At this time, I would like to welcome everyone to the third quarter 2008 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you, Mr. Honeyfield, you may sir.

Thank you for joining us for our third quarter 2008 earnings conference call. I’d like to start by introducing today’s participants from the company. We have with us, Bob Jornayvaz, the Chairman and Chief Executive Officer; Pat Avery, President and Chief Operating Officer; Hugh Harvey, Executive Vice President of Technology; R.L. Moore, Senior Vice President of Marketing and Sales; myself Dave Honeyfield, Executive Vice President, Chief Financial Officer and Treasurer. I would also like to remind everyone that statements made in this call which express beliefs, expectations or intentions, as well as those that are not historical facts are forward-looking statements within the meaning of the United States Securities Laws. A number of assumptions, which we believe are reasonable or made in connection with the expectations, reflected in such forward-looking statements. The forward-looking statements involve risks and uncertainties, which could cause actual results to differ from our expectations. For material information with respect to these risks, uncertainties and factors, which could cause our actual results to differ from our forward-looking statements, we direct you to our news release issued last night and the risk factors described in our filings with the SEC. All forward-looking statements are qualified in their entirety by such factors. The news release which is posted on our Web site includes a reconciliation of certain non-GAAP financial measures to the most directly comparable GAAP measures. All reference to tons are short tons of 2000 pounds. I will now turn the call over to Bob Jornayvaz.

Thanks Dave, and thanks to all those who had taken time this morning to learn more about Intrepid’s third quarter results. I’d like to say that our business is strong. Our balance sheet is very solid with zero debts. $153 million in cash at the end our October, $125 million line of credit and we are generating significant cash flow. All of which will allow us to be disciplined marketers of our product. We are currently selling potash at $800 per ton, based on our Carlsbad and Mexico list price. This price has been in effect since September 2, 2008. This is significantly higher than the price at the time of our IPO. Our third quarter realized potash products were as nearly $200 per ton, from our second quarter average, resulting in continued income growth, quarter-over-quarter. We continued to execute on our plans to add incremental tons that will have a lower cost profile. Our net sales price advantage in the third quarter expanded as we realized that the past net sales price per ton for potash of all the North American producers, and continued to benefit from a relatively more favorable tax structure. The world continues to need potash producing enough food to continue to feed a growing population. In spite of the strength of our business, the financial crisis has cast a shadow of uncertainty over the demand outlook for commodities and we realized, many of you’ll be more focused on what is to come, rather than our third quarter performance. We are pleased with our results and we look forward to sharing the highlights with you, as well as giving you a sense of our outlook for the potash sector. As we move through the call, I would ask you to remember that Intrepid is the only…

Thank you, Bob. During the third quarter our Moab Mine restarted production following the summer evaporation season. At our Carlsbad Mines we are executing on our plan to upgrade our electrical systems, as well as continue to execute on our capital investment program. In the third quarter of 2008, we produced 200,000 tons of potash, which was 14% less than the 233,000 tons produced in the third quarter of 2007. There are two primary reasons for this comparative decline. First, we started potash production at the Moab Mine later this year as part of the plan to increase the benefits of evaporation in solar ponds. Second, our Carlsbad West Mine had lower production, due primarily to a lower relative ore grade in 2008 third quarter, as well as the temporary decreased performance of a binding chemical purchased for ore flotation. The lower ore grade was primarily a result of an increase in mine development work, which opened and prepared additional mining panels and is designed to access areas of relatively higher ore grade in a systematic manner. The ore produced in the mine development phase is often lower than the grade when the mine is operating in a high extraction mode. We have chosen to accelerate our development work at West Mine based on part, on the current demand for potash and considering the long-term operating efficiencies that we gained from development work. On the Langbeinite part of our business, we saw a langbeinite's production grew 25% this quarter to 50,000 tons in the third quarter of 2008. Higher langbeinite ore grades and increased ore production are key factors in the increase of langbeinite's production. As a reminder, our East Mine is a mixed ore body of both potash and langbeinite ore. Let's look at our production outlook, the production…

