Cadiz Inc., ATEC Systems Associates Inc. and CH2M Execute Strategic Alliance Agreement to Provide Treatment for Chromium-6 in Drinking Water Sources

August 10, 2015 | By Business Wire News

LOS ANGELES

Today, Southern California land and water resources development company Cadiz Inc. (NASDAQ: CDZI) (“Cadiz”, the “Company”), water treatment company ATEC Systems Associates, Inc. (“ATEC”) and international engineering firm CH2M (“CH2M”) announced the execution of a strategic alliance agreement for the expanded use of an innovative California Division of Drinking Water-approved technology for the treatment and removal of Chromium-6 (“CR-6”) from drinking water supplies. The highly-efficient ATEC technology will also enable the economical treatment of water made available by the Cadiz Valley Water Conservation, Recovery & Storage Project (“Cadiz Water Project”) for naturally occurring CR-6 prior to its entering the Metropolitan Water District of Southern California’s (“Metropolitan”) Colorado River Aqueduct (“CRA”), the proposed primary water transportation conduit to the Project’s participating water providers.

The Santa Margarita Water District (“SMWD”), the managing member of the newly formed Fenner Valley Water Authority overseeing Project design and implementation, is currently working with Metropolitan on the technical arrangements for the potential conveyance of water through the CRA, including water quality standards. In 2014, California became the first and only state in the U.S. to limit CR-6 in drinking water to 10 parts per billion (“ppb”), compared to the federal standard for total Chromium in drinking water of 100 ppb. CR-6 occurs naturally at levels above 10 ppb in many groundwater sources across California, including the Cadiz Water Project basin where it naturally occurs at levels that slightly exceed the new California standard. Although a blend of Cadiz water with Metropolitan supplies in the CRA may satisfy the CR-6 water quality regulatory standard, Cadiz and SMWD are sensitive to ensure the Project has the ability to meet any applicable drinking water standards prior to entering the CRA as may be required by Metropolitan. Consequently, Cadiz began evaluating potential treatment technologies in 2013 following the announcement of the new standard.

After considering various treatment strategies, Cadiz engaged ATEC to conduct pilot treatment tests at its existing wells. Pilot tests at the Cadiz Water Project area were overseen by CH2M and subsequently peer reviewed by multiple drinking water professionals. The results demonstrate that the ATEC technology can cost-effectively remove CR-6 at the wellhead to a level substantially below the new California State standard. A secondary benefit of the new treatment technology is the removal of arsenic, although Project water is already below current arsenic standards.

“The prevailing view within the water community is that treatment of CR-6 is both intensive and expensive. We decided to make an investment in more innovative technology and feel fortunate to have been connected with ATEC. Their technology will provide dramatic benefits at the Cadiz Water Project area and can help many other water retail agencies that are attempting to cope with still relatively new CR-6 treatment standards,” said Scott Slater, CEO of Cadiz.

SMWD General Manager Dan Ferons stated that “delivering water that meets or beats the State standard for levels of CR-6 is a key objective of the success of our public-private partnership with Cadiz and we are pleased they took the initiative to investigate alternative technologies.”

ATEC’s innovative technology is applicable not only to the Cadiz Water Project, but also many similar groundwater basins in California and elsewhere. Through the strategic alliance, Cadiz, ATEC and CH2M will work to present the technology to other water providers that must comply with the new standard in an effective and cost-effective manner.

CR-6 is a form of the metallic element Chromium, the 11^th most common element in the earth’s crust, and is often found naturally in groundwater when the erosion of sediments in rock formations dissolves. According to the California State Water Resources Control Board, Division of Water Quality, more than 3,300 sources of drinking water tested from 1997 to 2014 had measured levels of CR-6. Sources in Riverside, Los Angeles, Merced, San Bernardino, Solano, Santa Barbara, Santa Cruz and Yolo Counties have experienced measured levels above the new State standard. The ATEC treatment technology has been tested at various locations in California with excellent results and could be a solution for many other groundwater basins that serve drinking water needs in California.

“ATEC is excited about the opportunity to provide treatment for the Cadiz Water Project, which will meet the water supply needs of thousands of California families, and we are delighted to help deliver an excellent water product through the use of our very effective technology,” said Bill Ketchum, CEO of ATEC.

