What changed in this filing

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Item 1. Business

2022-03-08 compared with 2021-03-02 · 108 added, 43 removed, 375 unchanged (29% of the section changed)

9 unchanged sentences

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

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 have permitted, licensed, declared and partially adjudicated 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.

26 unchanged sentences

We also monitor product inventory levels and overall production costs centrally.

During 2020, we supplied 0.5% of annual world potassium consumption and 3.7% of annual U.S.

During 2021, we supplied approximately 0.4% of annual world potassium consumption and approximately 3.5% of annual U.S.

potassium consumption.

6 unchanged sentences

Oilfield Solutions

We have water rights in New Mexico under which we sell water primarily for industrial uses in the oil and gas services industry.

We have permitted, licensed, declared and partially adjudicated water rights in New Mexico under which we sell water primarily for industrial uses in the oil and gas services industry.

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

5 unchanged sentences

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.

45 unchanged sentences

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.

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, specifically BHP's approval of the Jansen Stage 1 potash project, add additional uncertainty to the long-term supply and demand balance for the potash market.

The United States potash market is also impacted by the volume of imports.

A change in the volume of imports could result in a material change to potash prices in the United States.

Sanctions were recently announced on Belarusian potash imports and are expected to take effect in April 2022.

Belarusian potash has historically accounted for approximately 7% of annual demand in the United States.

We expect other suppliers will increase their volume of imports in response to the sanctions although timing of these changes and the overall effect of the sanctions on the potash market are uncertain.

Virtually all of the world's potash is currently extracted from 19 commercial deposits.

11 unchanged sentences

The majority of water used in fracking is transported by pipeline to the frac site, where it is stored in ponds or storage tanks.

While fresh water remains a key input for many fracs, some operators have switched to using exclusively recycled water or a combination of fresh water and recycled water when completing wells.

We believe this change is due to the growing focus on environmentally friendly operations and a response to the large amounts of produced water that is present in certain basins and formations, such as the Delaware Basin in southeast New Mexico.

By recycling and reusing produced water, operators are able to reduce fresh water purchases and decrease the cost of transporting and disposing of produced water into disposal wells.

The most productive region in the United States for oil production is the Permian Basin, which spans from west Texas to southeastern New Mexico.

20 unchanged sentences

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.

Given the current pricing and demand environment, we intend to continue to operate our Trio ® facility at reduced production levels and expect to continue to do so for the foreseeable future.

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

We currently operate our Trio ® facility at a reduced production level and expect to continue to do so for the foreseeable future.

• Expand offerings of oilfield solutions.

We intend to continue working to expand sales of water, particularly to service the oil and gas markets near our operating plants in New Mexico.

We have a meaningful amount of water

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

We have a meaningful amount of water rights under which we sell water primarily for industrial uses such as in the oil and gas services industry.

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.

1 unchanged sentence

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.

With an increasing focus on environmentally friendly operations and due to the large amounts of produced water in the Delaware Basin, operators are using increasing amounts of recycled water when completing wells.

We acquired multiple recycle units in the second half of 2021 and have begun hiring employees with the plan to enter the recycled water market in 2022.

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").

4 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.

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.

20 unchanged sentences

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.

We also offer Organic

Materials Review Institute ("OMRI") listed organic potash and Trio ® products that provide essential minerals for growing certified organic crops.

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.

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

Water rights in New Mexico are real property rights, which authorize a water right owner to use a specific amount of water, diverted from a specific location, for a specific purpose of use, in a specific place.

Water rights are limited to the amount of water put to beneficial use.

In New Mexico, the New Mexico Office of the State Engineer (“OSE”) administers water rights.

The validity of water rights are ultimately confirmed or denied by a court in an adjudication proceeding.

Prior to an adjudication, a water right may be acquired through the OSE’s permitting or licensing process.

If a water right existed before the OSE had authority to issue permits, a water rights owner may file a declaration with the OSE.

The OSE issues permits for both surface and groundwater appropriations.

These permits are inchoate rights, which allow a permittee to put the water to beneficial use as prescribed by the agency.

Once the OSE confirms that water diversion works have been completed and water has been put to beneficial use, the water right is licensed.

A declaration is made when water was put to beneficial use either before New Mexico adopted its current water code in 1907 for surface water declarations, or before the OSE declared an underground water basin for groundwater declarations.

A water right claimant must apply to the OSE for a permit to make changes to a water right, including changes in the place or purpose of use.

