Investment Overview

Report
CADIZ INC.
(NASDAQ: CDZI)
Corporate Overview
Safe Harbor Agreement
January 2015
This presentation contains forward-looking statements that
are subject to significant risks and uncertainties, including
statements related to the future operating and financial
performance of the Company. Although the Company
believes that the expectations reflected in its forwardlooking statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
Cadiz Inc.
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Cadiz Inc.
o 45,000 acres of land
and water rights in
San Bernardino
County, California.
Fresno
Las Vegas
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o Operations primarily
include
• agricultural
development
• implementation
of water supply
and groundwater
storage projects.
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Kingman
Bakersfield
Barstow
Santa
Barbara
Needles
40
CADIZ
San Bernardino
Los Angeles
Laughlin
PIUTE
DANBY
CRA
10
15
5
San Diego
El Centro
8
Yuma
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Cadiz Valley Water Resource
o 1,300 sq. mile watershed.
New York Mountains
o Approximately 20 million acrefeet (AF) of water in storage in
the alluvial aquifers.
o Water being lost to evaporation
at highly saline dry lakes.
o Cadiz owns 34,000 acres of
private land at base of
watershed – Permits to use
and deliver water from aquifer.
Providence
Mountains
Fenner Valley
Granite
Mountains
66
Orange
Blossom
Wash
Bristol Dry
Lake
Cadiz Dry
Lake
5 Miles
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Market Conditions
o Long-term Projections of Supply Crisis for California’s Traditional
Water Supplies
o Demand for New Water Supply Alternatives • Major Infrastructure Projects (reservoirs, Delta tunnels) pursued by
State, $7.5 Billion water bond approved by voters in Nov 2014.
• Variety of local supply projects (desalination, recycling, supply
augmentation, aquifer storage conservation) actively sought by all
water providers (utilities, retailers, public agencies, real estate
developers, agriculture).
o Rising Price of Water in California • Rates have historically increased approx. 6% per year.
• Market prices for reliable water reaching $1,000AF; short-term spot
market $2,000/AF.
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Supplemental Water Supply Alternatives
Project
Annual Yield
Unit Cost ($/AF)
70,000
22,000 to 112,000
16,500
48,000 to 56,000
$900
$1,366 to $1,835
$1,403
$ 2,014 to $2,257
Huntington Beach Seawater Desalination
56,000
$1,768 to $1,812
Camp Pendleton Seawater Desalination
56,000
$1,900 to $2,340
Elsinore Valley Repurified Water (Wildomar)
3,000
$1,312
Central Basin Repurified Water (Southeast)
15,000
$1,672
-
$735 - $1,032
12,000
$1,135
3,200
$2,190
600
$1,800
Long-term Annual Supply
OCWD Groundwater Replenishment System
West Basin Seawater Desalter
MWDOC - Dana Point Desalter
Carlsbad Seawater Desalination
MWD Untreated/Treated Tier 2 Rate
Short-term/Dry-year Supply
Buena Vista Water Storage District
Madera County Farmers
Riverdale Farmers
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Current Operations
o Cadiz Valley Water Conservation, Recovery and Storage Project
•
Permits for 2.5 million AF of water deliveries over 50 years; not to
exceed 75,000 AF/yr.
•
Current wellfield capacity on property to pump 20,000 AF/year.
o Cadiz Valley Agricultural Development
•
160-acre organic vineyard
(harvests dried-on-vine raisins.)
•
Joint venture with Ag company to
plant up to 1,500 acres of lemons,
340 of which planted to date.
 Rent $200/acre/yr; profit share not to exceed $1,200/acre/yr.
• Total 9,600 acres permitted for Ag.
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Other Assets
o Land Conservation Bank
• 7,500 acres undeveloped land owned by Cadiz in high density
tortoise habitat (Piute property).
• Final stage of approval as conservation bank in State of CA
entitlement process.
• Bank credits would be sold to development projects with
mitigation requirements.
o Cadiz Northwest Pipeline
• 96-mile 30” steel pipeline, idle in ground, with water delivery
capacity 20 – 30,000 AF/year.
• Intersects major California water infrastructure.
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Cadiz Valley Water Conservation,
Recovery & Storage Project
Phase 1 - Project Design
o Intercept and
conserve
groundwater
before it
reaches dry
lakes.
o Put conserved
water to
beneficial use in
So. California
via wellfield at
Cadiz and
pipeline
constructed
within active
railroad ROW.
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Phase 1 - Permitting Process
o 2011 – 2012: Public environmental review process. Final
Environmental Impact Report (FEIR) summarizes there will be NO
significant impacts caused by Project operations.
o July 31, 2012: Project approved and FEIR certified by Santa
Margarita Water District finding no impacts from project operation.
o October 1, 2012: San Bernardino County Supervisors approve
project withdrawals of 2.5 million AF over 50 years under
groundwater management plan (GMMMP).
o 2013 – 2015: U.S. BLM certification process
that project within the scope of the railroad
right-of-way; i.e. furthers railroad purposes.
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Phase 1- Project Participants
o Project Participants are AA-rated
water agencies or utilities
and large agricultural districts.
o More than 50,000 AF/year project supplies
reserved under definitive contract agreement,
option agreement, or Letters of Intent.
o Demand is in excess of Project capacity. To account for
oversubscription, participation being prioritized in final
definitive purchase agreements. Agreements expected to be
completed within the first half of 2015.
o In addition, Arizona & California Railroad has reserved water
and power from the Project for critical railroad purposes.
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Phase 1 - Project Pricing Structure
1. Water Supply Component
 2014 Definitive Purchase & Sale Agreement at
$960/AF delivered to Aqueduct.
 5% cap on average annual escalation.
2. Carry-over Storage Component
 2014 Definitive Purchase & Sale Agreement at
$1,500/AF of reserved storage. Capacity in
Phase 1 = 150,000 AF.
 Annual storage administrative fee $20/AF.
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Phase 1 - Litigation
o 4th Quarter 2012: Litigation filed by Project opponents
challenging environmental approvals and related permits.
 6 separate cases proceeded to trial in 2013. All cases
coordinated before one Judge.
o October 2014: Court denied all claims against Project
and upheld the environmental and permitting approvals.
Court also awarded legal costs to the defending parties.
o December 2015: All 6 cases appealed to California Court
of Appeals, 4th District.
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Phase 1 – Construction
o Primary activities:
•
Expand the existing agricultural well field by
approximately 12 new wells.
•
Construct 43-mile buried pipeline to
Colorado River Aqueduct within 200ft.
right-of-way.
•
Access natural gas power source for the well field
and ancillary facilities.
o Capital cost projected at $250 million.
o Timeline: Early stage pre- construction activity occurring in 2015 on
Cadiz property. Pipeline and build out of facilities expected to occur
in 2016.
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Phase 1 – Return on Investment
o Company has invested over $170m to acquire and develop the
assets needed to implement the Project.
o After operating costs and cap-ex amortization, cash flows from longterm contracts are estimated to be approximately $500-$600/AF
(plus 5% inflator).(1)
o Cash flows from short-term contracts are expected to track pricing in
short-term/emergency supply market .
(1In signed 2014 Purchase Agreement inflator based on US BLS Water & Sewer Index. O & M from site to Aqueduct estimated at $75/AF.
Minor treatment cost prior to Aqueduct estimated at $60/AF.
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Next Steps
2015: Implement project in coordination with SMWD and other
project participants

