What changed in this filing

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Item 1. Business

2021-03-02 compared with 2020-03-03 · 83 added, 59 removed, 335 unchanged (30% of the section changed)

9 unchanged sentences

We produce Trio ® from our conventional underground East mine in Carlsbad, New Mexico.

Until mid-2016, we also produced potash from our East and West mines in Carlsbad, New Mexico.

In April 2016, we converted our East facility from a mixed-ore facility that produced both potash and Trio ® to a Trio ® ‑only facility.

In addition, in early July 2016, we idled mining operations at our West facility and transitioned the facility into care and maintenance.

These changes were designed to increase our production of Trio ® , a product that had traditionally shown more resilience to pricing pressure than potash, and to lower costs in a time of declining potash prices.

We have water rights in New Mexico under which we sell water primarily to support oil and gas development in the Permian Basin near our Carlsbad facilities.

We continue to work to expand our sales of water.

In May 2019, we acquired certain land, water rights, other related assets in Lea County, New Mexico, from Dinwiddie Cattle Company.

We refer to these assets and operations as "Intrepid South." The purchase price was $53 million .

A reduction of $12 million from the original $65 million purchase price was agreed upon by the parties prior to closing subject to issues identified in the diligence process.

Dinwiddie Cattle Company also reserved a 20 -year, 10% royalty, proportionally reduced as to our interest, on certain produced water disposal revenue related to Intrepid South and certain other properties located near Intrepid South.

We capitalized $3.2 million of acquisition fees related to the purchase of the Intrepid South Assets.

In May 2019, we acquired certain land, water rights, state grazing leases for cattle, and other related assets from Dinwiddie Cattle Company.

We refer to these assets and operations as "Intrepid South." Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights to customers, where such sales provide a solution to a customer's operations in the oil and gas industry.

Our principal offices are located at 1001 17 th Street, Suite 1050, Denver, Colorado 80202, and our telephone number is (303) 296-3006.

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Year Ended December 31,

2020 2019 2018

Potash 47 % 47 % 52 %

33 % 29 % 31 %

Water 10 % 12 % 10 %

Salt 4 % 6 % 2 %

Magnesium Chloride 2 % 2 % 3 %

We have three segments:

potash, Trio ® , and oilfield solutions.

Prior to the adoption of Accounting Standards Codification ("ASC") Topic 606 Revenue from Contract with Customers ("ASC 606"), on January 1, 2018, we accounted for the sale of byproducts as a credit to cost of goods sold.

Brines 1 % 1 % 1 %

Other 3 % 3 % 1 %

Total 100 % 100 % 100 %

We sell potash into three primary markets:

1 unchanged sentence

Potash is sold in different product sizes, such as granular, standard, and fine standard.

The agricultural market predominately uses granular-sized potash, while the industrial and animal feed markets mostly use standard-

and fine standard-sized product.

The agricultural market predominately uses granular-sized potash, while the industrial and animal feed markets mostly use standard- and fine standard-sized product.

We have the flexibility to produce all of our product in a granular form, which decreases our dependence on sales of any one particular size of potash and any particular market.

14 unchanged sentences

We also offer potassium chloride ("KCl") real-time mixing services on location for hydraulic fracturing operations and trucking services.

In May 2019 we acquired Intrepid South as part of our strategy to expand our sales of water and other related products and services that support oil and gas development in the Permian Basin in southeast New Mexico.

In May 2019, we acquired certain land, water rights, state grazing leases for cattle, and other related assets from Dinwiddie Cattle Company that support oil and gas development in the Permian Basin in southeast New Mexico.

Our other oilfield related products and service offerings include, but are not limited to, caliche, right-of-way agreements, surface damages and easements, and a produced water royalty.

We refer to these assets and operations as "Intrepid South." Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights, to customers, where such sales provide a solution to a customer's operations in the oil and gas industry.

We sell water on Intrepid South under a joint marketing agreement with NGL Energy Partners, a land and water rights owner adjacent to our South property.

Under this agreement, we are responsible for the marketing, sale, and delivery of water to various customers across our combined acreage.

Demand for water and other oilfield related products and services is due to the significant oil and gas activity and development in southeast New Mexico.

We continue to work to expand our agreements with operators in the area.

Demand for water and other oilfield related products and services is due to oil and gas activity and development in southeast New Mexico.

During 2020, oil prices declined due to the COVID-19 pandemic, and oil and gas drilling operations also declined in 2020 compared to 2019.

However, oil and gas drilling activities have increased from the lowest levels reported early in the third quarter of 2020.

We also sell salt, magnesium chloride, metal recovery salts, brines, and water that are derived as part of our mining processes.

