Today Cadiz Inc. (NASDAQ: CDZI) announced that two Southern California water agencies have approved agreements to proceed with the Cadiz Water Conservation & Storage Project (“Cadiz Project”) and participate in the Project’s environmental review. The Boards of Directors of Santa Margarita Water District (“Santa Margarita”) and Three Valleys Municipal Water District (“Three Valleys”), which together serve over 650,000 customers in parts of Orange and Los Angeles Counties, have unanimously approved agreements that commit funds to an environmental review of the Cadiz Project and also grant the agencies the right to acquire a firm annual supply of water once the environmental review is complete.
Under the terms of the agreements, filed today by the Company with the Securities and Exchange Commission (“SEC”), upon completion of the environmental review, each agency has the right to acquire an annual supply of 5,000 acre-feet of water at a pre-determined formula competitive with their incremental cost of new water. Santa Margarita also has the option to purchase an additional 10,000 acre-feet of water per year. In addition, both agencies have options to acquire storage rights in the Cadiz Project that will allow them to manage this supply to complement their other water resources. The Company continues to work with additional water providers interested in acquiring rights to the remaining annual supply conserved by the Project and is in discussions with third parties regarding the storage aspect of the Project.
The two agencies, which signed Letters of Intent with Cadiz in 2009, approved these agreements following an exhaustive due diligence period. This included the recent publication of a comprehensive study of the Project’s aquifer system by environmental firm CH2M Hill. The study, which was peer reviewed and validated by leading groundwater experts, estimates total groundwater in storage in the aquifer system between 17 and 34 million acre-feet, a quantity on par with Lake Mead, the nation’s largest surface reservoir. The study also confirmed a renewable annual supply of native groundwater in the aquifer system currently being lost to evaporation.