The Trustees of Mesabi Trust (NYSE: MSB) declared a distribution of six and one-half cents ($0.065) per Unit of Beneficial Interest payable on May 20, 2012 to Mesabi Trust unitholders of record at the close of business on April 30, 2012. This compares to a distribution of five cents ($0.05) per Unit for the same period last year.
The one and one-half cents ($0.015) per Unit increase over the same period last year is attributable to increases in the volume of shipments of iron ore pellets and higher average sales prices per ton during the most recent quarter, each as compared to the same period last year, as reported to the Trust by Northshore Mining Company (“Northshore”), the lessee/operator of the mine on Mesabi Trust lands. The higher volume of shipments of iron ore pellets and average sales prices per ton resulted in the base and bonus royalty amount increasing from approximately $1.3 million in the first calendar quarter of 2011 to approximately $2.15 million for the first calendar quarter of 2012. However, negative price adjustments to royalties previously received by Mesabi Trust, which were applied by Northshore in the current calendar quarter, increased from $576,625 in the first calendar quarter of 2011 to $984,546 in the first calendar quarter of 2012, thereby reducing the amount of cash available for distribution to the Trust’s unitholders.
Based on shipments of iron ore pellets during the three months ending March 31, 2012, as reported by Northshore, Mesabi Trust expects to be paid a base royalty of $897,320 on April 30, 2012. Mesabi Trust also expects to be paid a bonus royalty in the amount of $1,076,785 based on the average sales price per ton of iron ore pellets and the volume of shipments during the first calendar quarter of 2012. As noted above, Northshore applied negative price adjustments in the amount of $984,546 to royalties previously received by Mesabi Trust, which includes a $644,971 negative price adjustment as a result of the previously disclosed negotiated settlement between Cliffs Natural Resources, Inc. (“Cliffs”) and ArcelorMittal USA, Inc. Mesabi Trust was not a party to the settlement agreement between Cliffs and its customer ArcelorMittal USA, Inc. The total royalty payment expected to be received by Mesabi Trust on April 30, 2011 is $1,166,049 (including a royalty payment of $176,490 payable to the Mesabi Land Trust) after giving effect to all price adjustments applied by Northshore in the current calendar quarter.
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