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A conventional underground mine uses a mechanical method of extracting minerals from underground.

Underground mining consists of

multiple shafts or entry points and a network of tunnels to provide access to minerals and conveyance systems to transport materials to the surface.

Underground mining consists of multiple shafts or entry points and a network of tunnels to provide access to minerals and conveyance systems to transport materials to the surface.

Underground mining machines are used to remove the ore and a series of pillars are left behind to provide the appropriate level of ground support to ensure safe access and mining.

14 unchanged sentences

In addition to the primary nutrients, which are required in the greatest quantities in crop nutrition, important secondary nutrients such as sulfur and magnesium are also essential in crop nutrition.

Intrepid's Trio ® product contains the primary nutrient potassium and two secondary nutrients in its sulfur and magnesium content.

Intrepid's Trio ® product contains the primary nutrient potassium and two secondary nutrients, sulfur and magnesium.

Long-term global fertilizer demand has historically been driven primarily by population growth and global economic conditions with annual demand variations based on planted acreage, agricultural commodity yields and prices, inventories of grains and oilseeds, application rates of fertilizer, weather patterns, and farm sector income.

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Several international brownfield and greenfield expansions have also begun production, with increases in production rates expected over the next few years.

Due to the increased production, near-term potash pricing will likely depend on the larger producers' ability to continue to manage this supply and demand balance through decreased utilization rates, a practice we saw in effect in the second half of 2019 as producers removed approximately four million tons of expected production through extended outages at certain facilities.

Due to the increased production, near-term potash pricing will likely depend on the larger producers' ability to continue to manage this supply and demand balance through decreased utilization rates.

Increases in world fertilizer demand, due mainly to population growth and limitations on arable land, are expected to eventually lessen the burden on producers, although recent increases in productive capacities and the continued progress of key expansion projects across the globe make this unlikely for at least the next few years.

5 unchanged sentences

Two major Canadian producers participate in the Canpotex marketing group that supplied approximately 28% of the global potash production in 2019, one producer in Russia supplied approximately 16% of global potash production in 2019 and one producer in Belarus supplied approximately 16% of the global potash production in 2019.

Another Russian producer is currently undertaking a significant increase in potash production.

If this producer achieves its goals, it could grow from approximately 1% of global potash production in 2019 to approximately 6% in the next few years.

Hydraulically fractured horizontal wells account for the majority of oil and gas wells drilled in the United States today and are responsible for the record amount of fossil fuels produced in the United States in recent years.

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Long-term, we have optimization and expansion opportunities at our solution mining facilities, that, over time, could further reduce our per-ton costs and increase our potash production.

For example, we have potential expansion opportunities at our HB mine.

• Expand Trio ® sales and maximize gross margin.

We plan to continue to expand our sales and marketing efforts for Trio ® .

These efforts include continued education in international markets and an increased marketing effort in domestic organic markets.

We plan to continue to expand our sales and marketing efforts for Trio ® in domestic markets and select international markets.

Our efforts include continued crop nutrition education and increased marketing efforts targeting organic agriculture and high-value specialty crop markets.

In order to maximize gross margin, we are working to optimize our production process to recover more of the langbeinite we mine and to produce more granular-sized product, which is preferred by most markets.

4 unchanged sentences

rights under which we sell water primarily for industrial uses such as in the oil and gas services industry.

As a result of these efforts, our water sales increased significantly over the past three years.

In addition, as described above, in May 2019, we purchased land, water rights, and other assets in the Permian Basin which we operate as Intrepid South.

These additional water rights contributed to the growth in water sales in 2019 and we expect to increase the amount of water available for sale on the Intrepid South property over the next few years through additional infrastructure investment and permitting.

The Intrepid South property also generates revenue from the sale of caliche, a produced water royalty, and right-of-way and surface use agreements with oil and gas operators.

In addition, as described above, in May 2019, we acquired certain land, water rights, state grazing leases for cattle, and other related assets from Dinwiddie Cattle Company in the Permian Basin which we operate as Intrepid South.

We expect to increase the amount of water available for sale on the Intrepid South property over the next few years through additional infrastructure investments and permitting.

Our other oilfield related products and service offerings include, but are not limited to, caliche, right-of-way agreements, surface damages and easements, and a produced water royalty.

In 2020, we sold approximately 320 acres of our fee land on Intrepid South to an oil and gas operator, which only allows the buyer to drill Acid Gas Injection ("AGI") wells on the property to dispose of natural gas with high concentrations of hydrogen sulfide ("H 2 S").

Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights, to customers, where such sales provide a solution to a customer's operations in the oil and gas industry.

• Continue diversification of products and services.

