Lucas Beaumont: Yes. So I mean I guess you said that the first one was linked to them just doing one drilling Island. So are the incremental ones linked to multiple drilling islands? Or I mean, what’s…
Robert Jornayvaz: We simply need to get their first one approved to kick off the entire process.
Lucas Beaumont: Okay, thanks. I have some more questions, but I’ll go back in the queue.
Operator: [Operator Instructions] Your next question comes from the line of Jason Ursaner from Bumbershoot Holdings. Please go ahead.
Jason Ursaner: Hi. Thanks for taking the questions. And first, I just want to congratulate you on the XTO deal and for getting the final sand permits. I know that’s been a long time coming. And then I appreciate all the details on the CapEx projects in terms of how they’re progressing and just your commentary at the end Bob, I appreciate you adding all that. Just first on the balance sheet. Is there anything notable about the timing in terms of either working capital that you’ve laid out ahead of the spring season or CapEx that’s maybe been front loaded in 2024? Or is that is that a pretty clean number?
Matthew Preston: Yes. Jason, when it comes to capital, I mean, I think certainly, some of it is going to be weighted more towards the first half as a lot of those projects started in 2023 and they’ll be wrapping up in kind of the first half of 2024, the HP pipeline. We’ve already covered IP30B the replacement well, which is happening right now and the Wendover primary pond, which began in 2023 as well. And so from the growth side, certainly, that will be weighted more towards the first half of the year and sustaining capital piece, which is the balance of that $40 million to $50 million spread pretty evenly throughout the year.
Jason Ursaner: Okay. And for the Sand project, I apologize if you’ve talked about this before, but can you maybe either speak to or remind me about the regional economics of the project? Because I guess my understanding is the cost of sand to whoever is using it probably has a lot to do with whoever the next closest option would be. So when this project now can get up and running, what is kind of the regional or competitive view of what’s in the area besides you guys?
Robert Jornayvaz: It will be the closest – it will be the first and only sand mine in Southeast New Mexico. So from a logistical standpoint of which operators pay for sand, sometimes they pay for it FOB at the mine and they pay their own transportation costs or they buy it on a delivered basis. Logistically, we will now be the only mine in the Delaware Basin, on the New Mexico side, and we will be the closest to the wells being permitted and drilled. So we will have a significant logistical advantage from a transportation standpoint to the wells being – to the hundreds, if not thousands of wells that are currently permanent scheduled to be drilled.
Jason Ursaner: Okay. That’s pretty clear. And the looking for a partner strategic, is it someone that would have, I guess, prior experience with operating running a sand mine that you kind of would look to bring that on? Or is it more just the financial aspect of maybe getting money upfront instead of having to kind of do it all yourself?
Robert Jornayvaz: I would say both components are very important. The good news is, we’ve got a lot of interest. And so I’ll just leave it at that, that we’re currently negotiating and feel like we have several directions that we could go and the nature of the partner.
Jason Ursaner: Okay. And then just – you talked a lot about HB in some of the last questions, but on Wendover, specifically, the primary pond 7, which I guess will now be a second primary pond. Is that one more additive? Or is that kind of replacing declining rates that, I guess, what would have been the old primary pond?
Robert Jornayvaz: I would say it’s number one purpose is replacement. We’ll still be storing brine in primary pond 6 that will then flow into primary pond 7, and we will eventually start a multiyear construction on pond 8, which we will – just so we don’t allocate a bunch of capital we’re going to look forward because Wendover has tremendous opportunity, assuming we structure a lithium joint venture, the capital will be available to greatly enhance the facilities out there with a partner that will not only increase potash production, but increase magnesium salt and hopefully, lithium production as well.
Jason Ursaner: Okay. And on the lithium, the kind of numbers like the 2,000 tons, is that kind of contingent on pond 7 being built? Is it contingent pond 8 being built? Is that kind of where you are today with the mag chloride as the byproduct or just, I guess, where is that number…
Robert Jornayvaz: The 2,000 really is a base number that is just literally sitting in a ditch 5 or collection pond 5. And so we know that we consistently over the last many, many years, if not decades. That’s where we achieved the highest concentrations of lithium. And so it’s been measured over several years. We know we have an additional 4,000 to 5,000 tons that flow through the system, and we’re working with some very sophisticated partners that have ideas how we – where we can place collection points to collect those additional tons. So combining with the right strategic partner that understands our seasonality, understands DLE technology and is well financed our primary goals. The great news is, is that any dollar we spend to enhance lithium production will directly result in greater potash production. So it is a true win-win in terms of who and how we structure this.
