The Trustees of Mesabi Trust (NYSE: MSB) declared a distribution of one dollar and thirteen cents ($1.13) per Unit of Beneficial Interest payable on November 20, 2012 to Mesabi Trust unitholders of record at the close of business on October 30, 2012. This compares to a distribution of one dollar and twelve cents ($1.12) per Unit for the same period last year.
The increase in the current distribution of one cent ($0.01) per Unit, as compared to the same quarter last year, is attributable to two factors. First, the volume of shipments of iron ore pellets credited to the Trust during the third quarter of 2012 was significantly higher than the volume of shipments credited to the Trust during the third quarter of 2011. The effect of higher volumes of iron ore pellet shipments during the third quarter 2012 credited to the Trust was offset somewhat by lower average sales prices per ton credited to the Trust during the same period. Second, the higher volume of shipments credited to the Trust for the third quarter of 2012 resulted in the application of a 6% royalty rate calculated on all tons shipped in excess of four million tons (on a year to date basis). Northshore’s most recent quarterly royalty report also reflected an $884,835 negative price adjustment to royalties previously received by Mesabi Trust for shipments of iron ore by Northshore during the first and second quarters of 2012. The base and bonus royalties payable to Mesabi Trust (after the application of pricing adjustments by Northshore) increased from approximately $14.5 million in the third calendar quarter of 2011 to approximately $14.7 million for the third calendar quarter of 2012, an increase of approximately 1.7%.
Based on shipments of iron ore pellets during the third calendar quarter of 2012 reported by Northshore, Mesabi Trust expects to be credited with a base royalty of $9,995,160 (based on credited shipments of 2,406,218 tons of iron ore mined from Mesabi Trust lands as described further below). Mesabi Trust also expects to be credited with a bonus royalty in the amount of $5,633,175 based on the average sales price per ton of iron ore pellets and the volume of shipments during the third calendar quarter of 2012. In addition, as discussed above, Northshore applied a $884,835 negative price adjustment to base and bonus royalties previously received by the Trust for shipments by Northshore during the first and second quarters of this year, thereby reducing the total royalty payment expected to be received on October 30, 2012 by Mesabi Trust from Northshore to $14,981,365 (which includes a royalty payment of $237,865 payable to the Mesabi Land Trust).