2 unchanged sentences

As we continue to look for opportunities to diversify our revenue sources, we may enter into new or complementary businesses that expand our product and service offerings.

For example, we are adding a brine station on the Intrepid South property and we are in the process of developing a produced water facility with a partner near our Intrepid South property which we expect will begin operating in mid-2020.

As an example, we added a brine station at Intrepid South in February 2020 and we are reviewing opportunities to develop a produced water facility near Intrepid South although the uncertainty caused by the COVID-19 pandemic has made the timing of this development uncertain.

We may also expand into oil and natural gas exploration and production, or into new products or services in our current industry or other industries.

19 unchanged sentences

Given the greater scarcity of langbeinite relative to potash and its agronomic suitability for certain soils and crops, we believe there is a market for Trio ® outside of our core potash markets.

We also believe that there is a market for Trio ® beyond the United States, and we continue to attempt to capture and grow this market.

Through our existing operations and assets, we also have the potential to grow our offerings of salt, water, and brine with low capital investments.

We also believe that there is a market for Trio ® beyond the United States, although freight expense and competition from substitute products have made this a difficult market to penetrate.

We also offer Organic Materials Review Institute ("OMRI") certified organic potash and Trio ® products for sale to customers in the growing organic segment of the fertilizer market.

Thr ough our existing operations and assets, we also have the potential to grow our offerings of salt, water, and brine with low capital investments.

• Water rights.

1 unchanged sentence

We continue to work to expand sales of water, especially to support oil and gas development in the Permian Basin near our Carlsbad facilities.

The Intrepid South property increased our total water rights available for sale and our footprint in and around the Delaware Basin.

This has expanded our relationships with oil and gas producers, which we may be able to use to expand sales of our industrial potash products, byproducts, and services.

The Intrepid South property increased our total water rights available for sale and our footprint in and around the Delaware Basin, a sub-basin of the Permian Basin.

We continue working to permit additional water rights on the Intrepid South property.

This has expanded

our relationships with oil and gas producers, which we may be able to use to expand sales of our industrial potash products, byproducts, and services.

• Diversity of potash markets.

2 unchanged sentences

The agricultural market supplies farmers producing a wide range of crops in different geographies.

Because of our geographic proximity to areas that have seen recent increases in oil and gas drilling activity, we

believe that we have an opportunity promote the benefits of potash in drilling activities and to increase our industrial sales volumes.

Because of our geographic proximity to areas that have seen recent increases in oil and gas drilling activity, we believe that we have an opportunity promote the benefits of potash in drilling activities and to increase our industrial sales volumes.

• Marketing flexibility.

3 unchanged sentences

• Significant reserve life.

Our potash and langbeinite reserves each have substantial years of reserve life, with remaining reserve lives for our actively mined areas ranging from 30 years to greater than 100 years, based on proven and probable reserve estimates.

Our potash and langbeinite reserves each have substantial years of reserve life, with remaining reserve lives for our actively mined areas ranging from approximately 24 years to more than 100 years, based on proven and probable reserve estimates.

In addition to our reserves, we have water rights and access to additional mineralized areas of potash for potential future exploitation.

132 unchanged sentences

For certain water sales we pay an $0.11 per barrel sold royalty to the State of New Mexico.

As of January 31, 2020, we had 445 employees, the majority of which were full-time employees.

Human Capital Resources

We believe that our employees and contractors are significant contributors to our success and the future success of our Company, which depends on our ability to attract, retain, and motivate qualified personnel.

The skills, experience and industry knowledge of key employees significantly benefit our operations and performance.

As of December 31, 2020, we had 440 employees distributed across our four main locations.

Our workforce is well-tenured providing invaluable experience and insight into our operations.

Location Number of Employees Average Tenure

New Mexico 282 10

Wendover 62 14

We have a collective bargaining agreement with a labor organization representing our hourly employees in Wendover, Utah, which expires on May 31, 2023.

This is the seventh agreement negotiated between us and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 867.

This is the eighth agreement negotiated between us and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 867.

We consider our relationships with our employees to be good.

Employee Development and Training

We believe in providing opportunities for employees to continue to develop and grow their careers.

We offer a tuition reimbursement program and ongoing support of continuing education for professional certifications and other credentials.

We also prove a comprehensive Career Path program for our hourly employees that clearly outlines the proficiencies necessary for each job level as well as the development steps to progress through various job levels.

Competitive Pay and Benefits

We have structured our compensation programs to balance incentive earnings for both short-term and long-term performance.

We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location.

We align our executives' long-term equity compensation with our shareholders' interests by linking realizable pay with stock performance.

