars and surrounding floors and walls

� Existing salt and rock is left largely undisturbed – reducing the level of potential surface disturbance

Step 1: Recover potash from existing mine works

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� Once saturated with potash, the brine is pumped out of the mine works through extraction wells

� Pipelines transport and deposit the saturated brine into lined solar evaporation ponds located on Intrepid’s property

� The brine evaporates and leaves behind salt and potash on top of the liner’s protective salt layer

Step 2: Transport brine to solar evaporation ponds

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� Precipitated salt and potash are harvested from the evaporation ponds

� Then transported for processing to a flotation plant

� Potash is separated from the salt and refined for sale

Step 3: Separate and refine potash

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HB Solar Solution Mine - Project ComponentsHB Solar Solution Mine - Project Components

� Uses solution mining and solar evaporation to extract potash from previously conventionally mined areas

� Environmentally friendly

� 12 to 18-month construction phase including:– Water supply wells and associated

piping– 6 injection wells and 5 extraction

wells with 37 miles of pipeline (primarily on public land)

– 572 acres of evaporation ponds (on Intrepid property)

– A new flotation plant

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Supplying a Growing America™15

HB Solar Solution Mine – Key FactsHB Solar Solution Mine – Key Facts

� Five million tons of proven and probable reserves (28 year mine life)

� 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 – 150,000-200,000 tons with higher volumes in earlier years

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HB Solar Solution Mine – Production Growth through Incremental Low-Cost TonsHB 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

– Wells for water, injection and extraction

� Leverages our solution mining and solar

evaporation expertise

� Improves our overall cost profile and margin

opportunity

� Anticipated production timeline:

– First production to begin fall of 2013

– Ramp up of production expected in 2014

– Production levels increasing into 2015

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Langbeinite Recovery Improvement Project (LRIP)Langbeinite Recovery Improvement Project (LRIP)



– Improved Recovery


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LRIP Project OverviewLRIP Project Overview

� Replaces existing East langbeiniteplant

� New langbeinite recovery plant

– Dense media separation (DMS)

– De-brining and drying (D&D)

– Pellitization

� Commissioning

– DMS and D&D commenced in Dec 2011

– Pelletizing commenced in April 2012

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LRIP – Benefits of Capital InvestmentLRIP – Benefits of Capital Investment

� Designed to increase Trio® recoveries to approximately 50 percent, resulting in:

– Production growth of 100,000 – 120,000 additional tons per year representing an annual ~75 percent increase in Trio® production

– Reduced per ton cash production cost

� Capacity to granulate 100 percent of standard Trio®

production, effectively tripling our granular capacity

� Total project investment on budget, at $85mm - $90mm

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Compaction Upgrade ProjectsCompaction Upgrade Projects

� Purpose




– Improved Flexibility and Marketability

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Purpose - Additional Granulation Capacity is Key to Marketing and Production FlexibilityPurpose - Additional Granulation Capacity is Key to Marketing and Production Flexibility

Focus on Increasing Granulation Capacity at all Facilities

Facility Product Anticipated Granulation Capacity Estimated In-Service Date

Moab, Utah Potash 100 percent of annual production In service

Wendover, Utah Potash 100 percent of annual production In service

Carlsbad, New MexicoNorth Facility

Potash100 percent of annual production from West Mine and anticipated HB Solar Solution Mine production

Commenced construction in Q2 2012; estimated in service date in the first half of 2013

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� Upgrade of existing granulation facility to provide capacity to granulate all mill concentrates

� Commissioned in December 2010

� Total capital investment - $10 million

� Excellent product quality

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Utah Compaction FacilitiesUtah Compaction Facilities

Moab Compaction Project Moab Compaction Project

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� Upgrade of existing granulation facility to improve compaction quality and provide capacity to granulate all mill concentrates

� Commissioned in December 2011

� Total capital investment - $13.1 million

� Excellent product quality

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Utah Compaction FacilitiesUtah Compaction Facilities

Wendover Compaction Project Wendover Compaction Project

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� 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

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Additional Granulation Capacity is Key to Marketing and Production FlexibilityAdditional Granulation Capacity is Key to Marketing and Production Flexibility

North Compaction Project North Compaction Project

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Summary

� Capital Investment Program Targeting:

� Growth of Incremental Low Cost Tons

� Increased Flexibility and Product Marketability

� Improved Margins

Intrepid Potash New Capital Investments Support Future ...Sep 07, 2012 · Intrepid Potash, Inc....

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