Cadiz, Inc. (NASDAQ: CDZI) has announced a definitive 50-year water delivery agreement with the Santa Margarita Water District (SMWD), a major advancement for the company and a significant step towards addressing California's water scarcity issues. The agreement, which was unanimously approved by SMWD's board of directors, is expected to generate essential revenue streams for supporting infrastructure financing for Cadiz's extensive pipeline project.
The agreement will see Cadiz delivering 5,000 acre-feet per year (AFY) of water from the Cadiz Water Supply and Storage Project to groundwater banks along a 220-mile pipeline. In return, SMWD will gain access to water from State Water Contractors and local suppliers. The price per acre-foot of water, which includes all costs, will not exceed $1,650. This initiative is poised to diversify SMWD's water supply portfolio, reducing its dependence on the Colorado River and State Water Project resources.
Susan Kennedy, Chairman and CEO of Cadiz, emphasized the significance of the agreement, stating, "Santa Margarita's agreement to take delivery of water via the Northern Pipeline will help us meet an aggressive construction schedule to have the pipeline online in 2026." Frank Ury, an SMWD board member, highlighted the strategic importance of the partnership in enhancing regional water resilience without the need for new pipeline construction.
Cadiz has been actively pursuing strategic initiatives to cement its market position and address groundwater contamination through various projects. The acquisition of ATEC Water Systems, LLC, a leader in water filtration solutions, is one such initiative. ATEC has secured multiple contracts, including a $5.2 million project in Gresham, Oregon, to supply filters for manganese removal from local groundwater. This project is part of the Cascade Groundwater Alliance's efforts to reduce reliance on imported surface water and improve local water quality.
Further reinforcing its financial stability, Cadiz secured a $41.2 million financing agreement with Heerema International Group Services BV on March 15, 2024, extending its debt maturity to 2027. This financing will accelerate the development of the company's water supply, pipeline, filtration, and storage assets. Additionally, a subsequent financing transaction led by Heerema International Group Services SA on April 25, 2024, has bolstered Cadiz's financial position, supporting its growth strategy.
Cadiz's flagship project, the Solomon Hills development in partnership with Solstra Communities California LLC, aims to deliver 1,275 AFY of water to support the construction of over 4,000 homes for military and working families along the Central California coast. This initiative underscores Cadiz's role in addressing California's urgent housing needs through sustainable water solutions.
In San Bernardino County's Mojave Basin region, Cadiz is collaborating with Fenner Gap Mutual Water Company and the Victor Valley Wastewater Reclamation Authority to integrate recycled water from wastewater treatment plants. This partnership aims to improve groundwater quality and supply efficiency.
Cadiz's transformation from a land and water asset company to a prominent player in the global water industry positions it for significant growth. The company's vast aquifer system in the eastern Mojave Desert, estimated to hold 30-50 million acre-feet of water, provides a crucial resource in a region facing severe water scarcity. By leveraging strategic infrastructure such as pipelines and right-of-ways, Cadiz is poised to operate one of the largest water banks globally.
With a clear vision for the future and a robust portfolio of assets, Cadiz is well-positioned to undertake public partnerships and infrastructure projects. These initiatives aim to bolster water security and address the escalating demand for resilient water management solutions amid climate variability.
