Mesabi Trust Press Release
January 14 2020 - 05:00PM
Business Wire
The Trustees of Mesabi Trust (NYSE:MSB) declared a distribution
of seventy cents ($0.70) per Unit of Beneficial Interest payable on
February 20, 2020 to Mesabi Trust Unitholders of record at the
close of business on January 30, 2020. This compares to a
distribution of one dollar and thirty-nine cents ($1.39) per Unit
for the same period last year.
The sixty-nine cents ($0.69) per Unit decrease in the current
distribution, as compared to the distribution announced by the
Trust at the same time last year, is primarily attributable to a
lower volume of iron ore shipments, at lower prices, during the
three month period ended September 30, 2019 compared to the same
period of 2018, and to the Trust’s receipt of total royalty
payments of $12,095,964 on October 30, 2019 from Northshore Mining
Company (“Northshore”), which was lower than the total royalty
payments of $18,259,954 received by the Trust from Northshore in
October 2018. The Trust’s announcement today also reflects that the
Trust’s most recent balance sheet includes a contract liability.
The contract liability represents iron ore that has not been
shipped by Northshore, but for which the Trust has received a
royalty payment based on an initial estimated price. Revenue will
be recognized in accordance with the Trust’s revenue recognition
policy at the estimated prices for iron ore products sold under the
Cliffs Pellet Agreement as shipments of these products are actually
made. See Mesabi Trust’s Quarterly Report on Form 10-Q, Note 2
(regarding “Contract asset and contract liability”), for the
quarter ended October 31, 2019 (filed November 4, 2019). Finally,
the Trust’s announcement today also reflects the Trustees’
determination that Mesabi Trust will have sufficient reserves
available to make such a distribution while also maintaining an
appropriate level of unallocated reserves in order for the Trust to
be positioned to meet current and future expenses, and present and
future liabilities (whether fixed or contingent), that may arise in
the future.
Quarterly royalty payments from Northshore for iron ore
shipments during the fourth calendar quarter, which are payable to
Mesabi Trust under the royalty agreement, are due on January 30,
2020, together with the quarterly royalty report. After receiving
the quarterly royalty report, Mesabi Trust plans to file a summary
of the quarterly royalty report with the Securities and Exchange
Commission in a Current Report on Form 8-K.
Forward-Looking Statements
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 2019 and 2020,
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 and uncertainties such as
general adverse business and industry economic trends,
uncertainties arising from war, terrorist events and other global
events, higher or lower customer demand for steel and iron ore,
decisions by mine operators regarding curtailments or idling of
production lines or entire plants, announcements and implementation
of trade tariffs, environmental compliance uncertainties,
difficulties in obtaining and renewing necessary operating permits,
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 quarterly 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 made herein to
reflect events or circumstances after the date hereof.
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