Intrepid Potash (IPI) Says Prelim. Q4 Production at 200K - 220K Tons

January 17, 2013 4:40 PM EST
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Intrepid Potash Inc. (Intrepid) (NYSE: IPI) announced today the following preliminary sales and production results for the fourth quarter and full year 2012.

Three Months Ended
Year Ended
December 31, 2012
December 31, 2012
Production (tons)
210,000 - 220,000
790,000 - 800,000
Sales (tons)
195,000 - 205,000
835,000 - 845,000
Average Net Realized Sales Price ($/ton)
$430 - $440
$450 - $455
Cash COGS, net of by-product credit ($/ton)
$175 - $185
$175 - $185
Total COGS ($/ton)
$235 - $245
$235 - $245
Production (tons)
30,000 - 35,000
130,000 - 135,000
Sales (tons)
40,000 - 45,000
120,000 - 130,000
Average Net Realized Sales Price ($/ton)
$340 - $350
$325 - $330
Cash COGS ($/ton)
$205 - $215
$205 - $215
Total COGS ($/ton)
$290 - $300
$280 - $290
Selling and Administrative
$8.0 - $9.5 million
$33.0 - $34.5 million

“Our preliminary results are consistent with our expectations of a strong fall application season, and we were pleased to see quarterly improvement once again in the potash production rate from our East facility,” said Bob Jornayvaz, Intrepid's Executive Chairman of the Board. “Fall fertilizer sales in North America were reflective of robust demand for potash across the markets we serve.”
A fundamental component to Intrepid's success is the commitment to and execution of the long-term capital investment program, which is designed to grow production of lower-cost tons across its portfolio of mining facilities. Each major project remains on budget and continues to progress on all fronts. Total capital investment in 2012 was $245 to $260 million. The amount of capital investment is expected to be roughly comparable in 2013 with the expected completion of the construction of the new HB Solar Solution mine project, the North compaction facility, and a third cavern system in Moab.

Capital investment for 2013 is expected to be funded out of cash and investments, cash flows, proceeds from the unsecured senior notes that are expected to fund in April 2013, and periodic limited utilization of the existing unsecured credit facility.

Two significant milestones occurred in the fourth quarter marking further success in Intrepid's solar solution mining projects, which are designed to produce incremental tons at lower cash costs. In November, as scheduled, Intrepid's HB Solar Solution mine project began pumping potash-enriched brine from the mine into the new solar evaporation ponds. This was a major event keeping the original production timeline on target for late 2013. The HB Solar Solution mine project remains in line with the $200 to $230 million budget, with total capital invested through the end of 2012 in the range of $125 to $130 million.

The other milestone was accomplished with the completion of the development of the second horizontal cavern network in Moab. As planned and on schedule, this second multi-well horizontal cavern system has been put into production, and is expected to benefit the Moab operations beginning with the 2013 evaporation season.

In the fourth quarter, Intrepid declared and paid a special cash dividend of $0.75 per share, or $56.5 million. The cash and investment balance at the end of 2012 was $55 to $60 million.

Additionally, during the fourth quarter of 2012, Intrepid recorded a deferred tax expense of approximately $5.0 to $5.5 million. This deferred income tax expense is the result of the ongoing review of state income tax rates and the application of the updated rate to the net deferred income tax asset. The result of this normal recurring evaluation will be a higher effective tax rate in the fourth quarter of 2012.

Intrepid reports “average net realized sales price,” which is an operating performance measure. Average net realized sales prices are derived by subtracting freight costs from gross sales revenue and then dividing this result by sales tons.

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