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CADIZ, Calif. - Cadiz Inc. (NASDAQ:CDZI), a water infrastructure company with a market capitalization of $449 million that has seen its stock surge 63% over the past year, has signed a definitive agreement with the Lytton Rancheria of California for up to $51 million in financing for its Mojave Groundwater Bank project, the company announced Tuesday. InvestingPro data shows the company maintains healthy liquidity with a current ratio of 1.81.
The agreement with the federally recognized Native American tribe represents the first tranche of approximately $450 million in total equity capital being raised through Mojave Water Infrastructure Company, LLC (MWI), a special-purpose entity formed to construct, own, and operate the project. According to InvestingPro analysis, Cadiz operates with a moderate debt level, with a debt-to-equity ratio of 2.5, suggesting reasonable financial flexibility for this major undertaking.
Under the terms of the agreement, Cadiz may draw unsecured loan proceeds up to $51 million to fund development and capital costs. The loan is convertible into membership interests in MWI on the same economic terms offered to other equity investors. Initial proceeds of approximately $15 million are expected to reimburse the company for project development expenses.
Lytton Rancheria Tribal Chairperson Andy Mejia said, "For generations, tribes have protected the land and water that sustains us. Today, we are taking a seat at the table to help shape how water is managed across California and the West."
Cadiz will issue 600,000 shares of common stock at closing as a commitment fee, and 25,000 shares per $1 million funded on each draw. All shares will be issued under the company’s effective Form S-3 shelf registration statement.
The company is currently completing due diligence with private equity investors for up to an additional $400 million in equity investment into MWI. Combined with municipal debt and government grant financing, these funds are expected to cover construction of all project facilities, with construction anticipated to begin in 2026. Analysts tracked by InvestingPro expect significant revenue growth this year, with 12 additional exclusive insights available to subscribers.
The agreement follows a Letter of Intent executed between the parties in November 2024. According to the press release statement, the project is expected to be the largest groundwater bank in the Southwest.
In other recent news, Cadiz Inc. has announced a memorandum of understanding with the U.S. Bureau of Reclamation, Fenner Valley Water Authority, and Fenner Gap Mutual Water Company. This agreement aims to explore opportunities for water augmentation of the Colorado River through Cadiz’s proposed Mojave Groundwater Bank project in San Bernardino County, California. The memorandum sets a collaborative framework for sharing data and research related to water augmentation and aquifer storage. The Bureau of Reclamation will study the feasibility of delivering conserved water from the project to Lake Mead and its potential benefits for the Lower Colorado River Basin.
Additionally, Cadiz Inc. has partnered with San Bernardino Valley Municipal Water District and Fontana Water Company to tackle perchlorate contamination in the Rialto-Colton Groundwater Basin. As part of this agreement, Cadiz will supply specialized water filtration systems to Fontana Water Company to treat perchlorate at its facilities. These systems aim to prevent potential contamination migration during the operation of San Bernardino Valley’s Cactus Basins Recharge Program.
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