Intrepid Potash Inc. reported a 145 percent increase in potash sales volumes in the first quarter ending March 31, 2010. “Our sales of 243,000 tons of potash during the first quarter was our second best quarter ever in terms of sales tons, and is strong evidence of the market reverting to more normal demand patterns,” said Intrepid CEO Bob Jornayvaz. “During the quarter, we substantially reduced the inventory that we had built in 2009, and as the spring planting season has gotten underway, our granular inventories are fully committed in April and will remain tight in May.” Year-ago potash volumes were 99,000.
The company said it is virtually out of red granular product.
Sales of Trio?äó, the company’s langbeinite product, were also up, at 70,000 st from the year-ago 38,000 st.
Despite the increased volumes, Intrepid reported reduced quarterly earnings. The company cited lower average realized sales prices that were adversely impacted by other North American producers, significantly reducing sales prices at the end of 2009, as well as Intrepid’s subsequent decision to compete at the lower pricing level. Jornayvaz reiterated to analysts that the company had brisk sales in November at higher prices ?Çô and then, very unexpectedly, prices fell.
Intrepid’s average potash prices were $354/st for the quarter, compared to the year-ago $727/st. First-quarter net potash sales were $86 million, compared to the year-ago $71.7 million. First-quarter production was 172,000 st, versus the year-ago 137,000 st.
Intrepid said that both potash and Trio prices moved up $15/st during the quarter.
First-quarter Trio prices were $167/st, versus the year-ago $330/st. First-quarter Trio net sales were $11.6 million, versus the year-ago $12.5 million. First-quarter production was 57,000 st, versus the year-ago 42,000 st.
Speaking to analysts, Jornayvaz was upbeat about sales going forward, saying that despite concerns that dealers are reluctant to buy, “they are nowhere near as reluctant as they were last summer. And they were a whole lot less reluctant in the fall and now we’re seeing more normalized patterns.” However, he said the company is still not seeing the robust sales of 2007 and 2008. He said the company is seeing distinct continual steady demand.
Intrepid Senior Vice President for Marketing and Sales R. L. Moore added that the company has seen a good recovery in the livestock market, which is in the company’s backyard. “Grass requires a lot of potash and this isn’t something that you just apply one time a year ?Ǫ our sales are going to continue though the summer months for people that need product right then.”
Moore added that the spring season in the Pacific Northwest is still to kick in, and there has been a late season start in California. “So, we still have some spring season ahead of us.”
Intrepid reports that it is moving forward with the Langbeinite Recovery Improvement Project, which is designed to increase Intrepid’s recovery of langbeinite to approximately 50 percent, while at the same time reducing process water usage and providing the flexibility to allow Intrepid to sell all of the production into the granular market. Langbeinite (sulfate of potash magnesia) is a specialty fertilizer that contains potassium, magnesium, and sulfur, and is low in chlorides.
The final engineering will commence in May 2010, followed by construction, with completion and operation of the project expected by the end of 2011. The total capital investment for this project is expected to be between $85 and $90 million. Included in this range is $3 million that has already been invested in engineering-related services. The project plan estimates are that Intrepid will invest approximately $35 million in the project during the remainder of 2010, and the balance in 2011.
Intrepid said that although it has r