Good morning, and welcome to the Intrepid Potash First Quarter 2011 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this conference is being recorded today, Thursday, May 5, 2011 at 8:00 am Mountain Time. It is now my pleasure to turn the conference over to William Kent, Director of Investor Relations. Mr. Kent, please go ahead.

Good morning. Thank you all for joining us for our first quarter 2011 earnings conference call. I'd like to start by introducing today's participants from the company. We have on the call with us today Bob Jornayvaz, Executive Chairman of the Board; Hugh Harvey, Executive Vice Chairman of the Board; David Honeyfield, President and Chief Financial Officer; Martin Litt, Executive Vice President and General Counsel; R.L. Moore, Senior Vice President of Marketing and Sales; John Mansanti, Vice President of Operations; and Kelvin Feist, Vice President of Marketing and Sales. I would also like to remind everyone that statements made on this call which express a belief, expectation or intention as well as those that are not historical facts are forward-looking statements within the meaning of the United States securities laws. These statements are not guarantees of future performance. A number of assumptions which we believe are reasonable were 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 more information with respect to the risks, uncertainties and other factors that could cause our actual results to differ from our forward-looking statements, we direct you to our news release issued last night and risk factors and management's discussion and analysis of financial conditions and results of operation in our most recent annual report on Form 10-k and subsequent quarterly reports on Form 10-Q as filed with the SEC. All forward-looking-statements are qualified in their entirety by such factors. Our earnings news release, which is posted on our website at intrepidpotash.com, includes a reconciliation of certain non-GAAP financial measures to the most directly comparable GAAP measures, including adjusted EBITDA, which will be used on this call. All references to tons are the short tons of 2,000 pounds. I'll now turn the call over to Bob Jornayvaz.

Thanks, Will, and thanks to everyone for joining us today to learn more about Intrepid's fourth quarter 2011 results. During the first quarter of 2011, we delivered solid results in the production sales and capital investment fronts. As spring planting got under way, we leveraged our strategic location advantage to maximize margin and deliver the best average net realized sales price when compared to our North American peers. During the quarter, we earned $0.38 per diluted share on a net income of $28.3 million. Our adjusted EBITDA was $55.8 million and we maintained our cash and investment positions from the end of the year at $143 million as of March 31st. Demand in the potash market in the United States during the first quarter was reminiscent of demand prior to the 2008 financial crisis. We saw dealer and distributor buying patterns that were much more consistent with normal spring purchasing levels. We believe there were important macro factors that positively influenced spring demand, including tightening crop inventories that contributed to the continued strength in agricultural commodity prices across a wide variety of crops. The strong commodity price environment provides a positive outlook for farmer income in the United States. We believe the profit opportunities for farmers will drive them to maximize yield through balanced fertilization as yield levels ultimately drive overall profitability. While commodity prices remain strong, we cannot ignore that weather conditions are clearly having an impact on the timing of fertilizer applications in many regions of the country. The continued rain and wet weather and the resulting flooding have delayed fieldwork in many areas. Given the wet weather pattern that has been in place over the last few weeks in the Midwest, farmers in these areas may not be able to get into their fields for weeks to…

Thanks, Bob. We produced 234,000 tons of potash during the first quarter of 2011, which included our usual seasonal increase in production from our Moab Utah operations, solid potash production from our Wendover, Utah operations and especially solid potash production from our Carlsbad operations. The improved Carlsbad results are due to the effective capital investments we have made and increased staffing that occurred over the last 12 to 18 months, as we ramped up mine production following the staffing reductions we made in response to the 2009 market. Each mine in Carlsbad is realizing the benefit of one additional mine panel, which were commissioned in 2010, and we're preparing to add one additional mining panel again to the East and West mines this year. First quarter 2011 production compares to 172,000 tons of potash produced in the first quarter 2010, a 36% increase over last year. We also produced 31,000 tons of Trio during the first quarter of 2011. This compares to 57,000 tons produced in the first quarter of last year. During the first part of this quarter, we continued to experience lower-than-planned recoveries of Trio. As we touched on during the last earnings call, we organized a team of engineering, production and maintenance personnel to review the original design and process drawings, consulted equipment manufacturers and to analyze plant data to increase recoveries. We turned the process upside down and made plant modifications. As a result, we are seeing sustained improvements in recoveries beginning in March. We will continue to make adjustments to improve recoveries ahead of the completion of the Langbeinite Recovery Improvement Project. In 2011, we expect to invest between $140 million and $165 million towards our capital investment projects, which are key components in the Intrepid growth story. A highlight of our capital investments are…