Negotiate and execute sales agreements with current option
holders and additional participants. (Q1 – Q2)

Final design and pre-construction activities (Q1-Q4)

Advance CRA tie-in and exchange terms with Metropolitan
Water District. (Q2-Q3)

Resolve BLM certification & CEQA appeal (Q3& Q4)

Project financing and construction (Q4)
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Phase 2 – Imported Water Storage
o Import water when available for
storage in the aquifer system at Project
area, return to agencies when needed
in dry years.
o Facilities – Cadiz NW 96-mile pipeline, new
recharge basins, new pump station.
o Capital costs – $30 - $40 million, plus costs to prepare the 96-mile
pipeline.
o Capacity – 1 million acre-feet of storage.
o Value – Estimated charge of $1,500/AF to reserve storage capacity,
plus annual storage fees.
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Map – So Cal Water System
Phase 1 & 2 would link Cadiz to main water transportation routes in
California.
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Corporate Details
Financial
(@12/31/14)
CASH - $16.2 million
o Working capital through Q2 2016.
o Funding for construction planning activity.
DEBT - $105 million outstanding
o $45 million Senior Secured Mortgage, 8% Interest
PIK, Maturity March 2016.
o $60 million Convertible Bond at $8.05/share, 7%
Interest PIK, Maturity March 2018.
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Capitalization
Shares O/S:
17.7 million
Market Capitalization:
$180 million
Fully Diluted Shares O/S (upon Bond 25 million
conversion) :
Debt O/S:
$105 million
Debt O/S (upon Bond conversion):
$45 million
Enterprise Value:
$285 million
(12.31.14)
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For more information, visit
www.cadizinc.com
email:
[email protected]
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