We are also committed to providing comprehensive benefit options and it is our intention to offer benefits that will allow our employees and their families to live healthier and more secure lives.

Some examples of our wide ranging benefits offered are:

health insurance, telemedicine, an employee assistance program, paid and unpaid leaves, life insurance, short-term disability insurance and a retirement savings plan with a company match.

We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs, including flexible time-off, adoption assistance, prescription savings solutions, and a wellness program.

Diversity and Inclusion

We are committed to building a culture where diversity and inclusion are core philosophies across our operations, including, but not limited to, our decisions around recruitment, promotion, transfer, leaves of absence, compensation, opportunities for career support and advancement, job performance and other relevant job-related criteria.

We embrace an approach to hiring and advancement that considers the value of diversity, and we are also committed to making opportunities for development and progress available to all employees so their talents can be fully developed to maximize our and their success.

We believe that creating an environment that cultivates a sense of belonging requires encouraging employees to continue to educate themselves about each other’s experiences, and we strive to promote the respect and dignity of all persons.

We also believe it is important that we foster education, communication and understanding about diversity, inclusion and belonging.

Finally, in line with our commitments to equal employment opportunity and diversity and inclusion, we expect recruiters operating on our behalf to provide us with a diverse pool of candidates.

Health and Safety

The health and safety of our employees is our highest priority, and this is consistent with our operating philosophy.

We are committed to providing a safe, functional, and effective work environment for anyone who comes on our properties.

We have implemented several safety policies and protocols at each of our locations.

In response to the COVID-19 pandemic, we have implemented significant changes that we believe to be in the best interest of our employees, as well as the communities in which we operate, and that comply with government orders.

These include having our office employees work from home to the extent they are able and implementing additional safety measures, including increased cleaning protocols and social distancing procedures at all facilities, and other recommended public health measures for our field and other employees (including on-site contract workers) continuing critical on-site work.

Available Information

1 unchanged sentence

Securities and Exchange Commission (the "SEC") reports, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and any amendments to these reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Exchange Act.

These reports are available free of charge on our website at intrepidpotash.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

These reports also can be obtained at sec.gov.

We routinely post important information about us and our business, including information about upcoming investor presentations, on our website under the Investor Relations tab.

These reports are available free of charge on our website at www.intrepidpotash.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

These reports also can be obtained at www.sec.gov.

We routinely post important information about us and our business, including information about upcoming investor presentations, on our website, www.intrepidpotash.com, under the Investor Relations tab.

We encourage investors and other interested parties to enroll on our website to receive automatic email alerts or Really Simple Syndication (RSS) feeds regarding new postings.

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The following section includes biographical information for our executive officers:

Jornayvaz III

Executive Chairman of the Board, President, and Chief Executive Officer

Senior Vice President - New Mexico

Vice President of Sales and Marketing

Vice President, Finance

Vice President, General Counsel and Secretary

Chief Operating Officer

Chief Human Resources Officer

Name Age Position

Jornayvaz III 62 Executive Chairman of the Board, President, and Chief Executive Officer

Baldridge 59 Senior Vice President - New Mexico

Preston 36 Vice President, Finance

Smith 47 Vice President, General Counsel and Secretary

Brian Stone 58 Chief Operating Officer

Wyatt 48 Chief Human Resources Officer

Jornayvaz III has served as our Executive Chairman of the Board since 2010 and as our President and Chief Executive Officer since August 2014.

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Jornayvaz is the sole owner of Intrepid Production Corporation.

Jornayvaz and Intrepid Production Corporation together beneficially own 14.9% of our common stock.

Jornayvaz and Intrepid Production Corporation together beneficially own 15.2% of our common stock, as of January 31, 2021.

Baldridge has served as our Senior Vice President - New Mexico since December 2019.

5 unchanged sentences

from 1988 to 2003.

Baldridge has over 30 years experience in the potash mining industry.

McDonald has served as our Vice President of Sales and Marketing since November 2017.

McDonald previously served as our Director of U.S.

Agricultural and Feed Sales from March 2017 to November 2017, Director of Industrial, Feed, and Midwest Agricultural Sales from July 2016 to March 2017, and National Accounts Manager from December 2013 to July 2016.

Before joining Intrepid, Mr.

McDonald worked at Agrium U.S.

and Agrium Inc., a manufacturer, wholesaler, and retail supplier of agricultural products and services, for 17 years in various positions culminating with Director, Eastern Sales Region.

Before joining Agrium, Mr.

McDonald held positions at Cargill Limited and Monsanto Company.

Baldridge has over 30 years of experience in the potash mining industry.

Preston has served as our Vice President of Finance since November 2019.

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business