The validity of water rights are ultimately confirmed or denied by courts in an adjudication process.

We have permitted, licensed, declared and partially adjudicated water rights in New Mexico under which we sell water primarily for industrial uses such as in the oil and gas services industry.

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

1 unchanged sentence

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.

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.

We sell potash into three different markets—the agricultural, industrial, and feed markets.

During 2020, these markets represented approximately 79%, 3%, and 18% of our potash sales, respectively.

During 2021, these markets represented approximately 78%, 6%, and 16% of our 2021 potash sales, respectively, and during 2020, these markets represented approximately 79%, 3%, and 18%, of our 2020 potash sales, respectively.

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 to promote the benefits of potash in drilling activities and to increase our industrial sales volumes.

• Marketing flexibility.

10 unchanged sentences

The sales pattern for potash sold into the agricultural market is seasonal.

Over the last three years, our monthly potash sales volume has been highest in March through May and September through November when purchasers are looking to have product on hand in advance of the spring and fall application seasons in the United States.

In turn, our monthly potash sales volume has been the lowest in July and December.

Over the last three years, our monthly potash sales volume has been highest in February through May and September through November when purchasers are looking to have product on hand in advance of the spring and fall application seasons in the United States.

In turn, our monthly potash sales volume has been the lowest in June, July and December.

The specific timing of when farmers apply potash remains highly weather dependent and varies across the numerous growing regions within the U.S.

1 unchanged sentence

The sales pattern for Trio ® sold into the domestic agricultural market is also seasonal.

Over the last three years, our domestic Trio ® sales volume has been highest in March and April, as Trio ® products are typically applied to crops in the United States during the spring planting season.

Over the last three years, our domestic Trio ® sales volume has been highest in March and April, as Trio ® products are typically applied to crops in the United

States during the spring planting season.

Demand for the spring planting season generally runs from December to May, during which we have sold approximately 60% of our domestic Trio ® volumes over the past three years.

4 unchanged sentences

Accordingly, we manage our inventories during the low demand periods of the year in order to ensure timely product availability during the peak sales seasons, as well as during the summer evaporation period when we have no potash being produced.

The seasonality of fertilizer demand results in our sales volumes and revenue being the highest during the spring and our working capital requirements being the highest just before the start of the spring season.

The seasonality of fertilizer demand results in our sales volumes being the highest during the spring and our working capital requirements being the highest just before the start of the spring season.

We have observed fertilizer dealers in North America instituting practices that are designed to reduce their risk of changes in the price of fertilizer products through consignment-type programs.

6 unchanged sentences

We sell into the industrial and feed markets through sales to distributors and directly to end users.

For water, we have entered into multiple long-term supply agreements with a diverse set of customers aimed at generating a long-term recurring revenue stream from water sales.

For water, we sell to a diverse set of customers through a combination of spot sales and multi-year contracts.

In each of 2021, 2020 and 2019, no customer accounted for more than 10% of our total sales.

9 unchanged sentences

In 2021, we had approximately $0.3 million of capital investments, and $1.4 million in other expenses, relating to environmental compliance, environmental studies, and remediation efforts.

We expect to spend $1.0 million to $3.0 million for environmental related capital projects in both 2021 and 2022.

We expect to spend $1.0 million to $3.0 million for environmental related capital and reclamation projects in both 2022 and 2023.

Future capital expenditures are subject to a number of uncertainties, including changes to environmental regulations and interpretations, and enforcement initiatives.

23 unchanged sentences

We hold numerous environmental, mining, and other permits or approvals authorizing operations at each of our facilities.

Our operations are subject to permits for, among other things, extraction of salt and brine, discharges of process materials and waste to air and surface water, and injection of brine.

Our operations are subject to permits for, among other things, extraction of salt and brine, discharges of process materials and waste to air and surface water, injection of brine, and appropriation of water.

Some of our proposed activities may require waste storage permits.

7 unchanged sentences

We believe we are in compliance with existing regulatory programs, permits, and approvals where non-compliance could have a material adverse effect on our operating results or financial condition.

In 2016, the New Mexico Office of State Engineer ("OSE") determined that our East tailing impoundment embankments are considered jurisdictional dams.

In 2016, the OSE determined that our East tailing impoundment embankments are considered jurisdictional dams.

We continue to work with the OSE to determine required dam modifications associated with this determination.

8 unchanged sentences

In some cases, we may be required to pay civil penalties for these notices of violation.