Thank you, John. The first quarter was, on all accounts, solid from a sales standpoint. Strong commodity prices persisted throughout the quarter that were backstopped by tight corn and soybean inventories and a positive USDA planting report. As a follow-up on the strong fall application season, we were able to ship our fall backlog of rail orders in January. Our truck market in the quarter saw healthy demand that allowed us to increase our average net realized sales price for potash over last quarter. We sold 196,000 tons of potash during the first quarter of 2011. This compares to 243,000 tons sold in the first quarter of 2010. We also sold 52,000 tons of Trio compared to 70,000 tons of Trio sold in the first quarter of 2010. The posted price for our red granular potash was $485 per ton during the first quarter, and we raised this posted price to $500 per ton effective April 1. Subsequent price increases of $15 per ton in May and June will put our posted price for red granular potash at $530 per ton effective June 1st. Given the strength of the agriculture commodity markets and the financial health of the farmer, we believe that farmers will make every effort this growing season to maximize their yield through balanced fertilization. Demand for granular Trio remains strong and continues to exceed our forecasted production levels, requiring us to allocate granular product to our customers. Because of the strong demand and strong agricultural commodity market, we raised the posted price for our granular Trio by $15 per ton to $271 per ton FOB Carlsbad on April 1st. We have seen solid spring demand in markets where farmers have been able to get into their fields. As example, our sales in the Pacific Northwest, which is…

Thanks, Kelvin. Our first quarter results really highlight how the investments we've made in the business over the last few years are beginning to pay off. We're seeing evidence of this through higher sustained production rates and better-than-expected returns on our de-bottlenecking and productivity enhancement projects. First-quarter potash production was very good at all our facilities, and our cash operating cost to goods sold saw the benefit of these production results. Operating our assets to maximize production allows us to realize cost benefits throughout the system and has us on track to deliver a cash cost of goods sold for potash this year in the range of $170 to $180 per ton. We should be able to achieve this range even with the variability in cost that we see from quarter to quarter as we execute and manage planned maintenance programs and scheduled down days to tie in new plant and equipment. Before going too much further, there are a couple of items that appeared to need some clarification related to our results. The first has to do with our Langbeinite Production and Trio cost of sales. Under our current production design, which should be thought of as our pilot project that got us into the Langbeinite market, the Trio we produced results in a stream of production that is approximately a 50-50 mix of natural granular and standard product. We used a screening process to separate our granular and standard production. We do not have any ability with our current plant to compact or granulate product, but rather we rely on the natural size distribution to separate the products. As a result, the granular and standard products carry the same per-ton cost. As we mentioned before, our low overall production results for Trio in the latter part of 2010…

[Operator Instructions] The first question today comes from Edlain Rodriguez of Gleacher & Company. Edlain Rodriguez - Gleacher & Company, Inc.: Just quick question on potash. Is the weather and delays in planting become an issue for the spring? Can you give us a sense of how much volume could be at risk? Because the reason I'm asking, because typically you do take advantage of spot sales. So but if you do have a delay, then the spot sales might not be there anymore. I just want to get a sense of how much of your sales tend to be spot versus contract.

We really don't have a percentage. I think what we're going to see is as we get some improved weather in the state of Texas, which hopefully will happen in the next few weeks, there's still a tremendous amount of planting that is yet to occur. And the Texas season hasn't gone too far to where we're not going to still see a great amount of activity there. In the Midwest, you're right, the flooding has caused delays not only of potash getting in, but of farmers either having to delay plantings or potentially replant. So I think it's too early right now to tell what kind of damage that would cause or might cause, I'll let Kelvin address that a little bit. But percentage-wise, I do think it's too early to give you a feel for what that might -- what impact that might have.

