Intrepid Potash Inc. on April 14 announced preliminary sales and production results for the first quarter 2011, highlighted the recognition of income associated with deferred insurance proceeds, and provided an update on certain capital projects. On an unaudited basis, during the first quarter of 2011, Intrepid estimates that it produced between 230,000-240,000 st of potash, and sold between 190,000-200,000 st. Potash production during the first quarter includes the seasonal production from the harvest of its Moab solar evaporation ponds. Intrepid estimates its average net realized sales price for potash during the quarter was approximately $435-$445/st.
Intrepid estimates that it produced approximately 25,000-35,000 st of Trio(R) and sold approximately 45,000-55,000 st of the product, with approximately half the sales being standard-sized product. Intrepid estimates that its average net realized sales price for Trio(R) during the quarter was approximately $195-$205/st.
Intrepid reports “average net realized sales price,” which is an operating performance measure commonly used in the potash mining industry. Average net realized sales prices are derived by subtracting freight costs from gross sales revenue and then dividing this result by sales tons.
Intrepid expects to release its first quarter 2011 financial results after market close May 4, 2011.
Intrepid also reports that in March 2011 it received its air-quality-related construction permit for the dense media separation plant of its approximately $85-$90 million Langbeinite Recovery Improvement Project, and subsequently commenced plant construction. It expects the dense media separation plant to be in operation during the fourth quarter of 2011. Intrepid is in the permitting process for the granulation plant of this project, and is prepared to commence construction on this facility as soon as the permit is issued. Prior to completion of this project, Intrepid continued to focus on increasing recoveries of Trio(R) back to historical levels and began to see an improvement in product recoveries beginning in March.
Also during the first quarter, Intrepid completed the construction and commissioning of its product warehouses at its East mine surface facility, and placed these assets into service.
Intrepid also finalized insurance settlement amounts related to its previous East product inventory warehouse, which was the result of an insurance claim from a wind event that occurred in 2006. As a result, the deferred insurance proceeds that were recorded as a deferred item on the balance sheet as of Dec. 31, 2010 $11.7 million, plus approximately $0.8 million of additional insurance proceeds are expected to be recognized as income in the first quarter of 2011. The total of approximately $12.5 million will be recorded as insurance settlements in excess of property losses as income in the other income section of its income statement, in a manner consistent with the presentation in prior periods. Intrepid said there is no cash impact associated with this event in the first quarter, as the previously deferred item was paid to the company prior to Dec. 31, 2010, and the additional payment of approximately $0.8 million was paid to Intrepid in April 2011.