The Utah Division of Air Quality conducts periodic compliance inspections at our Moab and Wendover facilities and affirms our compliance with applicable approval orders.

Safety and Health Regulation and Programs

7 unchanged sentences

and improving training.

Our New Mexico facilities are serviced by a trained mine rescue team, which is ready to respond to on-site incidents or assist in local incidents, if needed.

Our New Mexico facilities are serviced by a trained mine rescue team, which is ready to respond to on-site incidents or assist in local

incidents, if needed.

The team practices and participates at state and federal events and competitions.

6 unchanged sentences

Some of these operations resulted, or may have resulted, in soil, surface water, or groundwater contamination.

At some locations, there are areas where process waste, building materials (including asbestos‑containing transite), and ordinary trash may have been disposed or buried, and have since been closed and covered with soil and other materials.

At many of these facilities, spills or other releases of regulated substances may have occurred previously and potentially could occur at any of our facilities in the future, possibly requiring us to undertake or fund cleanup efforts under CERCLA or state laws governing cleanup or disposal of hazardous and solid waste substances.

41 unchanged sentences

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.

We also provide 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

18 unchanged sentences

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.

Environmental, Social, and Governance

We are committed to a goal of providing consistent returns to our shareholders while maintaining a strong sense of good corporate citizenship that places a high value on the welfare of our employees, the communities in which we operate, the customers we serve, and the world as a whole.

We believe that prioritizing, improving, and managing our Environmental, Social, and Governance (“ESG”) goals will allow us to better create long-term value for our investors.

We have made our ESG program a key initiative for our management team and we are committed to a plan to provide focused reporting on those ESG issues that we believe are the most relevant to our business and important to our stakeholders.

We understand that clearly disclosing the goals and metrics related to our ESG programs will allow our stakeholders to be informed about our progress and we look forward to expanding our disclosures in future periods.

A summary of our ESG goals under the United Nations Sustainable Development Goals framework is available on our website at intrepidpotash.com.

An update on recent ESG highlights and initiatives is shown below.

Commitment to the Environment

We rely on the environments, resources and ecosystems surrounding our locations in all segments of our business.

We work closely with our communities and make it a priority to protect the natural resources surrounding our operations.

– Full-Cycle Water Management - We are actively developing water treatment and recycling operations in the Delaware Basin.

Recycled water will reduce the amount of produced water that is injected into produced water disposal wells.

– Solar solution mining potash - All of our potash is currently produced at solar solution mines, one of the most environmentally friendly and energy efficient mining techniques.

We inject a naturally occurring, salt saturated brine solution into underground caverns or previously shuttered mine workings.

This brine selectively dissolves the remaining potash, which is then pumped back to the surface and into evaporation ponds.

During the spring and summer months, the brine naturally evaporates, leaving only the salt and potash solids in the ponds, which we then process into the products we sell.

By using solar energy, we do not need to burn natural gas or coal to evaporate our brine ponds.

– Salt laydown at the Bonneville Salt Flats - We are committed to helping maintain the environments in which we operate, one of which is the Bonneville Salt Flats near our Wendover, UT mine.

Since 2005, we have donated free of cost to the BLM nearly 7 million tons of salt that has been deposited on the racetrack to help preserve this unique attraction in northwest Utah.

We drilled an additional brackish well in 2021 to increase the brine available for the salt laydown project.

– We are the only OMRI-listed potash and langbeinite producer in the United States.

We became OMRI-listed in 2007 for our langbeinite, or Trio ® , product, and in 2018 for our potash products at our Moab and Wendover operating facilities.

We are also registered in the Organic Input Material Program through the California Department of Food and Agriculture, a program which registers fertilizers that can be used in organic crop and food production.

– We work closely with the Bureau of Land Management and other government and regulatory agencies to preserve historical sites near our operations such as the Maroon Cliffs in Carlsbad, New Mexico and petroglyphs near our Utah operations.

We also work with and have supported agencies dedicated to studying and protecting endangered species near our operations such as the sand dune lizards in New Mexico.

Our Social Impact and Supporting our Communities

Our employees live and work in small, tight-knit communities and we are deeply involved in volunteering and being active community members.

Our New Mexico operations have partnered with the United Way of Carlsbad and South Eddy County since 2004, participating in a variety of community-focused events and activities such as United Way's annual Day of Caring event.

We encourage all our employees to volunteer in their communities and we offer all our full-time employees three paid volunteer days each year to support either a charitable organization of their choosing or participate in an Intrepid sponsored volunteer project.

