On April 30, 2020, the Trustees of Mesabi Trust (NYSE: MSB)
received the quarterly royalty report of iron ore shipments from
Silver Bay, Minnesota during the quarter ended March 31, 2020 (the
“Royalty Report”) from Cleveland-Cliffs Inc. (“Cliffs”), the parent
company of Northshore Mining Company (“Northshore”).
As reported to Mesabi Trust by Cliffs in the Royalty Report,
based on shipments of iron ore products by Northshore during the
three months ended March 31, 2020, Mesabi Trust was credited with a
base royalty of $632,804. Also for the three months ended March 31,
2020, Mesabi Trust was credited with a bonus royalty in the amount
of $633,693. After applying a reduction of $2,502,524 as a result
of negative pricing adjustments to base and bonus royalty
calculations related to changes in price estimates made in prior
quarters, Cliffs paid Mesabi Trust a minimum base royalty of
$241,165 for shipments during the quarter ended March 31, 2020. In
addition, a royalty payment of $207,081 was paid to the Mesabi Land
Trust. Accordingly, the total royalty payments received by Mesabi
Trust on April 30, 2020 from Cliffs were $448,246.
The royalties paid to Mesabi Trust are based on the volume of
shipments of iron ore pellets for the 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-Mesabi Trust lands. In the first calendar quarter of 2020,
Cliffs credited Mesabi Trust with 340,617 tons of iron ore shipped,
as compared to 126,568 tons shipped during the first calendar
quarter of 2019.
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 under the term contracts among Northshore, Cliffs, and
certain of their customers (the “Cliffs Pellet Agreements”), to
which Mesabi Trust is not a party, are subject to interim and final
pricing adjustments, dependent in part on multiple price and
inflation index factors, some of which are not known until after
the end of a contract year. The factors that could result in price
adjustments under Cliffs’ customer contracts include changes in the
Platts 62% Price, hot-rolled coil steel price, the Atlantic Basin
pellet premium, published Platts international indexed freight
rates and changes in specified producer price indices, including
those for industrial commodities, fuel and steel. These multiple
factors can result in significant variations in royalties received
by Mesabi Trust (and in turn, the resulting funds available for
distribution to Unitholders by Mesabi Trust) from quarter to
quarter and from year to year. These variations, which can be
positive or negative, cannot be predicted by the Trustees of Mesabi
Trust. Royalty payments anticipated to be received during fiscal
2021 will continue to reflect pricing estimates for shipments of
iron ore products that will be subject to positive or negative
pricing adjustments pursuant to the Cliffs Pellet Agreements. Based
on the above factors, and as indicated by Mesabi Trust’s historical
distribution payments, the royalties received by Mesabi Trust, and
the distributions paid to Unitholders, if any, in any particular
quarter are not necessarily indicative of royalties that will be
received, or distributions that will be paid, if any, in any
subsequent quarter or full year.
With respect to calendar year 2020, Northshore has not advised
Mesabi Trust of its expected shipments of iron ore products, or
what percentage of 2020 shipments will be from Mesabi Trust iron
ore. In the Cliffs’ Royalty Report, Cliffs stated that the royalty
payments being reported today were 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.
Other Available
Information
Mesabi Trust’s Annual Report on Form 10‑K for the fiscal year
ended January 31, 2020, which includes the audited financial
statements of Mesabi Trust, was filed with the Securities and
Exchange Commission on April 13, 2020. Mesabi Trust Unitholders may
obtain a hard copy of the complete audited financial statements,
which is included as Exhibit 13 to Mesabi Trust’s Annual Report,
free of charge upon request to Mesabi Trust’s Corporate Trustee,
at:
Mesabi Trust c/o Deutsche Bank Trust Company Americas, Corporate
Trustee Trust & Securities Services — GDS 60 Wall Street, 16th
Floor New York, NY 10005 (904) 271‑2520
Unitholders can also directly access the audited financial
statements of Mesabi Trust by navigating to Mesabi Trust’s website
at www.Mesabi-Trust.com and clicking on the Edgar Filings (SEC)
link under the Menu to the right of the SEC Filings page by
scrolling down to the desired Annual Report on Form 10‑K under
Exhibit 13 thereof, beginning on page F‑1 of each such Report.
Forward-Looking
Statements
This report 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, the impact of the
recent coronavirus (COVID-19) pandemic and other global events,
higher or lower customer demand for steel and iron ore, decisions
by mine operators regarding curtailments or idling production lines
or entire plants (such as Cliffs’ April 13, 2020 announcement to
temporarily idle production at two of its iron ore mining
operations, including Northshore), 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, market inputs tied to
indexed price adjustment factors found in Cliffs Pellet Agreements
resulting in future 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 Mesabi
Trust’s filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the fiscal year ended
January 31, 2020 (filed April 14, 2020). 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505006057/en/
Mesabi Trust SHR Unit Deutsche Bank Trust Company Americas
904-271-2520
Mesabi (NYSE:MSB)
Historical Stock Chart
From Mar 2024 to Apr 2024
Mesabi (NYSE:MSB)
Historical Stock Chart
From Apr 2023 to Apr 2024