Cadiz, Inc. | Press Release: CH2M Hill Study Confirms Vast Scale of Cadiz Aquifer System
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Press Release: CH2M Hill Study Confirms Vast Scale of Cadiz Aquifer System

Press Release: CH2M Hill Study Confirms Vast Scale of Cadiz Aquifer System

Groundwater Management Plan to Provide for the Long Term Safe Annual Withdrawal of 50,000 Acre-Feet of Water Each Year; Results Peer- reviewed by Leading Geologists and Verified by New Test Well Data

February 8, 2010

ONTARIO, CA – Today the internationally respected environmental firm CH2M Hill will unveil the findings of a comprehensive year-long study measuring the vast scale and recharge rate of the Cadiz aquifer system. The study, to be presented at a conference of the Association of Ground Water Agencies and American Ground Water Trust, describes a groundwater basin consisting principally of an alluvial and carbonate aquifer ranging in size between 17 and 34 million acre-feet, a volume of water larger than Lake Mead, the nation’s largest surface reservoir. (To view the presentation given by CH2M Hill at the conference, click here CH2M Hill Study PPT.)

The findings also confirm the presence of highly permeable limestone carbonate rock lying beneath the alluvium, which contributes significantly to the productivity of the aquifer system.

CH2M Hill’s findings have been peer-reviewed by leading hydrology experts and the results corroborated by extensive field research and pump testing involving the excavation of four borings and test wells to depths of between 1,000 and 1,947 feet beneath the earth’s surface. Based on this study of natural recharge in the aquifer system, Cadiz Inc. [NASDAQ: CDZI] will develop a groundwater management plan providing for the safe long-term annual withdrawal of 50,000 acre-feet of water each year, an amount that can sustainably supply the total water needs of 400,000 Southern California residents.

“This is the most comprehensive study of the hydrogeology of the watershed ever undertaken, based on recent field data and on the best and latest science.” said Terry Foreman, CH2M Hill’s Senior Hydrogeologist. “In the initial phase of the study, we’ve concentrated on developing a watershed model to determine the total volume of water in storage and the long-term yield that can be safely recovered on a sustainable basis. We had the benefit of a recently published U.S. Geological Survey (“USGS”) watershed model, fresh technical surveys conducted by the federal government, and an array of new data obtained from climate research. The application of the USGS model clearly supports the conclusion that the Fenner Valley includes a deep and dynamic aquifer system holding a significant and renewable water supply.”

To corroborate these findings researchers conducted a second phase of field work, which included a deep survey and pump test of the water table of the Fenner Valley. Test well data, including video taken to a depth of approximately 1,800 feet, confirmed the presence of water in the alluvial soils and deep into the carbonate units.

“The scientific debate about this aquifer system has always revolved around two questions: How deep is the water table beneath Cadiz, and does it extend way down beneath the alluvial soils into the underlying layers of carbonate rock?” said Dr. John Sharp, Carlton Professor of Geology at the University of Texas and one of the nation’s leading experts on limestone carbonates. “These layers of dolomite, sandstone and limestone rock were laid down by an ancient seabed and are highly permeable. We now have new test well data, pumping results from the wells, and dispositive video evidence showing huge quantities of water flowing like a river through cavities 1,000 feet beneath the ground,” said Sharp, who reviewed the CH2M Hill findings.

“I can tell you from 43 years in this business, I have never seen a test well as productive as this one,” said Bob Ereth of Layne Christiansen, whose firm conducted the field tests.

To view a video detailing the new findings and describing the extent of the water resource at Cadiz, please go to: http://cadizinc.wpengine.com/pureproof. The video is the first in a series of videos being produced about the Cadiz Water Conservation and Storage Project (“Cadiz Project”).

The findings were also independently analyzed and corroborated by Dr. Dennis Williams, who teaches ground water modeling and geohydrology at the University of Southern California and whose firm GEOSCIENCE Support Services, Inc. previously conducted an exhaustive study of the Cadiz aquifer system for the Metropolitan Water District.

“These findings are entirely consistent with our earlier estimates of groundwater recharge into the Fenner, Bristol and Cadiz watershed areas,” said Williams.

“There is undoubtedly a prolific aquifer system in the Fenner Valley,” said Andrew Stone, hydrogeologist and Executive Director of the American Ground Water Trust, a national non-profit organization that promotes the sustainable management of groundwater and whose mission is to act as an independent authority on groundwater. “CH2M Hill has systematically followed prudent and sound scientific methodologies in its comprehensive report characterizing the hydrogeology of the aquifer system.”