Edlain, it's Calvin here. It's really a regional question. There's going to be areas that are going to get started in a week and there's going to be areas that are not going to be able to seed for a number of weeks. So it's really watching the weather and, I guess, seeing what will happen in terms of our weather forecast. And if they're able to get some sunshine and some wind, they're likely to be able to get into the field sooner and much less impact. But I guess we really don't have a percentage impact or how this might play out in the next couple of weeks. Edlain Rodriguez - Gleacher & Company, Inc.: Okay. Just a little too early to tell. Another quick question on langbeinite, just simple question. I mean, looking into Q2 and Q3, should we expect production cost to remain at the same high levels they were in Q1? And also will prices be closer to the posted prices? Or are we going to see the same big delta we saw in Q1?

Edlain, this is Dave. And John, if you need to supplement, please do. Overall, as John touched on, we've really started to see a very nice improvement in our langbeinite production starting in March after all the work that John described. And you'll probably remember us commenting on that back at the last analyst call as well that, that was something we'd identified, and we were putting a team on it. So that being said, we will have more product available. That means we'll probably be able to spread some cost out a little different. We'll also have the price increase that Kelvin had mentioned earlier that we've been able to get into the market on our granular product. So overall, we'll continue to see more product available for sale, which means that overall we'll see -- we should see an improvement on the margin side there.

One thing, Edlain, that I want to talk about with potash pricing that you've got to remember is that some of the export sales that we are choosing to tag are in the markets that we are building, these are new markets. And so we're selling product not on the markets that we're buying, but ones that we're building. And as we build out our langbeinite production, and especially our granular capacity, our ability to go back into those markets with premium granular product and achieve higher prices is something that we're very confident in our ability to achieve. But when you're building markets, not buying markets, it takes a little bit of time. And we would just ask you to continue to look towards the future as it relates to langbeinite.

The next question comes from Mark Connelly of the CLSA. Mark Connelly - Credit Agricole Securities (USA) Inc.: Just 2 questions. John, the design changes and the refinements you're making on the Langbeinite Recovery. Is that going to change materially the capacity that you're targeting to get?

The changes we're making, relative to where we're at first quarter, yes. Okay? Relative to where we've been historically, no. It allows us to get back to some of those historical recovery rates. We're hoping we can do a little bit better than that. And again, we're trying to bridge that. We'll be commissioning the LRIP plant later in the year, which, just due to the nature of the dense media plant, will increase that recovery overall.

Mark, this is Dave. One thing just to make sure that -- and I think we've talked about this maybe broadly before, but just to make sure people are aware, our current process design has us targeting about a 30% to 35% recovery of product. And the dense media plant that will be commissioned with the LRIP project takes us to 50% recovery. And then the other piece of that project is the granulation, or pelletizer, plant, which allows us to granulate 100% of that standard production. So really what we go to is having higher recovery and the ability to have all of that product in a granular form with the LRIP. As John mentioned, the changes and improvements really are relative to what we've seen over the last -- really the end of last quarter and the first month or 2 of this quarter.

And Mark, this is Bob. Not to make it sound too complicated, but let's not forget that we're mining a mixed ore body that has both langbeinite and sylvite in the ore. And so as we make tweaks and improvements to the potash side of the recovery from the mixed ore body, it has an impact on the langbeinite side. And so as we work to get these plants running as efficiently as we can to optimize recoveries on both side of the production stream, it's a little more complicated sometimes. And so the addition of the dense media separation plant as well as some of the recovery changes are going to continually just improve and improve upon this mixed ore body recovery system. Mark Connelly - Credit Agricole Securities (USA) Inc.: Just back to the weather impact. And I'm sorry to keep asking on this, but if the timing and location of sales changed materially in the quarter, could we anticipate a meaningful change in the costs, all-in costs? Or are transportation not going to be affected all that much even if you're shifting around quite a bit?

Mark, this is Dave. I think you probably heard us say it before, but really we focus on things on kind of a long term and annual basis. And we're going to continue to run the plants in as full a manner as we can. We have lots of storage capacity. So if we have some short periods of maybe this month's lower than what next month will be or you might see some variation from quarter to quarter, but I don't really anticipate that we'll be outside of that 170 to 180 number on the cash cost side of things for the year. We'll see some aberrations, I think we've got scheduled maintenance coming up at one of our facilities in the second quarter and one in the third quarter, and that will also include tying in some plant and equipment. So we'll have a little variation. But overall, we think we've got plenty of capacity, and we really think about this on an annual basis and believe we'll be able to sell all the granular production that we're able to produce from the plants.

