Mesabi Trust Declares Distribution
The Trustees of Mesabi Trust (NYSE: MSB) declared a distribution of twelve and one-half cents ($0.125) per Unit of Beneficial Interest payable on May 20, 2010 to Mesabi Trust Unitholders of record at the close of business on April 30, 2010. This compares to a distribution of thirty-eight cents ($0.38) per Unit for the same period last year.
The total royalty amount credited to the Mesabi Trust for the three months ended March 31, 2010 is approximately $1.9 million (which includes the fee royalty expected to be received by the Mesabi Land Trust). However, Mesabi Trust will only receive a minimum advance royalty payment of $203,432 (which represents one quarter of the annual minimum royalty payment for 2010 of $813,729) because the royalty income payable to Mesabi Trust was reduced by Northshore Mining Company (“Northshore”), the lessee/operator of Mesabi Trust lands, as a result of approximately $2.8 million of negative pricing adjustments. After Northshore offset $1.77 million of royalties credited to Mesabi Trust (which offset did not include the fee royalty expected to be received by the Mesabi Land Trust) against the $2.8 million of negative pricing adjustments, Mesabi Trust was notified that the remaining approximately $1.1 million of negative price adjustments would be offset against future royalties payable to Mesabi Trust by Northshore. Even though the royalty payment credited to Mesabi Trust was eliminated (with the exception of the minimum advance royalty and the fee royalty payable to the Mesabi Land Trust) due to negative pricing adjustments, the Trustees decided to distribute a portion of Mesabi Trust’s cash reserve. The receipt of the minimum advance royalty from Northshore together with a distribution from Mesabi Trust’s cash reserve will result in a total distribution to Mesabi Trust’s Unitholders of $1,640,001, or $0.125 per unit. In making the decision to pay a royalty from Mesabi Trust’s cash reserve, the Trustees considered the amount of royalty income that was offset due to negative pricing adjustments, as well as the need to maintain adequate reserves to cover Mesabi Trust’s present and future liabilities.
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