Mesabi Trust Declares Distribution
October 13 2006 - 4:35PM
Business Wire
The Trustees of Mesabi Trust (NYSE: MSB) declared a distribution of
$0.585 per Unit of Beneficial Interest payable on November 20, 2006
to Mesabi Trust unitholders of record at the close of business on
October�30, 2006. This compares to a distribution of $0.36 per Unit
for the same period last year. This increase in the distribution of
$0.225 per Unit, as compared to the same quarter last year, is due
to higher prices of iron ore pellets and a 34.5% increase in the
volume of shipments by Northshore Mining Company (�Northshore�),
the lessee/operator. The higher prices and increased shipment
volume resulted in a higher base royalty payment and a larger
royalty bonus payment for iron ore shipments from Silver Bay,
Minnesota at prices above a predetermined threshold price. The
distribution includes certain positive adjustments to royalties
paid in the previous two quarters. These adjustments are the result
of pricing adjustments under term contracts between Northshore,
Northshore�s parent Cleveland-Cliffs Inc (�CCI�) and certain of
their customers (the �CCI Pellet Agreements�). The total royalty
payment is expected to be approximately $7,857,318 (which includes
the fee royalty received by the Mesabi Land Trust). With respect to
shipments of iron ore during the third calendar quarter of 2006,
Mesabi Trust received a base royalty of $4,701,010 and a bonus
royalty of $2,974,956. The base royalty and bonus royalty amounts
were increased by $85,953, representing positive adjustments of
$42,528 and $43,425, respectively, to base royalty and bonus
royalty amounts credited to the Trust during the first two calendar
quarters of 2006. The prices under the CCI Pellet Agreements are
subject to interim and final pricing adjustments, dependent in part
on multiple price and inflation index factors that are not known
until after the end of a contract year. This can result in
significant and frequent variations in royalties received by Mesabi
Trust (and in turn the resulting amount available for distribution
to Unitholders by the Trust) from quarter to quarter and on a
comparative historical basis. These variations, which can be
positive or negative, cannot be predicted by Mesabi Trust. Royalty
payments received by the Trust in 2006 reflect pricing estimates
for shipments of iron ore products that may be subject to further
adjustment (upward or downward) in accordance with the CCI Pellet
Agreements. The volume of shipments of iron ore pellets by
Northshore varies from quarter to quarter and year to year based on
a number of factors, including weather conditions on the Great
Lakes, the requested delivery schedules of customers and general
economic conditions in the iron ore industry. The royalties paid to
the Trust are dependent on the volume of shipments of iron ore
pellets for the quarter and the year to date, the pricing of the
iron ore product sales and the percentage of iron ore pellet
shipments from Mesabi Trust lands rather than from other lands.
Northshore has not advised Mesabi Trust as to its expected 2006
shipments of iron ore products or what percentage of 2006 shipments
will be from Mesabi Trust iron ore. This news release contains
certain forward-looking statements with respect to iron ore pellet
production, iron ore pricing, shipments at Northshore in 2006 and
royalty (including bonus royalty) amounts, 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 and shipments of iron ore pellets, as
well as actual royalty levels (including bonus royalties) could
differ materially from current expectations due to inherent risks
such as general and industry economic trends, uncertainties arising
from war, terrorist events and other global events, higher or lower
demand for steel and iron ore, higher imports of steel and iron ore
substitutes, processing difficulties, consolidation and
restructuring in the domestic steel market or other factors.