That next question comes from Lindsay Drucker Mann of Goldman Sachs.

First on your expectations for production, in the event that because of weather-related issues you do get some softness in demand in the first part of the year, would you expect to run your facilities full out and build some inventory for fall?

That's the expectation, Lindsay. I think, like we've touched on, we see the benefit on the unit cost when we're able to do that. We got staff back up at the mines and the plants really in November last year. So our expectation is that we will produce those plants at maximum rates and make sure that we've got product available for what we really see to be a pretty darn strong commodity environment and ag [agricultural] market for a period of time here.

On an earlier earnings report, you had talked about some pressure on standard potash prices because of some excess selling from your Canadian competitors. I was just hoping you could give us an update anecdotally on what you're seeing from them today.

The first thing that we've done has made a big difference is the addition of granulation capacity so that we can take product that was standard product that might have needed to go into an industrial market, and it can now go into an agricultural market, so the ability to right-size our product stream so that we can most effectively do what we need to do. When we look at the oil and gas market down in the state of Texas and Oklahoma and the activity that we're seeing, we're seeing our industrial sales pick up. With the increase in the price of oil and natural gas, we're seeing firming in the pricing of our industrial products. And we continue to work with oil and gas operators to explain the benefits of KCl in drilling fluids and completion fluids. So Intrepid is working its tail off to make sure the oil and gas operators are intimately aware as well as the Halliburtons of the world, who recommend our product, can convey that message to their oil and gas operators. So we're seeing activity in those markets pick up and firming in those markets pick up.

Maybe let me just ask that at a different way. That's helpful, but in light of some of the softer sales we're seeing at retail and perhaps some inventory building in anticipation of when the growing season kicks into gear with these weather delays, are you seeing any of your large competitors getting more aggressive to move product?

Fortunately, what we're seeing is the Indian market and the Chinese market and Asian markets that are big standard markets have picked up. We're seeing more standard, more Canadian standard, go offshore. And so we're not seeing the kind of pressure that we had seen before, because those standard outlets have reopened, if you will. And it's our impression that the Canadians are shipping significantly more standard into the Asian markets and the Indian market.

The next question comes from Elaine Yip of Credit Suisse. Elaine Yip - Crédit Suisse AG: A question on your announced price increases. In contrast to the other North American producers, you've chosen to raise prices in $15 increments. What drove that type of pricing approach, and what has been the customers' response to the price increases?

The first was that -- we've learned back in 2000 and 2008 that price shocks aren't necessarily beneficial to our customers. So we wanted to give our customers plenty of time to prepare for the price increases. We wanted to do it in incremental fashion so that we could achieve the increases as well as not put as much pressure as was put on customers in the 2007, 2008 price run-up. So from our perspective, we're just simply trying to learn from what were potentially mistakes in the past and turn them into benefits. And we fully believe we're going to achieve the full $45, and it's not going to be as painful on our customers, we gave them time to plan. Kelvin, would you like to add anything that, as you were part of the decision process?

Elaine, I think the other thing that was important is a big piece of our business is the truck market, and a $50 increase is, of course -- we see this big run of trucks or orders at the end of a certain month and with smaller increases, we don't seem to see that. So it's really balanced off our shipping patterns and I think beneficial both to the customer who's responded positively to the $15 increases, and ourselves, which we're able better to manage our business with smaller increases. Elaine Yip - Crédit Suisse AG: And then are you realizing, then, the full $45 per ton increase? Have you seen -- how have the customers reacted as the new price list? Are they looking to book the nearer-term deliveries? Or are they more focused a bit on inventories and just willing to wait until they really need the product before placing the order?

We haven't seen -- June 1 is the full $45. So I guess that part remains to be seen, but we haven't seen the pushback to date. And I guess it's really more a weather question than a pricing question today.

Next question comes from David Silver of Bank of America Merrill Lynch.