About the Study

According to the findings, the aquifer system is fed by a watershed spanning some 1,300 square miles, an area nearly three times the size of the City of Los Angeles. Rain and snowmelt in nearby mountains filter deep beneath the earth’s surface, where it reaches the water table and slowly percolates to the valley floor, finding a natural confluence in the Cadiz Project area. According to the findings, this annual recharge into the aquifer ultimately migrates further downhill where it is lost to evaporation through nearby salt flats.

CH2M Hill’s findings were prepared in advance of an upcoming environmental review of the Cadiz Project under the California Environmental Quality Act (CEQA). The Project proposes both to capture and conserve recoverable water before it evaporates and to utilize the aquifer’s capacity to offer up to one million acre-feet of water storage for conserved and imported water.

CH2M Hill’s year-long study included an analysis of all previous studies on the hydrology, geology, hydrogeology, groundwater conditions and vegetation of the watershed, compiling the most up-to-date data on climate conditions, precipitation and temperature, as well as geologic data, data on wells, springs and groundwater, soils mapping and vegetation studies. By examining the latest revisions to bedrock and groundwater-level contour maps, the study updates and provides more precise estimates of groundwater in storage. The study included a detailed examination of the geology and capacity of the Fenner Gap, including the development of a local three-dimensional flow model to estimate the likely rate of groundwater flow.

Estimates of recoverable water were developed using the INFIL3.0 Watershed Soil Moisture Budget Model published and released for public use by the USGS in 2008 and originally developed in cooperation with the U.S. Department of Energy to estimate net infiltration and groundwater recharge at the Yucca Mountain waste repository in Nevada. This complex model considers geography, topography, climate parameters, including monthly atmospheric conditions, precipitation and air temperature, soil parameters, hydrologic parameters including hydraulic conductivity and porosity, and vegetation and root zone data. CH2M Hill’s findings also relied on data published by the USGS in 2006 providing additional detail on the geology of the study area, which was not available during previous studies.

Major findings of the CH2M Hill report include:

• The range of groundwater in storage in the focus area of study ranges from 17-34 million acre-feet stored in the alluvial aquifer.

• CH2M Hill estimates the character of the underlying carbonate units greatly contribute to the productivity of the groundwater basin and would substantially add to the quantity of water stored in the alluvial aquifer system.

• Application of the latest USGS computer model results in a recharge estimate of 32,000 acre-feet per year, much higher than the previous USGS Maxey-Eakin model estimates of 2,070 to 10,343 acre-feet per year.

• The freshly collected field data indicates that groundwater flow through the Fenner Gap will be consistent with the watershed model results.

• A significant groundwater resource generated by precipitation in the watershed is presently being wasted to evaporation at the Bristol and Cadiz Dry Lakes

These findings will allow Cadiz and its public agency partners to now begin the CEQA process for the Cadiz Project. The Company looks forward to providing an update on the details of those developments shortly.

The Sustainability Pledge

Cadiz has committed to developing the Cadiz Project sustainably. Last year, the Company signed a wide-ranging “Green Compact” with the Natural Heritage Institute (NHI), a leading global environmental organization committed to protecting aquatic ecosystems. Now with the completion of the CH2MHILL study, Cadiz will sponsor the development of a groundwater management plan to establish operating parameters to ensure that the long-term withdrawal of 50,000 acre-feet per year can be safely withdrawn in a manner that maximizes conservation and minimizes harm to the environment. A technical committee will be formed comprised of leading professionals to provide comment and to peer review the proposed plan. The American Ground Water Trust has been invited to participate in the ongoing effort.

“Given the Trust’s groundwater education mission and its track record in promoting sustainable groundwater management and aquifer storage technology, I am enthusiastic about the opportunity to participate in the ongoing review of the groundwater management plan that has the potential to provide Southern California with an additional source of water,” said Andrew Stone of the American Ground Water Trust.

Founded in 1983, Cadiz is a publicly held renewable resources company that owns 70 square miles of property with significant water resources and clean energy potential in eastern San Bernardino County, California. The Company is engaged in a combination of organic farming, solar energy and water supply projects. Further information can be obtained by visiting www.cadizinc.com.

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This release 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 and the financing activities of the Company. Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Factors that could cause actual results or events to differ materially from those reflected in the Company’s forward-looking statements include the Company’s ability to maximize value for Cadiz land and water resources, the Company’s ability to obtain new financing as needed, and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.

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