Mesabi Trust Press Release

Rhea-AI Summary

Mesabi Trust (MSB) announces a distribution of $0.29 per Unit of Beneficial Interest payable on May 20, 2024, reflecting an increase compared to the previous year due to the restart of Northshore operations and higher royalties received from Cleveland-Cliffs Inc.

Positive

• Mesabi Trust declares a distribution of $0.29 per Unit of Beneficial Interest, payable on May 20, 2024.
• The distribution marks an increase compared to the same period last year when no distribution was declared.
• The increase is attributed to the restart of Northshore operations in April 2023 and higher royalties received from Cleveland-Cliffs Inc.
• Total royalty payments of $6,432,434 were received on January 30, 2024, compared to zero dollars received in January 2023.
• The Trust had not received any royalties in the three previous fiscal quarters until July 30, 2023.
• Current uncertainties related to previous announcements by Cliffs may impact future distributions.

Negative

• None.

Insights

Financial Analyst

The reinstatement of Mesabi Trust's distribution at $0.29 per unit, especially following a period of no distributions, signals a turnaround in the Trust's revenue stream. This is largely credited to the resumption of Northshore operations. For investors, this uptick in distribution could indicate a restoration of operational stability and potentially improved profitability for the company. Analyzing the year-over-year increase in royalties received in January—from $0 in 2023 to over $6 million in 2024—highlights significant operational improvement. However, the mention of 'current continuing uncertainties' is a cautionary note indicating the potential volatility of future earnings.

Mining Industry Expert

The operational restart at Northshore, which is underlined as a key contributor to the increased royalties, likely points to an enhanced extraction and production capacity. Northshore's operational dynamics directly influence the Trust's royalty income, hence their output and the prevailing iron ore market prices are important to Mesabi Trust's financial health. Moreover, the distribution increase could reflect positively on Cleveland-Cliffs Inc.'s strategic decisions, suggesting effective management of the mining assets and responsiveness to market conditions.

NEW YORK--(BUSINESS WIRE)-- Announcement of Mesabi Trust Distribution

The Trustees of Mesabi Trust (NYSE:MSB) declared a distribution of twenty-nine cents ($0.29) per Unit of Beneficial Interest payable on May 20, 2024 to Mesabi Trust Unitholders of record at the close of business on April 30, 2024. This compares to no distribution declared for the same period last year.

The Trustees’ announcement today of a twenty-nine cents ($0.29) per Unit distribution, as compared to no distribution announced by the Trust at the same time last year, reflects an increase in the distribution compared to the same period in the prior year, and is primarily attributable to the restart of Northshore operations in April 2023, and to an increase in the total royalties received by the Trust in January 2024, as compared to the total royalties received by the Trust in January 2023. In particular, the Trust’s receipt of total royalty payments of $6,432,434 on January 30, 2024 from Cleveland-Cliffs Inc. (“Cliffs”), the parent company of Northshore Mining Company (“Northshore”), was higher than the total royalty payments of zero dollars ($0.00) received by the Trust from Cliffs in January 2023.

The distribution announced today also reflects that, until July 30, 2023, the Trust had received no royalties in the Trust’s three previous fiscal quarters, as well as the current continuing uncertainties related to previous announcements by Cliffs about its intention to continue to treat Northshore as a swing operation. Accordingly, the Trustees’ decision announced today also reflects their determination to maintain an appropriate level of reserves in order to make adequate provision to meet current and future expenses and present and future liabilities (whether fixed or contingent) that may arise in the future.

The Trustees have received no specific updates on Cliffs’ plans for the current year concerning Northshore iron ore operations. The Trustees’ distribution announcement today also takes into account numerous other factors, including uncertainties resulting from Cliffs’ prior announcements to increase the use of scrap iron in its vertical supply chain planning, the potential volatility in the iron ore and steel industries generally, national and global economic uncertainties, the cost and expense related to the Trust’s pending arbitration against Northshore and Cliffs, and further potential disturbances from global unrest.

Quarterly royalty payments from Northshore for iron ore production and shipments during the first calendar quarter, which are payable to Mesabi Trust under the royalty agreement, are due April 30, 2024, 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 Northshore operations in 2024 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. Cliffs’ actual utilization of the Northshore operations 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, recession, potential future impacts of the 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, and other factors. 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 for the fiscal year ended January 31, 2023, its Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2023 and its Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2023. 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/20240416064125/en/

Mesabi Trust SHR Unit

Deutsche Bank Trust Company Americas

904-271-2520

Source: Mesabi Trust

FAQ

What is the distribution amount declared by Mesabi Trust (MSB) for May 20, 2024?

Mesabi Trust declared a distribution of $0.29 per Unit of Beneficial Interest.

Why is the distribution amount higher this year compared to the previous year for Mesabi Trust (MSB)?

The increase is due to the restart of Northshore operations in April 2023 and higher royalties received from Cleveland-Cliffs Inc.

How much total royalty payments did Mesabi Trust (MSB) receive from Cleveland-Cliffs Inc. on January 30, 2024?

Mesabi Trust received total royalty payments of $6,432,434 on January 30, 2024.

Did Mesabi Trust (MSB) receive any royalties in the three previous fiscal quarters until July 30, 2023?

No, the Trust had not received any royalties in the three previous fiscal quarters until July 30, 2023.

What may impact future distributions for Mesabi Trust (MSB) according to the press release?

Current uncertainties related to previous announcements by Cliffs may impact future distributions.