Thank you, Pat. During the third quarter we raised our posted potash prices twice in response to strong demand throughout the markets we serve. As a benchmark we ended the second quarter with red granular potash posted a $582 per ton. This price increase to $782 per ton effective August 1st, and was raised $800 per ton effective September 2nd. We were able to continue to shorten the lag time of realizing the increases in our posted prices as evidenced by our net sales price advantage. We have effectively shortened our lag time from 90 days at the end of the first quarter to 75 days at the end of the second quarter and currently to 60 days entering the fourth quarter. This has effectively increased our spot market exposure and was accomplished in all by moving many of our customers from quarterly to monthly pricing. Langbeinite pricing has also continued to increase and is currently about 45% of the price of potash on a realized basis, which is approximately a 126% of the price of potash on a potassium nutrient basis. This price indicates that the additional secondary magnesium and sulfur nutrients and Langbeinite are valued by growers. Its market risk fertilizers buyers are being cautious due to the uncertainty created by the financial crisis. The key to renewed buying rest with the farmer, we must decide, which crop to plant next year and how much fertilizer will be required to maximize their income. As stated earlier using the current price for corn, natural gas, diesel, seed and fertilizer, we had some eight mid-west corn drillers still have an attractive return on their fertilizer investments. We believe that modern farmers are sophisticated business men and will try avoid getting the nutrients out of balance on the lands they farm.…

Thanks, R.L.. First, to comment on our third quarter financial statement presentation since there seem to be some confusion in the second quarter. As a result of the consummation of our IPO we are required to report the results of operation for Intrepid Mining LLC, our credit structure company separately from those of Intrepid potash. In the press release, we presented the pro forma of comparative results for the quarters and for the year-to-date periods to aid in your analysis of the company. You can refer to the second quarter press release for historical quarterly information going back all the way to 2007 and our 10-Q for the third quarter will be filed shortly after this call. The prior period pro forma is also presented in a comparative basis including the adjustments necessary for the stock compensation expense associated with the IPO to reflect the repayment of all of our bank borrowings following the offering, the pro forma impact of income taxes, and the calculation of earnings per share. We have also updated our cash tax rates to be approximately 25% of our pretax income. This includes now both federal and state cash taxes and it's more consistent with what we are seeing as we go through the allocation on tax basis associated with the IPO formation and exchange transactions. Most of the operating highlights for the company have already been presented and discussed by the rest of the team. There are couple of items, however, that we believe need to be reiterated to the market about the quality of our balance sheet. Our balance sheet is exceptionally strong. As at the end of the October we have a $153 million of cash in bank, zero debt outstanding, together with a solid line credit of $125 million available to us from our bank group. As we've said before, our capital projects will be the first call on our capital, as we generate excellent returns investing, in the expansion of our existing facilities and bringing back idle potash capacity. What that means is that our capital development program, including approximately $85 million related to the HB Mine is essentially fully funded for the foreseeable future. It probably goes without saying that in light of today's market of tight credit and limited liquidity, we believe the strength of our balance sheet, which will enable us to execute our business plan is a key competitive advantage for Intrepid. We'd now like to open the lines for any questions.

(Operator Instructions) The first question is from Vincent Andrews with Morgan Stanley.

Hi, everyone. This is Megan Davis calling in for Vincent. I just have a few questions. First, how should we expect COGS for potash to come back at all once you see electrical stuff, upgrades at the West Mine are at more normal level.

Hi, Megan this is Dave. On the cost of sales per ton number, its in our guidance at a $155 to $165 per ton. That’s an annual number. So, I think if you just walk through the map of how that has shaken out for first, second, and third quarter, you can see the fourth quarter will be roughly in line with the third quarter, but going forward we really expect that that range that we’ve given right now for the year should be fairly consistent on an annual basis.

So you’re expecting it to come down to somewhat in ‘09 from where we are now?

From where we’re at during the quarter yes. On an annual basis we think it will be comparable..

Okay.

We are all in the process of going through our budget process right now, so that will be item that we will make sure we left the market now when we’ve gone through a formal board approval.

One thing you have to remember in the second and third quarter is that, you don’t have the benefits of the produced tons from Moab because of the solar evaporation that you have the cost structure. So as we’ve said before those COGS are higher in those quarters.

Okay. Given a near-term shortfall this fall for fertilizer demand, how quickly do you think that that’s going to come back in the frame?

Let’s see. Let me find the crystal ball. Quiet frankly we all have to watch and wait and be patient and understand that farmers are going to grow crops. When they start is something that I really can’t offer it on the day its going to occur only that it will occur. I wish I had more guidance from you in terms of when exactly that’s going to occur, but we just have to wait and be patient.

Okay. Well, I'll leave it there. Thank you.

The next question is from Edlain Rodriguez with Goldman Sachs.

Good morning. Bob, many of your peers have decided to take advantage of the market dislocation and they have announced no major share buyback. Can you talk about your appetite for doing the same?

