Mesabi Trust Declares Distribution
04/14/2008 - Trustees of Mesabi Trust declare a distribution of twelve cents per Unit of Beneficial Interest payable on May 20, 2008, which compares to a distribution of four and one-half cents per Unit for the same period last year.
The Trustees of Mesabi Trust have declared a distribution of twelve cents ($0.12) per Unit of Beneficial Interest payable on May 20, 2008 to Mesabi Trust Unitholders of record at the close of business on April 30, 2008. This compares to a distribution of four and one-half cents ($0.045) per Unit for the same period last year.
The increase in the distribution is attributed to higher pellet shipments during the first quarter of 2008, when the Trust was credited with total shipments of 493,695 gross tons of iron ore pellets. During the first calendar quarter of 2007, only a minimum advance royalty was received by Mesabi Trust because no shipments were made during that period.
The Trust receives royalties based on the volume of shipments and the selling prices of iron ore pellets shipped by Northshore Mining Co., the lessee/operator of the Mesabi Trust lands. Iron ore pellet prices realized by Northshore with respect to pellets shipped from Mesabi Trust lands during the first quarter were, on average, basically unchanged from the pellet prices credited to the Trust in the fourth quarter of 2007. Pricing information from the first quarter of 2007 is not available due to the lack of shipments during that quarter.
The total royalty payment expected to be received by Mesabi Trust on April 30, 2008 is $1,666,214 (which includes the fee royalty expected to be received by the Mesabi Land Trust). With respect to shipments of iron ore during the first calendar quarter of 2008, Mesabi Trust was credited with a base royalty of $753,668 and a bonus royalty of $904,378. These base royalty and bonus royalty amounts were decreased by an aggregate of $111,825, representing net price adjustments for prior periods. These pricing adjustments resulted primarily from changes in the prices of iron ore pellets shipped under supply agreements between Northshore, Northshore’s parent Cleveland-Cliffs Inc., and certain of their customers, commonly referred to as the Pellet Agreements.
Prices under the Pellet Agreements are subject to interim and final pricing adjustments, dependent in part on multiple price and inflation index factors that are not known until after the end of a contract year.
The volume of Northshore’s iron ore pellets shipments varies based on a number of factors, including weather conditions on the Great Lakes, the requested delivery schedules of customers, and general economic conditions in the iron ore industry. Royalties paid to the Trust are dependent on the volume of shipments of iron ore pellets for the quarter and the year-to-date, pricing of the iron ore product sales, and the percentage of iron ore pellet shipments from Mesabi Trust lands rather than from other lands. The volume of actual shipments of iron ore products in any particular quarter is not necessarily indicative of the level of shipments in subsequent quarters. Northshore has not provided the Mesabi Trustees with a forecast of the volume of shipments of iron ore pellets in 2008.
