Mesabi Trust Press Release
January 11 2021 - 4:15PM
Business Wire
The Trustees of Mesabi Trust (NYSE:MSB) declared a distribution
of forty-six cents ($0.46) per Unit of Beneficial Interest payable
on February 20, 2021 to Mesabi Trust Unitholders of record at the
close of business on January 30, 2021. This compares to a
distribution of seventy cents ($0.70) per Unit for the same period
last year.
The twenty-four cents ($0.24) 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 the
Trust’s receipt of total royalty payments of $5,925,181 on October
30, 2020 from Cleveland-Cliffs Inc. (“Cliffs”), the parent company
of Northshore Mining Company, which was lower than the total
royalty payments of $12,095,964 received by the Trust from Cliffs
in October 2019. The decrease in the royalty received by the Trust
in October 2020, as compared to the royalty received in October
2019, is primarily attributable to lower volume of shipments of
Mesabi ore during the most recent calendar quarter 2020 (including
as a result of Cliffs’ temporary idling of production at Northshore
from April 2020 until early August 2020), and lower average iron
ore sales prices during the most recent calendar quarter 2020
compared to the same quarter 2019. The Trust’s announcement today
also reflects that the Trust’s most recent balance sheet includes a
contract liability, which represents, among other things,
anticipated negative pricing adjustments and 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. See Mesabi
Trust’s Quarterly Report on Form 10-Q, Part I- Financial
Information, Note 2 (regarding “Contract asset and contract
liability”), for the fiscal quarter ended October 31, 2020 (filed
December 9, 2020). Finally, the Trust’s distribution 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.
Quarterly royalty payments from Cliffs’ 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,
2021, 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, royalty (including
bonus royalty) amounts, timing of quarterly royalty payments and
quarterly royalty reports, 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 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 and Quarterly Reports on
Form 10-Q. 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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