ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

6 Months Ended

Jul. 31, 2023

ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

Note 4.  On July 14, 2023, the Trustees declared no distribution per Unit of Beneficial Interest for the quarter ended July 31, 2023 as compared to a distribution of $0.84 per Unit of Beneficial Interest for the quarter ended July 31, 2022.

On July 28, 2023, the Trustees received the quarterly royalty report of iron ore production and shipment during the calendar quarter ended June 30, 2023 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 July 31, 2023 and January 31, 2023, the unallocated cash and cash equivalents portion of the Trust’s Unallocated Reserve was comprised of the following components. Cash equivalents consists of U.S. government securities with original maturities of 3 months or less.

	July 31, 2023		January 31, 2023
Cash and cash equivalents	$	17,750,909	$	13,966,500
Distribution payable		—		—
Unallocated cash and cash equivalents	$	17,750,909	$	13,966,500

A reconciliation of the Trust’s Unallocated Reserve and Trust Corpus for the three and six months ended July 31, 2023 and 2022 is as follows:

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2023	$	11,438,214	$	3	$	11,438,217
Net income		10,206,479		—		10,206,479
Distributions declared - $0.0000 per unit		—		—		—
Balances as of July 31, 2023	$	21,644,693	$	3	$	21,644,696

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of April 30, 2023	$	12,461,353	$	3	$	12,461,356
Net income		9,183,340		—		9,183,340
Distributions declared - $0.0000 per unit		—		—		—
Balances as of July 31, 2023	$	21,644,693	$	3	$	21,644,696

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2022	$	30,794,749	$	3	$	30,794,752
Net income		8,737,814		—		8,737,814
Distributions declared - $1.8800 per unit		(24,665,620)		—		(24,665,620)
Balances as of July 31, 2022	$	14,866,943	$	3	$	14,866,946

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of April 30, 2022	$	30,745,124	$	3	$	30,745,127
Net loss		(4,857,371)		—		(4,857,371)
Distributions declared - $.8400 per unit		(11,020,810)		—		(11,020,810)
Balances as of July 31, 2022	$	14,866,943	$	3	$	14,866,946