Mesabi Trust Declares Distribution
July 11 2014 - 4:20PM
Business Wire
The Trustees of Mesabi Trust (NYSE:MSB) declared a distribution
of thirty-two cents ($0.32) per Unit of Beneficial Interest payable
on August 20, 2014 to Mesabi Trust Unitholders of record at the
close of business on July 30, 2014. This compares to a distribution
of forty-six cents ($0.46) per Unit for the same period last
year.
The decrease in the current distribution of fourteen cents
($0.14) per Unit, as compared to the same quarter last year, is
primarily attributable to a decrease in the volume of shipments for
the second calendar quarter of 2014 and year to date, offset
somewhat by a small increase in the average sales price per ton of
iron ore pellets in the current quarter compared to the second
quarter of 2013. The base and bonus royalties payable to Mesabi
Trust (before the application of pricing adjustments by Northshore)
decreased from approximately $6.0 million in the second calendar
quarter of 2013 to approximately $4.5 million for the second
calendar quarter of 2014. This decrease resulted primarily from
lower volumes of shipments of iron ore pellets on a year to date
basis during 2014 compared to a year ago.
Based on shipments of iron ore pellets during the second
calendar quarter of 2014 reported by Northshore, Mesabi Trust
expects to be credited with a base royalty of $2,242,578. Mesabi
Trust also expects to be credited with a bonus royalty in the
amount of $2,484,810 based on the average sales price per ton of
iron ore pellets and the volume of shipments during the second
calendar quarter of 2014. As previously reported, Northshore
applied $277,413 of negative price adjustments to shipments and
royalty payments made in the second calendar quarter of 2014, as
well as a $85,362 negative adjustment to reconcile the minimum
advance royalty previously paid to the Trust in the first quarter
2014, and other minor adjustments. Accordingly, the total
royalty payment expected to be received on July 30, 2014 by Mesabi
Trust from Northshore is $4,531,262 (which includes a royalty
payment of $161,538 payable to the Mesabi Land Trust).
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
2014, the Trust was credited with 1,113,443 tons shipped (which was
100% of the actual tonnage shipped). 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, year to year 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 2014 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 the balance of calendar year 2014, Northshore
has not advised Mesabi Trust of its expected 2014 shipments of iron
ore products or what percentage of 2014 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
indicated 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.
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 2014, 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 (“SEC”), including its Annual
Report on Form 10-K and other periodic reports filed with the SEC.
Mesabi Trust undertakes no obligation to publicly update or revise
any of the forward-looking statements that may be in this press
release.
Mesabi Trust SHR UnitDeutsche Bank Trust Company
Americas904-271-2520
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