I had a couple of questions I guess focused mainly on the production side. So maybe John or -- when I look back to other high-volume production periods for your company in 2005 and 2007, the cash production cost number, in other words, just production cost, no DD&A, no royalties, no by-product revenues, $172 was the number I'm thinking about for 1Q. But if you go back to '05 and '07, for stretches, the numbers were in the $110s or $120s. And thinking about investments, you understand your assets very well, where the low-hanging fruit is. Is there an opportunity for looking out to 2013 or so for the New Mexico operations to move down the cost curve significantly from here? Just thinking about 800,000 tons of sales, maybe $40 to $50 per-ton difference there, I mean it seems like a significant profit opportunity. If you could just comment on that.

This is Bob. I guess the first thing that I'd draw your attention to is that in that same period of time, labor costs have continued to increase in the Southeastern Mexico area because it's a very competitive labor market with the oil and gas industry and with other mining industries. So it's a very, very competitive labor market. We've seen other cost, mining equipment cost, chemical reagent cost, cost up and down. Our cost structure has gone up significantly. So it's not just simply about volume in tons. If we look at other producers of commodities, whether they're gold producers, coal producers, they're seeing the same kind of impacts on their cost structure that we've seen. The biggest impact that we're going to make to our cost structure is methodology of mining. And that's why solution mining combined with solar evaporation really is where Intrepid is trying to take itself from a cost standpoint. As we pointed out many times, we believe the new HB Solar Solution Mines can produce tons in the $75 to $80 per-ton range. That's how you make a significant impact. We continue to manage labor costs and manage chemical reagent costs, manage mining equipment costs in the same fashion that other mining companies are having to mine them, but we can't ignore the fact that those costs continue to creep up just like they are for everybody else in the mining industry. So we're very aware of it, we see it, we look back at it in the same fashion you do. And so where we get the biggest bang for our buck or where we make significant changes, like the LRIP project, and then by adding the compaction piece, that allows us to get a higher margin once that product is made, just like we're seeing at Moab. By creating that marketing flexibility, we're now marketing that product in regions that previously we didn't have the product quality to even get into. It wasn't about reaching out, it was that the product quality wasn't there to get us into certain markets. So there are a lot of different ways to focus on your margin and your bottom line. It's not just cost. The way we look at it, it's all about margin. John, is there anything you'd like to add to that?

I think that covers it, Bob. The only little piece I would add is that we continue to manage the amount of development. And during that period of time, we're probably doing a smaller amount of development. The mine was very well developed. And we're positioned as we look forward to the future. Our issue with [ph] development to ore has changed, that means we'll be a little lower grade. As a result we're focusing on moving more tons to offset that, and so you'll see that. If you look at overall tons of material processed and mined, those figures are moving up dramatically. Unfortunately, the grade development has actually decreased a bit given this kind of a flattening effect on actual potash production.

If I could follow up, maybe, on John's last comment. But I believe one quarter ago in discussing the production, potash production expectation, for calendar 2011, you kind of guided us maybe towards a certain level, I thought closer to 800,000 short tons for the year. And I look at the production rate, which I believe was an all-time record for your company in the first quarter, and then allowing for -- there's some apples-to-oranges things with the Moab harvest, I guess. But it does seem like if you can continue at this kind of rough rate, you'd be higher on a full year basis, maybe significantly so than maybe what you were discussing one quarter ago. Has anything changed in your production view for 2011 from last quarter to this quarter? And should we think of your production, potash production potential, as higher than what you were thinking about last conference call?

David, this is Dave Honeyfield. I think the comments, if I remember right, from the last quarter were -- and I think filey [ph] actually called it out pretty well, that we really do see higher production numbers in the first quarter of each year and the fourth quarter of each year because of the seasonality of Moab. The plants are running well. But I think those numbers are still where we think people should look to for 2011 here. The expectation would be that as the harvest cycle in Moab completes here in the second quarter that we'll have a little bit lower production numbers in Q2 and Q3. And then we'll see that pick back up in Q4. At the same time, we've enumerated the projects that are out there and what they're doing on a long-term basis. So directionally, if you look down the road, you're going to see improvements. But I think those numbers are still the right ones to use for this year.

Next question comes from Don Carson of Susquehanna Financial.

Just want to go back to those inventories, your field inventories. You had mentioned that the dealers seem to want to hold inventory, although obviously, there's the risk that they may not be able to sell everything have in inventory now. And then, of course, yesterday, the largest distributor in the U.S. indicated they want to run their inventories down by the end of the season. So I'm wondering whether this latest price increase is really designed to encourage some buying to beat the price increase or whether you think we'll see a replay of last year when had an announced price increase for the summer, but pricing still went down and inventories were down as well?

