Mesabi Trust Declares Distribution
July 15 2011 - 5:05PM
Business Wire
The Trustees of Mesabi Trust (NYSE: MSB) declared a distribution
of sixty cents ($0.60) per Unit of Beneficial Interest payable on
August 20, 2011 to Mesabi Trust unitholders of record at the close
of business on July 30, 2011. This compares to a distribution of
eighty cents ($0.80) per Unit for the same period last year.
The decrease in the current distribution of twenty cents ($0.20)
per Unit, as compared to the same quarter last year, is mostly
attributable to decreases in the volume of shipments of iron ore
pellets, partially offset by an increase in the average sales price
per ton of iron ore pellets. The base and bonus royalties payable
to Mesabi Trust (before the application of pricing adjustments by
Northshore) decreased from approximately $10.9 million in the
second calendar quarter of 2010 to approximately $7.9 million for
the second calendar quarter of 2011, a decrease of approximately
27.5%.
Based on the shipments of iron ore pellets during the first
calendar quarter of 2011 reported by Northshore, Mesabi Trust
expects to be credited with a base royalty of $3,965,498 (based on
credited shipments of 1,532,046 tons of iron ore mined from Mesabi
Trust lands as described further below). Mesabi Trust also expects
to be credited with a bonus royalty in the amount of $3,931,531
based on the average sales price per ton of iron ore pellets and
the volume of shipments during the second calendar quarter of 2011.
In addition to the base and bonus royalty payments, Mesabi Trust is
also expecting to receive $67,549 as a result of positive pricing
adjustments to shipments and royalty payments made in the first
calendar quarter of 2011. Accordingly, the total royalty payment
expected to be received on July 29, 2011 by Mesabi Trust from
Northshore is $8,165,125 (which includes a royalty payment of
$200,546 payable to the Mesabi Land Trust).
The royalties paid to Mesabi Trust are based on the volume of
shipments of iron ore pellets for the particular quarter and the
year to date, the pricing of iron ore product sales, and the
percentage of iron ore pellet shipments from Mesabi Trust lands
rather than from non-Trust lands. In the second calendar quarter of
2011, Northshore credited Mesabi Trust with 1,532,046 tons of iron
ore, as compared to 2,189,889 tons shipped from Mesabi Trust lands
during the second calendar quarter of 2010. Although Mesabi Trust
was credited with shipments of 1,532,046 tons of iron ore during
the second calendar quarter of 2011 because it is entitled to
payment on at least 90% of the first four million tons of pellets
shipped from Silver Bay, MN by Northshore in each calendar year,
actual shipments of iron ore products shipped from Mesabi Trust
lands in the second calendar quarter of 2011 were 1,388,359 tons.
The volume of shipments of iron ore pellets (and other iron ore
products) by Northshore varies from quarter to quarter and year to
year based on a number of factors, including the requested delivery
schedules of customers, general economic conditions in the iron ore
industry, and weather conditions on the Great Lakes. Further, the
prices determined under contracts between Northshore, Northshore’s
parent Cliffs Natural Resources Inc. (“Cliffs”) and certain of
their customers (the “Cliffs 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
variations in royalties received by Mesabi Trust (and in turn the
resulting amount available for distribution to Unitholders by
Mesabi Trust) from quarter to quarter and on a comparative
historical basis. These variations, which can be positive or
negative, cannot be predicted by the Trustees of Mesabi Trust.
Royalty payments received in 2011 and prior years continue to
reflect pricing estimates for shipments of iron ore products that
may be subject to further adjustment (upward or downward) pursuant
to the Cliffs Pellet Agreements. Based on all of the above factors
and as indicated by the Trust’s historical distribution payments,
the royalties received by the Trust, and the distributions paid to
Unitholders, in any particular quarter are not necessarily
indicative of royalties that will be received, or distributions
that will be paid, in any subsequent quarter or for a full
year.
With respect to calendar year 2011, Northshore has not advised
Mesabi Trust of its expected 2011 shipments of iron ore products or
what percentage of 2011 shipments will be from Mesabi Trust lands.
Cliffs has not provided Mesabi Trust with any projections about
possible pricing (and resulting royalty) adjustments that might
impact future distributions, although Cliffs did indicate that the
royalty payments being reported today are based on estimated iron
ore pellet prices under the Cliffs Pellet Agreements, which are
subject to change. It is possible that future negative price
adjustments could offset, or even eliminate, royalties or royalty
income that would otherwise be payable to Mesabi Trust in any
particular quarter, or at year end, thereby potentially reducing
cash available for distribution to Mesabi Trust’s Unitholders in
future quarters. In addition, because the Cliffs Pellet Agreements
contain various pricing formulas and price adjustment provisions,
the average sales prices received by Mesabi Trust may not match
international iron ore pellet prices.
This press release contains certain forward-looking statements
with respect to iron ore pellet production, iron ore pricing and
adjustments to pricing, shipments by Northshore in 2011, royalty
(including bonus royalty) amounts, 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, and
shipments of iron ore pellets, as well as actual royalty payments
(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 customer demand for steel
and iron ore, environmental compliance uncertainties, higher
imports of steel and iron ore substitutes, processing difficulties,
consolidation and restructuring in the domestic steel market,
indexing features in Cliffs Pellet Agreements resulting in
adjustments to royalties payable to Mesabi Trust and 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 Mesabi Trust is not a party and that are not
known until after the end of a contract year. Although the Mesabi
Trustees 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. Additional information concerning 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. Mesabi Trust undertakes no obligation to publicly update
or revise any of the forward-looking statements that may be in this
press release.
Mesabi (NYSE:MSB)
Historical Stock Chart
From May 2024 to Jun 2024
Mesabi (NYSE:MSB)
Historical Stock Chart
From Jun 2023 to Jun 2024