Further, substantial portions of royalties earned by Mesabi Trust
are based on estimated prices that are subject to interim and final
adjustments, which can be positive or negative, and are dependent
in part on multiple price and inflation index factors under
agreements to which the Trust is not a party and that are not known
until after the end of a contract year. Although the Trustees of
the Mesabi Trust believe that any such forward-looking statements
are based on reasonable assumptions, such statements are subject to
risks and uncertainties, which could cause actual results to differ
materially. Mesabi Trust does not undertake any obligation to
update any forward-looking statements to reflect events or
circumstances occurring after the date of this press release. The
Trustees of Mesabi Trust (NYSE: MSB) declared a distribution of
$0.585 per Unit of Beneficial Interest payable on November 20, 2006
to Mesabi Trust unitholders of record at the close of business on
October 30, 2006. This compares to a distribution of $0.36 per Unit
for the same period last year. This increase in the distribution of
$0.225 per Unit, as compared to the same quarter last year, is due
to higher prices of iron ore pellets and a 34.5% increase in the
volume of shipments by Northshore Mining Company ("Northshore"),
the lessee/operator. The higher prices and increased shipment
volume resulted in a higher base royalty payment and a larger
royalty bonus payment for iron ore shipments from Silver Bay,
Minnesota at prices above a predetermined threshold price. The
distribution includes certain positive adjustments to royalties
paid in the previous two quarters. These adjustments are the result
of pricing adjustments under term contracts between Northshore,
Northshore's parent Cleveland-Cliffs Inc ("CCI") and certain of
their customers (the "CCI Pellet Agreements"). The total royalty
payment is expected to be approximately $7,857,318 (which includes
the fee royalty received by the Mesabi Land Trust). With respect to
shipments of iron ore during the third calendar quarter of 2006,
Mesabi Trust received a base royalty of $4,701,010 and a bonus
royalty of $2,974,956. The base royalty and bonus royalty amounts
were increased by $85,953, representing positive adjustments of
$42,528 and $43,425, respectively, to base royalty and bonus
royalty amounts credited to the Trust during the first two calendar
quarters of 2006. The prices under the CCI Pellet Agreements are
subject to interim and final pricing adjustments, dependent in part
on multiple price and inflation index factors that are not known
until after the end of a contract year. This can result in
significant and frequent variations in royalties received by Mesabi
Trust (and in turn the resulting amount available for distribution
to Unitholders by the Trust) from quarter to quarter and on a
comparative historical basis. These variations, which can be
positive or negative, cannot be predicted by Mesabi Trust. Royalty
payments received by the Trust in 2006 reflect pricing estimates
for shipments of iron ore products that may be subject to further
adjustment (upward or downward) in accordance with the CCI Pellet
Agreements. The volume of shipments of iron ore pellets by
Northshore varies from quarter to quarter and year to year based on
a number of factors, including weather conditions on the Great
Lakes, the requested delivery schedules of customers and general
economic conditions in the iron ore industry. The royalties paid to
the Trust are dependent on the volume of shipments of iron ore
pellets for the quarter and the year to date, the pricing of the
iron ore product sales and the percentage of iron ore pellet
shipments from Mesabi Trust lands rather than from other lands.
Northshore has not advised Mesabi Trust as to its expected 2006
shipments of iron ore products or what percentage of 2006 shipments
will be from Mesabi Trust iron ore. This news release contains
certain forward-looking statements with respect to iron ore pellet
production, iron ore pricing, shipments at Northshore in 2006 and
royalty (including bonus royalty) amounts, 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 and shipments of iron ore pellets, as
well as actual royalty levels (including bonus royalties) could
differ materially from current expectations due to inherent risks
such as general and industry economic trends, uncertainties arising
from war, terrorist events and other global events, higher or lower
demand for steel and iron ore, higher imports of steel and iron ore
substitutes, processing difficulties, consolidation and
restructuring in the domestic steel market or other factors.
Further, substantial portions of royalties earned by Mesabi Trust
are based on estimated prices that are subject to interim and final
adjustments, which can be positive or negative, and are dependent
in part on multiple price and inflation index factors under
agreements to which the Trust is not a party and that are not known
until after the end of a contract year. Although the Trustees of
the Mesabi Trust believe that any such forward-looking statements
are based on reasonable assumptions, such statements are subject to
risks and uncertainties, which could cause actual results to differ
materially. Mesabi Trust does not undertake any obligation to
update any forward-looking statements to reflect events or
circumstances occurring after the date of this press release.
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