As you know, the weather is changing daily and weekly, and the weather is having impact on people's plans. So when we talk to our dealers, I would say that there is a fundamental underlying belief that the price of potash has the opportunity to get stronger and to be higher. And so when you talk to most dealers and you look at kind of the fundamental philosophy, if you will, that's the underlying belief. Now day-to-day weather changes are going to change, in effect, the philosophy of certain suppliers. So what we were clearly feeling as recently as a week or 2 ago, dealers bullish on potash for the long-term. There are certain dealers that have different balance sheet situations, different credit situations, different board decision-making situations. And so there's no doubt that we're going to see individual changes or micro-changes within a macro picture. And so we're still seeing dealers that are bullish on potash. And I know that you work hard to talk to a lot of people, and you're going to find those one-off dealers and distributors that are different than the macro picture. Now if the weather continues to be what it is, then we could see a shift in that for the summer, but what we're seeing commodity-price-wise, is very strong commodity pricing. And so we don't anticipate seeing a major fundamental shift in the overall agricultural macro picture. So yes, we're going to see speed bumps just like what we're seeing, and I think you're describing a speed bump, and that's why we continue to try to manage our business on a long-term basis.

And Bob, a follow-up on your pricing strategy. You mentioned that one lesson from 2008 was you didn't want to surprise customers by bumping prices up too aggressively, and you seem to be creeping them up now. What do you think the constraint is on pricing? Does potash have to stay below nitrogen? Because it seemed in 2008 that as potash got above ammonia prices in the corn belt that, that seemed to bring about some price resistance on the parts of growers.

Well, we're not having significant pricing discussions with end users about the price of potash where it is today. As Kelvin mentioned, the discussion right now is really not about price, it's more about timing and movement inventories, what's going to happen. So it's a different discussion. So it feels very different. And so that's why I believe in the macro picture -- in the near-term, foreseeable future, I think we're going to see firm and strong pricing of our product, because the demand is there and, most importantly, the economics are there. So we haven't even begun to touch any kind of a range where potash is priced too high to affect farmer's economics across the broad spectrum of farmers that use potash. So we're a long way away from that price point where we're affecting their economics. So it's a different discussion today than it was in, say, '08. And it's a more fundamentally long term story for the price of potash today than it was in 2007 and 2008. And we're trying to manage our business accordingly.

[Operator Instructions] The next question comes from Fai Lee [ph], an independent analyst.

David, I just wanted to talk to you maybe about the Langbeinite Recovery Improvement Project. You gave some guidance and it was very good. I just want to better understand that. So you're going to have higher volumes once that project comes into place, and you're going to realize higher prices from selling more granular. And I think your cost of production will decrease as higher recovery. But you're going to also have higher DD&A. So on the gross margin aspect of the project, do you expect margins to come down a bit with a higher DD&A or stay relatively flat because the pricing and cost reduction will offset that?

I think the cost side on that, Fai, what you'll see is -- and I think you've captured it pretty well. Our overall production costs for the langbeinite circuit will be, effectively, the same as it is today. But we'll have more tonnage coming through that. Clearly, there is the capital investment that goes along with that. So for a period of time, what you'll see is essentially a trade-off of cash operating costs for DD&A cost on a per-ton basis. That's no different than any other capital investment projects that you have along the way. And what we try to keep people focused on is our cash operating cost, because that's really how you generate the returns on the capital dollars that were putting to use. So overall, we expect to see that cash operating cost decrease. And like I said, we will see an uptick on the DD&A piece with the capital investment.

And so if you're cash operating costs offset your DD&A, but you're still going to sell price -- more granular to be higher-priced, then you should get some gross margin expansion as well. Is that correct?

I think you hit it right on the head. Again, the ability to sell all that product into the granular market, that, based on historical numbers, has achieved a $55 to $65 advantage on a per-ton basis over that standard export market makes the economics of the project together with the per-ton cash operating cost very significant.

This concludes the time allocated for questions on today's call. I will now turn the call back to Mr. David Honeyfield for any closing comments.