ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

3 Months Ended

Apr. 30, 2024

ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

Note 4.  On April 16, 2024, the Trustees declared a distribution of $0.29 per Unit of Beneficial Interest payable on May 20, 2024 to Mesabi Trust Unitholders of record at the close of business on April 30, 2024. The declared distribution of $3,804,803 is recorded as a distribution payable on the Consolidated Balance Sheet for the quarter ended April 30,2024 (unaudited) as compared to no distribution per Unit of Beneficial Interest for the quarter ended April 30, 2023.

On April 30, 2024, the Trustees received the quarterly royalty report of iron ore production and shipment during the calendar quarter ended March 31, 2024 from Cliffs.

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 a prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry, current economic conditions and current communications from Cliffs as it relates to NMC.

Pursuant to the Agreement of Trust, the Trustees make decisions about cash distributions to Unitholders based on the royalty payments it receives from Cliffs 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 April 30, 2024 and January 31, 2024, 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.

	April 30, 2024		January 31, 2024
Cash and cash equivalents	$	21,629,973	$	23,980,448
Distribution payable		(3,804,803)		(4,854,404)
Unallocated cash and cash equivalents	$	17,825,170	$	19,126,044

A reconciliation of the Trust’s Unallocated Reserve and Trust Corpus for the three months ended April 30, 2024 and 2023 is as follows:

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2024	$	20,975,143	$	3	$	20,975,146
Net income		3,483,785		—		3,483,785
Distributions declared - $0.2900 per unit		(3,804,803)		—		(3,804,803)
Balances as of April 30, 2024	$	20,654,125	$	3	$	20,654,128

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2023	$	11,438,214	$	3	$	11,438,217
Net income		1,023,139		—		1,023,139
Distributions declared - $0.0000 per unit		—		—		—
Balances as of April 30, 2023	$	12,461,353	$	3	$	12,461,356