Well, first and foremost, we think that our strong balance sheet is gives us the ability to be very disciplined market of our potash. So, we like the strength of our balance sheet and our ability to focus on our margin, that’s first and foremost. Second, when the clouds dissipate in terms of the financial crisis, we will have more clarity in terms of when farmers are going to start planning, when they are going to start making their fertilizer purchases, that something that we'll look at. But I think right now, balance sheet strength is an asset and a competitive advantage that we want to maintain. And as we get more clarity on what's going to happen in the financial markets and the credit markets and in the agricultural markets, that's something that I think that we will focus for. We are very aware of it. We think that we are a great value right now, but we think a more important value is balance sheet's strength.

Okay, thank you. David, can you talk about SG&A, it seems like it was much higher this quarter; should we looking at this as run rate or would that number be coming down somewhat?

Sure, Edlain. This quarter we had total G&A of about $9.4 million. That’s a little bit higher than, where I’d anticipate it on a run rate basis, we disclosed in our 10-Q it will come back later today that, we had some what I call one off cost related to appraisal work that was about $400,000 in the third quarter and that is associated with IPO and the tax rate is step up and then, we had some legal expenses that I expect it will level off to some degree. So overall, again I think that numbers a little bit high and I expect that run rate to be a bit lower, Edlain.

Okay. Thank you.

The next question is from Steve Byrne with Merrill Lynch.

Hi, thank you. I know you are just conceptualizing your plan to reopen the North mine, but Bob, what would you say is likely to be the longest lead time that you expect for that project; is there a multi-year backlog on miners or what would you say is the rate limiting step for that project?

Steve thanks for the question. I am going to let Pat Avery answer that.

Good question Steve. In a mine like this which is a two bed mine where we use compactors for making granular product that take currently 12 to 14 months, and there are some specialized items, some specific crushers or type of motors that, we are going to approach it, they are 12 to 14 months. So, at this point of our game, I don’t think we see that is a limiting factor. We just quite accountably we are designing our engineering and long lead we buying in time to adjust to those time frames. I would also say that some of the modest economic slow down, we are seeing delivery times improved.

Steve I'd like to remind you, kind of mining equipment what we use is unlike the coal industry. So that we don’t have the same kind of long lead times that they have for mining equipment in Canada.

Okay. That helps. And what about the mill at North Mine? Is that operational?

No. We would have to build a new surface plant for that. There was one here in the 70s and 80s that has since been demolished. We would build a new surface plant but again we feel that relatively would be flotation plant, a [desalination] circuit flotation plant, fairly traditional in the potash industry with very reasonable lead times.

And Steve once again I would like to remind you that of all of our flotation plants and what we have one at Wendover, one at Moab, one had a less facility. We have redesigned and rebuilt those float plants since we owned all those facilities. So, not only we do have the experience and expertise to execute on that, but we’ve done it recently and it didn’t take that long to rebuild those.

And those shafts, those are concrete shafts?

Yeah two 18 to 20 foot diameter concrete line shaft. Frankly we’ve inspected them in great detail in the last few months and actually are in the process of refurbishing those right now.

Do you have a ball-park estimate of what kind of operating capacity that facility could generate?

I think that we said in some early documents. When the facility closed it was about 350,000 finished tons a year. Our current design, which has been published in round numbers, it’s about 500,000 finished tons a year.

Okay. On your drilling end markets, you clearly have a lot of loyalty there, with your just-in-time delivery relationship. But does that give you the ability to forecast changes in demand in that end markets. What kind of visibility do you have for the demand, for the white potash that's used in the drilling markets?

Well, Steve this is Bob. We're trying to estimate that right now. We are in the heart of that market, we're right in the middle of that market and we're trying to evaluate it. There is no question that in different parts of the country, rigs are getting lie-down. So I want to remind you that lot of our customers were on allocation. To come back and really understand what that the demand piece is going to look like, at $60 oil and $6 natural gas, there still going to be a tremendous amount of drilling in the areas that we're located. So it is just a little premature to estimate what that it is going to look like, but we definitely have our figure on the pulse and as we get more clarity we will try to pass that on.

Thank you.

The next question is from Mark Gulley with Soleil Securities.

Yes. My question – is for Pat, has to do with production cost of sales for potash. It was addressed in the first question, but I still don't understand what the answer is. Maybe if you can parse a part of the increased cost of sales per ton in the middle two quarters, that are due to seasonality and how much of its due to all the extra staffing that you'd talk about in the press release; or perhaps you can provide a little bit better guidance for next year, as to what that might look like for KCL?

