ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

9 Months Ended

Oct. 31, 2021

UNALLOCATED RESERVE AND DISTRIBUTIONS

ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

Note 4.  On October 8, 2021, the Trustees declared a distribution of $1.42 per Unit of Beneficial Interest payable on November 20, 2021 to Mesabi Trust Unitholders of record at the close of business on October 30, 2021.

On October 29, 2021, the Trustees received the quarterly royalty report of iron ore product during the calendar quarter ended September 30, 2021 from Cliffs, the parent company of Northshore.

Each quarter, as authorized by the Agreement of Trust dated July 18, 1961, as amended (the “Agreement of Trust”), the Trustees evaluate all relevant factors, including all costs, expenses, obligations, and present and future liabilities of the Trust (whether fixed or contingent) in determining the prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry and current economic conditions.

Pursuant to the Agreement of Trust, the Trustees make decisions about cash distributions to Unitholders based on the royalty payments it receives from Northshore when received, rather than as royalty income is recorded in accordance with the Trust’s revenue recognition policy. Refer to Note 3 for further information.

As of October 31, 2021 and January 31, 2021, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components:

	October 31, 2021		January 31, 2021
Cash and U.S. Government securities	$	45,859,961	$	22,407,610
Distribution payable		(18,630,414)		(6,035,205)
Unallocated cash and U.S. Government securities	$	27,229,547	$	16,372,405

A reconciliation of the Trust’s Unallocated Reserve and Trust Corpus for the three and nine months ended October 31, 2021 and 2020 is as follows:

		Unallocated		Trust
		Reserve		Corpus		Total
Balances at January 31, 2021	$	16,477,046	$	3	$	16,477,049
Net income		51,322,806		—		51,322,806
Distributions declared - $2.4000 per unit		(31,488,024)		—		(31,488,024)
Balances at October 31, 2021	$	36,311,828	$	3	$	36,311,831

		Unallocated		Trust
		Reserve		Corpus		Total
Balances at July 31, 2021	$	38,949,336	$	3	$	38,949,339
Net income		15,992,906		—		15,992,906
Distributions declared - $1.4200 per unit		(18,630,414)		—		(18,630,414)
Balances at October 31, 2021	$	36,311,828	$	3	$	36,311,831

		Unallocated		Trust
		Reserve		Corpus		Total
Balances at January 31, 2020	$	11,831,014	$	3	$	11,831,017
Net income		13,414,023		—		13,414,023
Distributions declared - $0.9700 per unit		(12,726,411)		—		(12,726,411)
Balances at October 31, 2020	$	12,518,626	$	3	$	12,518,629

		Unallocated		Trust
		Reserve		Corpus		Total
Balances at July 31, 2020	$	12,115,431	$	3	$	12,115,434
Net income		5,126,399		—		5,126,399
Distributions declared - $0.3600 per unit		(4,723,204)		—		(4,723,204)
Balances at October 31, 2020	$	12,518,626	$	3	$	12,518,629