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 2012, Northshore credited Mesabi Trust with 978,306 tons of iron ore products, as compared to 1,126,551 tons of iron ore products credited during the fourth calendar quarter of 2011. Though actual shipments of iron ore products mined from Mesabi Trust lands in the fourth calendar quarter of 2012 equaled 993,282 tons, Mesabi Trust was credited with shipments of 978,306 tons of iron ore during the fourth calendar quarter of 2012 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 first calendar quarter of 2012, 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 2012, Northshore reduced the actual shipments attributable to Mesabi Trust by 14,976 tons to recoup certain tonnage of iron ore products for which Mesabi Trust was credited and paid royalties earlier in calendar year 2012.The volume of shipments of iron ore pellets 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 under the term contracts between Northshore, Northshore’s parent Cliffs Natural Resources Inc. (“Cliffs”) and certain of their customers (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. This can result in significant variations in royalties received by Mesabi Trust (and in turn the resulting amount available for distribution to Unitholders by Mesabi Trust) from quarter to quarter and on a comparative historical basis. These variations, which can be positive or negative, cannot be predicted by the Trustees of Mesabi Trust. Royalty payments received in 2012 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 the Trust’s history of distribution payments, the royalties received by the Trust, and the distributions paid to Unitholders, in any particular quarter or year are not necessarily indicative of royalties that will be received, or distributions that will be paid, in any subsequent quarter or for a full year.