Well, we can’t. I don’t have the exact numbers in front of me but let me give you some basic ideas. There is the seasonality of some of our facilities particularly Moab, where we don’t process potash into second, third quarter, total output, total operation of the pond cycle. During the last couple of years, we have scheduled our turnarounds in third and fourth quarter, this is one was in October and one is in November. So, it is the difference between solar evaporation, reduction in ton and turnaround reduction in tons. We also related in the call a food category, and we are doing a significant amount of upgrading to our electrical systems, training, maintenance programs as well as building for our future in storage projects, capital projects. So, I don’t have the numbers in front of me, but seasonality is one portion. And then schedule of turnaround is a portion and then the increased infrastructure and reliability project you’re doing is a portion and those three areas will continue -- scheduling will continue for the next foreseeable in couple of years.

Mark, this is Dave. Once more, just this is a quick reminder. Q1 always compares to the $155 to $165 range that we have out there for an annual number. Q1 we were at 136. Q2 we were at 142 and Q3 we were at190. So when you do the math you can see that level is going to be fairly consistent for the fourth quarter. As Pat touched on those are things that we expected and they are a function of the operations and the timing of the cycles that we have in our business. When we go into and finalize our 2009 budget we’ll certainly report exactly where we think that range will be. As we sit here right now, our expectation is that it’s going to be in that 155 to 165 range going into the future. So, hopefully that helps clarify a little bit.

Okay. That was helpful. Look you used to be in the oil and gas business, so I am sure you get a pretty good view as to the demand for White Potash and oil and gas. I’m going to come back and maybe a diverse capacity and same question was asked previously even with 60th and fixed on oil and gas respectively, if you were drillings in that business still, what would you be doing?

It only depends on the play that you're in. You know, Haynesville Shale play, more conventional play, its all dependent upon the reservoir rock that you're trying to produce from and find. So, I guess, it really is situation depending upon, which basin you are in. And the good news is that most of the Permian and Delaware basins in West Texas are dealing with more conventional plays with higher quality reservoir rocks. So, in order to answer your question really get a feel for it, what I would be doing is very much dependent upon the play that and I would trying to produce from. When I look at the macro scale there is no question that we're going to see some rate slow down. But we are still going to see a lot of drilling, when we looking at the decline curves on the reservoirs that have been found, we found significant deliverability opportunity, though we have not increased our reserve base significantly. So, when you turn off the drilling rig rate, we're going see productions begin to fall pretty quickly and that we believe we're going to see rig rate come right back up. So, the answer is on board we believe it’s a relatively short-term blip because of the nature of the reserves that we've been finding over the last two or three years, and if I'm answering your question, we can talk about this per day.

That is very helpful What would the lag between, let's assume what we say is correct if production falls off relatively quickly in response to less drilling, how long would it take for that to increase prices by self correct?

That’s a tough one, but, the way Trepid is looking at this, we're looking this is as a nine month and one year phenomena.

Okay. That’s helpful. Finally, I wanted to also follow-up as well, you laid out fairly detailed production and capacity forecast, as far of the IPO. You have already touched on some of the detail behind the HB mine today and the North Mine as well. Generally speaking, are the production and capacity forecast in the IPO documents, pretty well as of today or would you change anything?

Mark this Dave, I think you have seen the production guidance, we changed our potash production guidance, September 15 and then as Pat has found with the site at lower operating rates on, at least we brought down our langbeinite guidance, but with overall, we are pretty close to where we are at the IPO time and moving forward in the capital projects in a similar manner.

Mark the one thing I'd really to stress is that, we believe it’s a big difference and time for you choose not to produce versus tons you can't produce. And we believe that margin is the thing that we should be most focused on in Intrepid rather than volume. And so we are watching markets, we are aware of markets, we know what is the best place for us to be, if you will and we try to give guidance as to what is to work like when we believe its changed. But I would like to really lead you with the thought that, we believe that margin is very, very important to us.

Okay thanks for your help and I appreciate it.

The next question is from Mike Jadoo with Greenwich Consulting.

Yes thanks for taking my question. And your release is really great. A lot of terrific information in there. I just had a question about your assumptions on potash, prices for the fourth quarter. You didn't provide guidance per se but you did provide some nice historical information. We now had three month add with a least price of $800 and then if you look at what the actual results were for the third quarter versus the average posted price I think when look at last year on the same basis. I guess last year was about tighter in terms of the range just any thought about how to be doing in the fourth quarter would be very, very helpful. Thank you.

