CADIZ INC. (NASDAQ: CDZI) Corporate Overview August 2014
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CADIZ INC. (NASDAQ: CDZI) Corporate Overview August 2014
August 2014
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 forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
Cadiz Inc.
Safe Harbor Agreement
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Los Angeles
San Diego
Las Vegas
Barstow
Fresno
Bakersfield
San Bernardino
SantaBarbara
Yuma
Kingman
Needles
Laughlin
El Centro
CADIZ
CRA
DANBY
PIUTE
Cadiz Inc.
o 45,000 acres of land and water rights in San Bernardino County, California.
o Developing agriculture, water supply and groundwater storage projects.
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o 1,300 sq. mile watershed in eastern San Bernardino County.
o Approximately 20 million acre-feet (AF) of water in storage in the alluvial aquifers.
o 34,000 acres of private land.
o Water being lost to evaporation at highly saline dry lakes.
Cadiz Valley Water Resource
Cadiz Dry
Lake
Bristol Dry Lake
5 Miles
BNSF
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Fenner Valley
Orange Blossom Wash
Granite Mountains
Providence Mountains
New York Mountains
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o Agricultural Operation –
• 9,600 acres zoned for agricultural development.
• Existing 160-acre organic vineyard.
• New JVs with two ag groups to develop up to 1,500 acres of lemons.
• 320 acres planted to date.
• Rent $200/acre/yr.; profit share not to exceed $1,200/acre/yr.
Cadiz Valley Operations
o Water Project –
• Site of Cadiz Valley Water Conservation, Recovery and Storage Project: Approved for 2.5 million AF of water deliveries over 50 years; not to exceed 75,000 AF/yr.
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LAND CONSERVATION BANK
o 7,500 acres undeveloped land in separate watershed; high density tortoise habitat.
o Final stage of approval as conservation bank in State of CA entitlement process.
o Bank credits would be available to development projects with mitigation requirements.
EPNG PIPELINE
o 96-mile 30” steel pipeline, water delivery capacity 20 – 30,000 AF/year.
o Cadiz Property NW to Barstow, CA.
Other Assets
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o Rising Price of Water in California -
• Rates have historically increased approx. 6% per year.
• New long-term water supplies cost >$1000/AF.
• Market prices for short-term ag water >$2000/AF.
o Institutional Limits on Traditional Water Supplies -
• 3 primary So. Cal import systems at historic lows.
o Lack of Cost-Effective Alternatives -
• SF/SJ Bay Delta twin tunnels to cost >$25 billion & only nominally increases annual deliveries.
• Identified surface storage alternatives estimated between $2 - $3 billion dollars to construct.
Key Drivers of Development Strategy
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Supplemental Water Supply Alternatives
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Project Annual Yield Unit Cost ($/AF)
Long-term Annual Supply OCWD Groundwater Replenishment System 70,000 $900 West Basin Seawater Desalter 22,000 to 112,000 $1,366 to $1,835 MWDOC - Dana Point Desalter 16,500 $1,403 Carlsbad Seawater Desalination 48,000 to 56,000 $ 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
MWD Untreated/Treated Tier 2 Rate - $735 - $1,032 Short-term/Dry-year Supply Buena Vista Water Storage District 12,000 $1,135 Madera County Farmers 3,200 $2,190 Riverdale Farmers 600 $1,800
Cadiz Valley Water Conservation, Recovery & Storage Project
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Phase 1 - Project Design
o Intercept and conserve groundwater before it reaches dry lakes.
o Put conserved water to beneficial use in So. California water system.
o Without intervention, billions of gallons of water lost.
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o Expand the existing agricultural well field by approximately 12 new wells.
o Construct 43-mile buried pipeline to Colorado River Aqueduct within Arizona & California Railroad right-of-way.
o Natural gas power source for the well field and ancillary facilities.
o Capital cost projected at $200-$250 million.
o O & M from site to Aqueduct estimated at $75/AF.
Phase 1 – Facilities
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Phase 1 - Permitting Process
o Public environmental review process conducted in 2011 – 2012. Final Environmental Impact Report (EIR) responds to every public comment and summarizes that Project operations will avoid any significant impacts to desert resources.
o July 31, 2012: Final EIR certified by Santa Margarita Water District.
o October 1, 2012: San Bernardino County Board of Supervisors approved Groundwater Management, Mitigation and Monitoring Plan and the withdrawal of 2.5 million AF over 50 years.
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Phase 1 - Litigation Phase
o Litigation filed in Q4 2012 by Project opponents challenging approvals and related permits.
2 petitioners dismissed in 2013 (Labor and Ratepayer groups);
2 petitioners went to trial 2013-2014 (Mining and Environmental groups) in 6 separate cases. Cases coordinated before one Judge in Superior Court.
o May 2014: Judge issued ruling denying all 6 claims and upholding environmental approvals.
o Cases subject to appeal.
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Phase 1- Participants
o Up to 40,000 AF/year of project supplies under option to AA-rated water agencies and utilities.
o Arizona & California Railroad will receive water and power for critical railroad purposes.
o Advanced discussions with additional water providers and agricultural districts that have proposed acquiring rights to the remaining available Project supplies.
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Project Pricing Structure
Option Agreements currently provide for:
1. Water Supply Component
• $775* AF delivered to Colorado River Aqueduct (“CRA”)
• 5% cap on average annual escalation
2. Storage Component
• Carry-over storage up to $1,500* AF
• Annual storage administrative fee $20* AF
15 * 2010 Dollars
o Company has invested over $170m to acquire and develop the assets needed to implement the Project.
o Projected cash flows would cover upfront capital investment and provide single digit rate of return consistent with other public/private water development projects.
o After operating costs and cap-ex amortization, cash flows from long-term contracts are estimated to be approximately $500-$600/AF (plus 5% inflator).(1)
o Cash flows from short-term contracts would be expected to track water supply alternatives.
(1) Estimated inflator is based on the historic trend of CA water price increases.
Phase 1 – Return on Investment
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o Import water when available for storage in the aquifer system at Project area, return to agencies when needed in dry years.
o Facilities – existing 96-mile pipeline, new recharge basins, new pump station.
o Capital costs – $30 - $40 million, plus costs to convert the 96-mile pipeline.
o Capacity – 1 million acre-feet of storage.
o Value – Central Valley banks charge water agencies approx. $1,500/AF to reserve storage capacity, plus annual storage fees.
Phase 2 – Imported Water Storage
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Map – So Cal Water System
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Phase 1 & 2 would link Cadiz to main water transportation routes in California.
Next Steps
2014 – 2015: Implement project in coordination with SMWD and other project participants
Resolve DOI certification & any CEQA appeal.
Advance sales agreements with current option holders and new participants.
Advance CRA tie-in and exchange terms with Metropolitan Water District.
Project financing, final design and start construction of Phase 1 facilities.
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Corporate Details
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Financial (@6/30/14)
CASH - $5.3 million
o Working capital through Q1 2015.
DEBT - $100 million outstanding.
o $44 million Senior Secured Mortgage, 8% Interest PIK, Maturity March 2016.
o $56 million Convertible Bond at $8.05/share, 7% Interest PIK, Maturity March 2018.
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Shares O/S: 16.2 million
Market Capitalization: $150 million
Fully Diluted Shares O/S (upon Bond conversion) :
23 million
Debt O/S: $100 million
Debt O/S (upon Bond conversion):
$44 million
Enterprise Value: $250 million
Capitalization
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