Our Commitment to a Diverse Workforce

We are committed to a recruitment and hiring process that emphasizes and embraces diversity.

We believe a diverse workforce leads to greater collaboration, innovation, and improves shareholder returns and we celebrate the great value the differences in our people bring to our organization.

We support a variety of organizations within our communities including the Women's Leadership Foundation, a Colorado based organization with the goal of opening more board of director positions to women leaders in Colorado and beyond.

Our Commitment to Safety

Safety audits are conducted across all our locations to ensure a thoughtful approach can be taken that increases the safe execution of all tasks.

Through our audits and dialogue, we educate ourselves and understand the potential hazards present, create best practices that can be shared, and address areas where improvements can be made.

Prior to each task, employees are required to:

assemble the proper personal protection equipment, tools, permits, etc., ensure the area is safe for employees and contractors, discuss the task with all stakeholders, and understand how the task is related to the overall business.

We conduct safety audits of our operations on a monthly basis.

The data from these safety audits is collected to analyze where, what, and why gaps exist, and to provide meaningful information that results in safer work for our employees.

In August 2021, our East Mine operation in Carlsbad, New Mexico received the National 2020 Sentinels of Safety Award in the large underground nonmetal category.

The Sentinels of Safety Award is presented by the National Mining Association each year to recognize the outstanding safety achievements of mining operations across a variety of categories.

Business Ethics

Since inception, Intrepid has placed the highest emphasis on conducting its business with honesty and integrity.

These standards are expected of management and employees alike, and we continuously strive to create a corporate culture of honesty, integrity, and trust.

The policies we have developed are intended to:

– Maintain and communicate our core value of integrity and disseminate our core values and the legal requirements applicable to good business conduct and ethical behavior.

– Annual refresher training on company policies, values, interpreting laws, and handling a variety of potential company-related issues and situations.

– Resources for employees to report any suspected violations of our company policies, including an anonymous employee hotline via phone and internet.

– Provide clear and well-defined procedures by which employees can easily obtain information, ask questions, and, if necessary, report any suspected violations of any of our Business Ethics policies.

– Maintain and communicate a Code of Business Conduct and Ethics which clearly articulates the company’s values, culture, and practices.

Available Information

9 unchanged sentences

Name Age Position

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

Jornayvaz III 63 Executive Chairman of the Board and Chief Executive Officer

Brian Stone 59 President and Chief Operational Officer

Baldridge 60 Senior Vice President - New Mexico

Preston 36 Vice President, Finance

Preston 37 Chief Financial Officer

Smith 48 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.

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

Jornayvaz served as our Chairman of the Board and Chief Executive Officer from our formation in 2007 until 2010.

2 unchanged sentences

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

Brian Stone has served as President since August 2021 and our Chief Operating Officer since December 2019.

Prior to joining Intrepid, Mr.

Stone was the Chief Operating Officer for Hupecol Operating Co.

LLC, an international oil and gas company focused on South America and Europe, from 2005 to 2019.

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

6 unchanged sentences

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

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

Preston has served as our Chief Financial Officer since December 2021.

Preston also serves as our principal financial officer and principal accounting officer.

Preston served as our Director of Budget and Forecast from April 2016 to November 2019.

Preston served as our Vice President of Finance from November 2019 to December 2021 and our Director of Budget and Forecast from April 2016 to November 2019.

Previously, Mr.

5 unchanged sentences

Smith was in private practice from July 2017 to January 2019, served as Executive Vice President and General Counsel for Echo Energy, a start-up pure-play oil and gas operator from December 2016 to June 2017, and as Assistant General Counsel for Operations for Continental Resources, a large independent upstream producer, from June 2014 to June 2016.

Brian Stone has served as our Chief Operating Officer since December 2019.

Prior to joining Intrepid, Mr.

Stone was the Chief Operating Officer for Hupecol Operating Co.

LLC, an international oil and gas company focused on South America and Europe, from 2005 to 2019.

Wyatt has served as our Chief Human Resources Officer since December 2018.

Wyatt previously served as Vice President of Human Resources from June 2015 to December 2018, Senior Director of Human Resources from 2013 to June 2015, and Director of Human Resources from 2007 to 2013.

Prior to joining Intrepid, Ms.

Wyatt held various positions at DISH Network Corporation, a pay-TV provider, from 1999 to 2007, including most recently Director of Human Resources supporting the field services division.

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