Mesabi Trust Declares Distribution

  Mesabi Trust Declares Distribution

Business Wire

NEW YORK -- October 11, 2013

The Trustees of Mesabi Trust (NYSE:MSB) declared a distribution of fifty-one
cents ($0.51) per Unit of Beneficial Interest payable on November 20, 2013 to
Mesabi Trust’s unitholders (hereinafter referred to as “Unitholders”) of
record at the close of business on October 30, 2013. This compares to a
distribution of one dollar and thirteen cents ($1.13) per Unit for the same
period last year.

The decrease in the current distribution of sixty-two cents ($0.62) per Unit,
as compared to the same quarter last year, is attributable to a significant
decrease in the volume of shipments for the third calendar quarter of 2013
and, to a lesser extent, a decrease in the average sales price per ton of iron
ore pellets. The base and bonus royalties payable to Mesabi Trust (before the
application of pricing adjustments by Northshore Mining Company (hereinafter
referred to as “Northshore”)) decreased from approximately $13.97 million in
the third calendar quarter of 2012 to approximately $7.22 million for the
third calendar quarter of 2013.

Based on shipments of iron ore pellets during the third calendar quarter of
2013 reported by Northshore, Mesabi Trust expects to be credited with a base
royalty of $4,553,784 during the third calendar quarter of 2013. Mesabi Trust
also expects to be credited with a bonus royalty in the amount of $2,661,607
based on the average sales price per ton of iron ore pellets and the volume of
shipments during the third calendar quarter of 2013. Mesabi Trust is, however,
expecting a decrease in base and bonus royalty payment of $151,371 as a result
of negative pricing adjustments to shipments and royalty payments made in the
first and second calendar quarters of 2013. Accordingly, the total royalty
payment expected to be received on October 30, 2013 by Mesabi Trust from
Northshore is $7,176,448 (which includes a royalty payment of $112,429 payable
to the Mesabi Land Trust).

The royalties paid to Mesabi Trust are based on the volume of shipments of
iron ore pellets for the particular quarter and 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 third
calendar quarter of 2013, Northshore shipped 1,361,841 tons of iron ore
pellets attributable to iron ore excavated from Mesabi Trust lands compared to
2,406,218 tons of such iron ore pellets during the third calendar quarter of
2012. 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 determined under contracts
among Northshore, Cliffs Natural Resources Inc. (Northshore’s parent entity,
hereinafter referred to as “Cliffs”) and certain of their customers (such
contracts referred to as the “Cliffs 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 under the Cliffs Pellet Agreements. These multiple factors can result in
significant variations in the amount of royalties received by Mesabi Trust
(and in turn the resulting amount available for distribution to Unitholders by
Mesabi Trust) from quarter to quarter and year to year. These variations,
which can be positive or negative, cannot be predicted by the Trustees of
Mesabi Trust. Royalty payments received in 2013 and prior years continue to
reflect pricing estimates for shipments of iron ore products that may be
subject to further adjustment (upward or downward) pursuant to the Cliffs
Pellet Agreements. Based on all of 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, in any particular
quarter are not necessarily indicative of royalties that will be received, or
distributions that will be paid, in any subsequent fiscal quarter or for a
full fiscal year.

With respect to the remainder of calendar year 2013, Northshore has not
advised Mesabi Trust of its expected total 2013 shipments of iron ore products
or what percentage of 2013 shipments will be from Mesabi Trust lands. Cliffs
has not provided Mesabi Trust with any projections about possible pricing (and
resulting royalty) adjustments that might impact future distributions,
although Cliffs did indicate that the royalty payments being reported today
are 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 fiscal
quarter, or at fiscal year end, thereby potentially reducing cash available
for distribution to Unitholders in future fiscal quarters.

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 in 2013, 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 such
as general and industry economic trends, uncertainties arising from war,
terrorist events and other global events, higher or lower customer demand for
steel and iron ore, environmental compliance uncertainties, 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 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 thereunder. 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.
Mesabi Trust undertakes no obligation to publicly update or revise any of the
forward-looking statements that may be in this press release.

Contact:

Mesabi Trust SHR Unit
Deutsche Bank Trust Company Americas
(904) 271-2520
 
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