Mike this is Dave. Just in terms of policy real quick we don’t give future guidance on potash price, but what I can help you with understanding a little bit of the lag and RL touched on it that we’re seeing about a 60 day lag relative to the posted price as to what our realized prices now and that’s is contracted versus what we had originally right out of the gate at the time of IPO. So, I think the reason why you see that range being tighter last year is that you had a probably more gradual change in the price, clearly if we’ve seen October, November are staying still at $800 you should expect to see price staying closer to that range just since we’re seeing a little bit of flattening on the space of acceleration on that price curve.

Thanks for the help. I appreciate it.

Okay.

The final question is from Wayne Cooperman with Cobalt Capital.

Hi, thanks. We all know that the price for potash is the price for potash and there is not much we can do about it. So obviously everybody got a lot of question about your cost. Can you give us a little more detail on the breakdown of the costs; I am also curious if the new tons you are bringing on for the expansion are inherently at higher cost. I'm trying to understand the cost components. and are we going to start to seeing breaks, as the natural gas and other commodities have come down, shouldn't that benefit us a little bit.

You bet. I am going to give a figure overview in late decade and some of the details. In response to the first part that shouldn’t we say cost come down as it relates to steel, energy etc cetera, absolutely we think we will.

Well, I guess could you tell us how much they were per ton on the first place that would be a good start.

Okay. I'll let Dave get into the details, but do want to make it clear that as we bring on tons from the HB solution mines the COGS of those tons are much more in line with our cost at Moab and Wendover.

Okay.

So from the road show COGS for those tons are in the $65 to $70 range. So as HB tons come on it should help to bring down overall company cost structure that's why we were so focused on solar evaporations tons.

Okay.

So as you see Intrepid mature, what's unique is our ability to bring on these tons using solution mining combined with solar evaporation. It is one of the lowest cost ways of producing potash. With that I'll let Dave get into some of the differentiation in terms of where we were and where we think we're going on some specific items.

Despite a few general categories just to think about I am not going to be able to give you a terribly precise answers on the breakdown, because its inside information that we've shared on a regular basis, but currently we've got a large component of our cost that are tied to labor and benefits, a large portion that's tied to contract or maintenance expenditures, and then consumables associated with it. On the natural gas side what we've done is we've run some sensitivities that show that about $1 move on the NYMEX has about $2 effect on our cost of sales and then clearly that has a flow through to the electricity usage in the operations.

Could you give just out of your COGS, how much per ton do you spend on electricity and natural gas, just a ballpark?

I don’t have that calculation handy right now. So we’ll run the traps on it and see if there's something I can get you.

And I mean anything outside. And labor, are we going to get economies of scale on labor, as we grow or these economies or you think that will be relatively stable?

The one thing that I really want to stress was the number of contractors that we had on site is working on this major electrical upgrades, the major de-bottlenecking and turnaround projects. And those projects are completed in number of contractors exits the facility, if you will. So there is a lot of different ways that we’re going to see benefits from a cost structure. Pat would you like to add anything to that?

Well, I think Bob is right. And again, so I was thinking in general terms I don’t have the dollars lookout in front of me or even the percents. But I think we’re seeing this trend among many, which is yeah, we expect steel, concrete, energy, they generally drop and we’re seeing that. On the other hand labor and benefits continue to trend upward, that’s essentially a little slower than we saw in the last couple of years, but continuing upwards. And as Dave has alluded, directionally we’re seeing net-net our cost stay about the same. Some categories improving, and labor and benefits particularly staying somewhat high. And then as Bob alluded, we finish our capital projects, some of them and finish our reliability projects, it will reduce contractors and the maintenance materials they use.

All right. Well I was saying just probably the more detail you could put out in a presentation or in your 10-K or whatever I just think people would understand the cost structure and the components, it would all be better off.

We appreciate the comment. We'll certainly consider if there is some additional disclosure we think is helpful, you may well look in the 10-Q as well. We do give some fairly good analytical discussion around that, that you might find helpful on your analysis and certainly feel free to call me directly if you have some other specific questions.

All right, great, thanks.

There are no further questions at this time. Mr Honeyfield, would you like to have any closing remarks?

We just want to say, thank you for joining the call. I appreciate your taking interest in Intrepid.

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect.