Mesabi Trust Press Release

Rhea-AI Summary

Mesabi Trust (NYSE:MSB) has declared a distribution of $0.39 per Unit of Beneficial Interest, payable on November 20, 2024, to unitholders of record as of October 30, 2024. This represents an increase from the $0.35 per unit distribution declared for the same period last year. The increase reflects:

1. Slightly higher royalty payments received from Cleveland-Cliffs Inc. in July 2024 ($5,325,522) compared to July 2023 ($5,321,510).
2. Use of a portion of the unallocated reserve for this distribution.
3. A recent arbitration award of $71,185,029 paid to Mesabi Trust on October 4, 2024, for underpayment of royalties from 2020 to early 2022.

The Trustees are holding the arbitration funds in reserve pending procedural deadlines and assessment of other factors. The distribution decision also considers uncertainties in the iron ore and steel industries, economic conditions, and potential global unrest.

Positive

• Increased distribution of $0.39 per unit, up from $0.35 last year
• Slightly higher royalty payments received from Cleveland-Cliffs Inc. ($5,325,522 vs $5,321,510)
• Arbitration award of $71,185,029 received for underpayment of royalties
• Funds from arbitration award invested in interest-bearing accounts

Negative

• Uncertainties in iron ore and steel industries affecting future operations
• Potential volatility in national and global economic conditions
• Possible disturbances from global unrest impacting business
• Cliffs' plans to increase use of scrap iron may affect future royalties

Insights

Financial Analyst

The announcement of a $0.39 per unit distribution for Mesabi Trust represents a 11.4% increase from the previous year's $0.35 distribution. This uptick is primarily attributed to:

• Slightly higher royalty payments received from Cleveland-Cliffs Inc. ($5,325,522 vs. $5,321,510 last year)
• Utilization of a portion of the unallocated reserve
• A significant $71,185,029 payment received from Northshore and Cliffs following an arbitration award

However, the Trustees are exercising caution by holding the arbitration funds in reserve, pending procedural deadlines and further assessment. This conservative approach, coupled with investments in interest-bearing accounts, suggests a prudent financial strategy amidst industry uncertainties.

The Trust's cautious stance is further evidenced by their consideration of potential volatility in iron ore and steel industries, as well as global economic uncertainties. Investors should note the lack of specific updates on Northshore iron ore operations, which could impact future distributions.

Overall, while the increased distribution is positive, the Trust's conservative approach and the various uncertainties highlighted suggest a complex outlook for Mesabi Trust unitholders.

Legal Expert

The arbitration outcome represents a significant legal victory for Mesabi Trust, resulting in a substantial $71,185,029 payment for underpaid royalties from 2020 to early 2022. This demonstrates the Trust's ability to enforce its rights and recover owed funds, which is important for unitholder interests.

However, the Trustees' decision to hold these funds in reserve pending the expiration of procedural deadlines related to the arbitration is a prudent legal strategy. This approach safeguards against potential challenges or appeals to the arbitration award, ensuring the Trust's financial stability.

The lack of specific updates on Cliffs' plans for Northshore iron ore operations raises potential legal considerations regarding the ongoing royalty agreement. Investors should be aware that any significant changes in operations could lead to further negotiations or legal actions to protect the Trust's interests.

The Trust's transparent communication about these legal matters and their potential impact on distributions aligns with their fiduciary responsibilities to unitholders, demonstrating good governance practices.

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

The Trustees of Mesabi Trust (NYSE:MSB) declared a distribution of thirty-nine cents ($0.39) per Unit of Beneficial Interest payable on November 20, 2024 to Mesabi Trust Unitholders of record at the close of business on October 30, 2024. This compares to a thirty-five cents ($0.35) per Unit distribution declared for the same period last year.

The Trustees’ announcement today of a thirty-nine cents ($0.39) per Unit distribution, as compared to the thirty-five cents ($0.35) per Unit distribution announced by the Trust at the same time last year, reflects several points. The Trust’s receipt of total royalty payments of $5,325,522 on July 30, 2024 from Cleveland-Cliffs Inc. (“Cliffs”), the parent company of Northshore Mining Company (“Northshore”), was slightly higher than the total royalty payments of $5,321,510 received by the Trust from Cliffs in July 2023. The Trustees also determined that a portion of the unallocated reserve could be used for this distribution.

As previously reported, the arbitration initiated by the Trust in October 2022 concluded in June 2024. Pursuant to the AAA tribunal’s final award dated September 6, 2024, Northshore and Cliffs paid Mesabi Trust $71,185,029 on October 4, 2024. This payment satisfied the AAA panel’s unanimous award of damages (including pre-award interest) for underpayment of royalties due to the Trust in 2020, 2021 and the first four months of 2022. The distribution announced today also reflects the Trustees’ determination to hold these funds in reserve pending the expiration of procedural deadlines related to the arbitration, and an assessment of all other facts and contingencies. In the interim, the Trustees have invested the funds in appropriate interest-bearing accounts.

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, and further potential disturbances from global unrest.

Quarterly royalty payments from Cliffs and Northshore for iron ore production and shipments during the third calendar quarter, which are payable to Mesabi Trust under the royalty agreement, are due October 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, 2024, and its Quarterly Report on Form 10-Q for the quarter ended July 31, 2024. 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/20241017799427/en/

Mesabi Trust SHR Unit

Deutsche Bank Trust Company Americas

904-271-2520

Source: Mesabi Trust

FAQ

What is the new distribution amount for Mesabi Trust (MSB) and when is it payable?

Mesabi Trust (MSB) has declared a distribution of $0.39 per Unit of Beneficial Interest, payable on November 20, 2024, to unitholders of record as of October 30, 2024.

How does the new distribution compare to last year's for Mesabi Trust (MSB)?

The new distribution of $0.39 per unit is an increase from the $0.35 per unit distribution declared for the same period last year.

What was the outcome of Mesabi Trust's (MSB) recent arbitration with Cleveland-Cliffs?

Mesabi Trust (MSB) received an arbitration award of $71,185,029, paid on October 4, 2024, for underpayment of royalties from 2020 to early 2022.

How much in royalty payments did Mesabi Trust (MSB) receive from Cleveland-Cliffs in July 2024?

Mesabi Trust (MSB) received total royalty payments of $5,325,522 from Cleveland-Cliffs Inc. on July 30, 2024.