CADIZ LAND CO (NASDAQ:CLCI) Message Board

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Gold/Mining/Energy : CADIZ LAND CO (NASDAQ:CLCI)

CLCI 0.00500

0.0%

Sep 28 5:00 PM EST

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To: chalu2 who wrote (47)	6/1/1999 11:30:00 AM
From: Simon	of 50

How about this: Cadiz has entered into a contract with the Metropolitan Water District that GUARANTEES a MINIMAL usage over F I F T Y years. The net present value of these cash flows alone is $13.00 per share. Furthermore, they are guaranteed by a AAA rated agency, and total over $1.5 Billion. This is extremely conservative given the fact it assumes only a 5% increase in water price. The price of water in California has actually increased over 9% annually over the last thirty years. If we adjust our water inflation rate to this historic level the values jump to our values jump to $18.00 per share. Are you looking for a way to play water? Here it is; a pure play on the price of water in California! Keep in mind the values above are only the minimal obligations of the Metropolitan. There is no doubt the Metropolitan is going to need the full capacity of this project. If they didn't they would not have increased the size of the pipeline to a 150 acre-feet from 100 acre-feet (a 50% increase!). If you increase the usage from the minimums to a most likely case your values jump to over $23 per share. It looks like you have a play on the demand of water in Southern California as well! Remember, this $23 per share again assumes only a 5% water inflation rate. When we adjust that rate to the historical average of 9% the values jump to over $40 per share! These values do not include the value of other Cadiz properties like Sunworld Agricultural operations, the excess water at Sunworld that can easily be sold (look at recent water right litigation victory), the Piute property, Danby Lake property, and the organizational value of the ongoing water business. What are the risks? Environmental? Fortunately the Metropolitan is the agency that approves its own environmental impact report on the State level. The Bureau of Land Management (BLM) is the agency that approves it on a national level. The BLM is a part of the Department of the interior, the same folks who pushed California into the 4.4 plan that Cadiz is a part of. This deal gets done. Look for an increase in the minimal obligations of the Cadiz program to go along with the increase capacity of the pipeline. Is there an Azurix in your future? Azurix, the newly created water subsidiary of Enron will be going public this summer and will have a war chest of $400 million. The former Metropolitan general manager John "Woody" Wodraska recently left the Met to Join Azurix. The Bass brothers are around with cash recently received from US Filter deal, and US Filter and its new parent Vivendi still shopping. Add this to an uncharacteristic strength and volume of stock and options, and new poison pill. You do the math. Also, the CEO just exercised options at around 7 and change. He owns almost 2M shares.

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