Intrepid Potash Sees Announces Preliminary Sales and Production Results; Q4 Potash Sales 175,000 – 185,000 Tons
Courtesy of Benzinga.
Intrepid Potash, Inc. (NYSE: IPI) announced today preliminary sales and production results for the fourth quarter and full year 2011 and provided an update on its capital investment program.
On a preliminary basis, during the fourth quarter of 2011, Intrepid estimates that it produced between 190,000 and 200,000 tons of potash and sold between 175,000 and 185,000 tons of potash. Production results for the quarter include the seasonal harvest from the Moab, Utah mine.
Intrepid estimates that its average net realized sales price for potash sold during the quarter was approximately $490 – $500 per ton. Potash sales during the quarter were reflective of the decreased farmer demand for fertilizer experienced in the latter half of the fourth quarter of 2011. We believe this pause in demand was the direct result of farmers feeling a sense of economic unease over the general global market uncertainty resulting from the European debt crisis, political gridlock in Washington and the slow pace of economic recovery. Given this backdrop, farmers chose to focus on seed and equipment purchases and to defer purchase of their fertilizer inputs until the spring of 2012.
Intrepid’s cash cost of goods sold for potash for the full year, net of by-product credits, is estimated to be between $170 and $180 per ton. We experienced higher per ton costs in the fourth quarter, which were largely driven by higher per ton costs from our East Mine as maintenance and construction-related activities impacted plant operations. Operating time at our East plant was reduced in part due to production disruptions associated with the construction of the Dense Media Separation component of our Langbeinite Recovery Improvement Project, as well as the initial commissioning of the new DMS plant and related technology.
On a preliminary basis, during the fourth quarter of 2011, Intrepid estimates that it produced approximately 30,000 – 35,000 tons of Trio® and sold approximately 25,000 – 30,000 tons of Trio®. Intrepid estimates that its average net realized sales price for Trio® during the quarter increased to approximately $280 – $290 per ton. Trio® sales during the quarter were limited by our production and low inventory levels, as the demand for Trio® remained strong. We commenced the commissioning of the DMS component of our LRIP in the fourth quarter of 2011. Commissioning of the DMS is expected to continue into early 2012. We anticipate increased Trio® production once the DMS is fully commissioned.
For the full year ended December 31, 2011, Intrepid invested approximately $135 – $140 million in its capital investment program, including the aforementioned substantial completion of construction and commencement of commissioning of the DMS, and the installation and commissioning of a new compactor at our Wendover, Utah facility. Intrepid’s capital strategy remains focused on increasing reliability, efficiency, and productivity, all with the goal of decreasing per ton operating costs. In 2012, Intrepid expects to invest approximately $225 -$300 million related to its capital investment program that is expected to be funded from existing cash and investments and operating cash flows.
Significant capital investments in 2012, beyond sustaining capital of approximately $50 million, will be focused on the HB Solar Solution mine project in Carlsbad New Mexico, pending a favorable Record of Decision on the project from the Bureau of Land Management; the construction of new compaction capacity at our North facility in Carlsbad, New Mexico; the addition of new solution mining wells at our Moab, Utah facility; and the completion of the granulation plant component of our LRIP project at our East plant in Carlsbad, New Mexico.
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