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Mesabi Trust Declares Distribution

Stocks in this article: MSB

The Trustees of Mesabi Trust (NYSE: MSB) declared a distribution of seventy-six cents ($0.76) per Unit of Beneficial Interest payable on February 20, 2012 to Mesabi Trust unitholders of record at the close of business on January 30, 2012. This compares to a distribution of sixty-five cents ($0.65) per Unit for the same period last year.

The eleven cents ($0.11) per Unit increase in the current distribution, as compared to the distribution announced in same quarter last year, is primarily due to a 24% increase in the average price per ton credited to the Trust on all shipments during the fourth calendar quarter of 2011, as compared to the fourth calendar quarter of 2010. In addition, there was a 3% increase in the volume of shipments credited to Mesabi Trust and shipped from Silver Bay, Minnesota, reported by Northshore Mining Company (“Northshore”), the lessee/operator of the mine on Mesabi Trust lands, during the fourth quarter of calendar year 2011, as compared to the fourth calendar quarter of 2010.

Based on the shipments of iron ore reported by Northshore during the fourth calendar quarter of 2011, on January 30, 2012, Mesabi Trust is expecting to receive a base royalty of $6,258,381. Mesabi Trust is also expecting to receive a bonus royalty in the amount of $3,193,062. In addition to the base and bonus royalty payments, Mesabi Trust is also expecting to receive $631,952 as a result of positive pricing adjustments to prior shipments and royalty payments previously paid to Mesabi Trust during the first three calendar quarters of 2011. Accordingly, the total royalty payment expected to be received by Mesabi Trust from Northshore is $10,252,749 (including a royalty payment of $169,354 payable to the Mesabi Land Trust).

The royalties paid to Mesabi Trust are based on the volume of shipments of iron ore pellets (and other iron ore products) for the quarter and the year to date, the pricing of the iron ore product sales, and the percentage of iron ore attributable to Mesabi Trust lands rather than from other lands. In the fourth calendar quarter of 2011, Northshore credited Mesabi Trust with 1,126,551 tons of iron ore products, as compared to 1,092,152 tons shipped from Mesabi Trust lands during the fourth calendar quarter of 2010. Though actual shipments of iron ore products mined from Mesabi Trust lands in the fourth calendar quarter of 2011 were 1,332,613 tons, Mesabi Trust was credited with shipments of 1,126,551 tons of iron ore during the fourth calendar quarter of 2011 because under the royalty agreement, Mesabi Trust is only entitled to payment on at least 90% of the first four million tons and 85% of the next two million tons of iron ore shipped from Silver Bay by Northshore in each calendar year. In each of the first two calendar quarters of 2011, Mesabi Trust was credited with shipments and received royalty payments based on a higher volume of iron ore products than were actually mined from Mesabi Trust lands and shipped from Silver Bay. In the royalty report received by Mesabi Trust for the fourth calendar quarter of 2011, Northshore reduced the actual shipments attributable to Mesabi Trust to recoup certain tonnage of iron ore products for which Mesabi Trust was credited and paid royalties earlier in calendar year 2011.

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