The ATEC treatment system is designed around the Reduction-Coagulation-Filtration (RCF) process for CR-6, which is listed as a best available treatment for hexavalent chromium removal by the California State Water Resources Control Board, Division of Drinking Water. This treatment strategy is cost effective and can be accommodated within the previous capital and operations maintenance cost estimates for the Cadiz Water Project.

“The ATEC treatment technology is really a break through improvement in the effort to cost-effectively treat CR-6. We think it has tremendous potential for retail agencies across California,” said Lee O’Dell from CH2M.

John Gaston, former Chief Engineer for the California Department of Public Health, Office of Drinking Water, said, “After reviewing the pilot test results, I believe the ATEC technology, which very effectively removed Chromium-6 from Cadiz well water, can be a dramatic improvement in how we treat CR-6 in California.”

James Borchardt, Vice President and Director of Water Technology at MWH Global, also stated following his peer review of the pilot results, “This is a proven treatment train for removal of chromium, arsenic, and other dissolved metals and is appropriate for large-scale water treatment facilities. The pilot testing results for Cadiz show that chromium and arsenic were all effectively removed to well below MCLs.”

Further testing is ongoing to make the technology more broadly available across California. Cadiz and CH2M will collaborate with ATEC to market the technology to other retail water agencies beginning Fall 2015.

About Water Quality at the Cadiz Water Project area

Groundwater from the non-industrialized, largely vacant watershed tributary to the Cadiz Water Project is of a very high quality with low total dissolved solids (“TDS”). TDS in the groundwater that is within the Project area well field has been consistently measured at less than 300mg/L. This compares quite favorably with the TDS quality of water in the Colorado River Aqueduct, (CRA) owned and operated by Metropolitan.

In 1999, Metropolitan established a salinity goal of 500mg/L TDS. In its 2010 Urban Water Management Plan, Metropolitan identified the link between lowering salinity and substantial cost benefits. A 2013 report authored by CH2M using the joint model recently developed by the United States Bureau of Reclamation (USBR) and Metropolitan estimated that the water-softening benefits that would follow from Project water entering the CRA would exceed $400 million over the life of the Project. These benefits were also included in a 2013 quantification of regional benefits of the Cadiz Water Project amounting to $6.1 billion.

About Cadiz Inc.

Founded in 1983, Cadiz Inc. is a publicly held renewable resources company that owns 70 square miles of property with significant water resources in Southern California. The Company operates an organic agricultural development in the Cadiz Valley of eastern San Bernardino County, California and is partnering with the Santa Margarita Water District, Fenner Valley Mutual Water Company, and Fenner Valley Water Authority to implement the Cadiz Valley Water Conservation, Recovery & Storage Project. The Company abides by a wide-ranging “Green Compact” focused on environmental conservation and sustainable practices to manage its land, water and agricultural resources. For more information about Cadiz, visit www.cadizinc.com.

About ATEC Systems

ATEC is a Seattle-based business engaged in the development of efficient, reliable, cost-effective high rate water treatment technologies. ATEC Systems debuted its first high rate system for the removal of iron and manganese in 1992. Since that time, the Company has built approximately 350 water treatment systems across the US and around the world. Its process is unique and consistently results in smaller footprints, smaller piping, and lower costs. The Company’s products have successfully treated water supplies for arsenic, iron, manganese, hydrogen sulfide and radium, and its systems are now being pilot tested in California to remove hexavalent chromium and arsenic from groundwater. For more information, visit www.atecwatersystems.com.

About CH2M

CH2M is a global, Fortune 500, employee-owned engineering firm specializing in government, industrial, infrastructure and energy projects. CH2M was founded in Oregon nearly 70 years ago by three young engineers and their professor. Through the years, CH2M has evolved from a regional engineering and consulting firm associated with first-of-a-kind projects to a global leader associated with some of the largest, best-known infrastructure programs for public and private clients. CH2M has 25,000 employees working in more than 50 countries and annual revenues of approximately US$6B. The firm was named Water Company of the Year at the 2012 Global Water Awards. For more information, visit www.ch2m.com.

FORWARD LOOKING STATEMENT: 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, the receipt of additional permits for the water project and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.