Content of the article
NEW YORK — The trustees of Mesabi Trust (NYSE: MSB) have declared a distribution of eighty-four cents ($0.84) per beneficial interest unit payable August 20, 2022 to Mesabi Trust unitholders of record at the close of business on July 30, 2022. This compares to a distribution of nine cents ($0.09) per unit for the same period last year.
The increase of seventy-five cents ($0.75) per unit in the current distribution, compared to the distribution announced by the Trust for the same period last year, is mainly attributable to an increase in the total royalties received by the Trust in April 2022, compared to the total royalties received by the Trust in April 2021. In particular, the receipt by the Trust of total royalty payments of $13,542,442 received on April 29, 2022 from Cleveland-Cliffs Inc. (“Cliffs”), the parent company of Northshore Mining (“Northshore”), exceeded the total royalty payments of $6,340,032 received by the Cliffs Trust in April 2021. This increase in the total royalties received by the Trust in April 2022, compared to total royalties received in April 2021 , was primarily due to higher prices for iron ore products and higher volumes of iron ore products produced and shipped during the first quarter of 2022 compared to the first quarter of 2021.
Content of the article
Today’s announcement by the Trust also reflects the Trustees’ determination that Mesabi Trust currently has sufficient cash reserves to make such a distribution while increasing the level of the Trust’s unrestricted reserves so that the Trust is in able to meet current and future expenses, and present and future liabilities (fixed or contingent) that may arise, including expenses incurred by the Trust during any potentially prolonged period of inactivity of the Northshore Operations (which are currently inactive by Cliffs since May 1, 2022 and are expected to continue for at least Fall 2022, and possibly beyond). The Trustees have not received any updates on Cliffs’ plans for Northshore’s operations. The Trustees’ decision to increase the Trust’s unallocated reserve also takes into account numerous other factors, including the uncertainties resulting from Cliffs’ announcement to make Northshore a transition operation as Cliffs’ Menorca operation becomes increasing use, potential volatility in the iron ore and steel industries generally, domestic and global economic uncertainties, possible additional disruptions from global unrest, and potential impacts of further outbreaks of the pandemic coronavirus (COVID-19).
Northshore’s quarterly royalty payments for iron ore production and shipments during the second calendar quarter, which are payable to Mesabi Trust under the royalty agreement, are due July 30, 2022, together with the report quarterly on royalties. After receiving the Quarterly Royalty Report, Mesabi Trust expects to file a summary of the Quarterly Royalty Report with the Securities and Exchange Commission in a Current Report on Form 8-K.
This press release contains certain forward-looking statements regarding the inactivity of Northshore’s mining and production operations, iron ore pellet production generally, iron ore prices and price adjustments, shipments by Northshore in 2022, royalty amounts (including royalty premiums), timing of quarterly royalty payments and quarterly royalty reports, potential periodic inactivity of Northshore’s operations and other matters, which statements are intended to be made under the safe harbor protections of the Private Securities Litigation Reform Act of 1995, as amended. Actual production, prices, price adjustments, iron ore pellet shipments, and actual royalty payments (including additional royalties) could differ materially from current expectations due to inherent risks and uncertainties such as general adverse business and industry economic trends, uncertainties arising from war, terrorist events, recession, potential future impacts of the coronavirus (COVID-19) pandemic and other global events, higher or lower customer demand for steel and iron ore, decisions by mine operators regarding reductions or idling of production lines or entire plants, announcements and implementation of commercial tariffs, uncertainties regarding environmental compliance , difficulties in obtaining and renewing the necessary operating permits, increase in steel imports and iron ore substitutes, processing difficulties, consolidation and restructuring of the domestic steel market, escalation features of the Cliffs Pellet agreements resulting in royalty adjustments due to Mesabi Tru st and other factors. In addition, substantial portions of the royalties received by Mesabi Trust are based on estimated prices which are subject to quarterly and final adjustments, which may be positive or negative, and depend in part on multiple price index factors and inflation under agreements with customers to which Mesabi Trust is not a party and which are only known after the end of a contract year. Although the directors of Mesabi believe that these forward-looking statements are based on reasonable assumptions, these statements are subject to risks and uncertainties, which could cause actual results to differ materially. Additional information regarding these and other risks and uncertainties is contained in the Trust’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Mesabi Trust undertakes no obligation to publicly update or revise any forward-looking statements made herein to reflect events or circumstances after the date hereof.
Mesabi Trust SHR Unit
Deutsche Bank Trust Company Americas