Mesabi Trust Reports Decline in Revenues and Net Income for Q3 2024, But Sees Increase in Royalty Income and Distributions

Mesabi Trust reported a decline in total revenues for the three months ended July 31, 2024, amounting to $6.49 million, down from $9.89 million in the same period of 2023. However, for the six months ended July 31, 2024, total revenues increased to $12.74 million, compared to $11.74 million in the prior year. The net income for the three months ended July 31, 2024, was $5.40 million, a decrease from $9.18 million in the same quarter of 2023. For the six-month period, net income fell to $8.88 million from $10.21 million year-over-year.

Net income per unit for the three months ended July 31, 2024, was $0.4114, down from $0.6999 in the previous year. For the six months, it decreased to $0.6770 from $0.7779. Notably, the Trust declared distributions of $0.30 per unit for the quarter, a significant increase from no distributions in the same quarter of 2023, totaling $3.94 million for the quarter.

The Trust's cash and cash equivalents as of July 31, 2024, were $21.63 million, a decrease from $23.98 million at the beginning of the year. Total assets also declined slightly to $26.25 million from $26.69 million. Total liabilities decreased to $4.13 million from $5.72 million, while the unallocated reserve increased to $22.12 million from $20.98 million.

Royalty income for the six months ended July 31, 2024, was $10.39 million, significantly higher than $5.32 million in the same period of 2023. However, for the three months ended July 31, 2024, total royalty income dropped to $6.25 million from $9.73 million in the prior year, primarily due to lower pricing and shipment volumes. Base overriding royalties for the quarter decreased to $3.56 million from $5.37 million, while bonus royalties also fell to $2.55 million from $4.09 million.

Operationally, iron ore pellet production and shipments from Mesabi Trust Lands totaled 974,532 tons for the three months ended July 31, 2024, down from 1,049,281 tons in the same period of 2023, attributed to lower customer demand. However, for the six months, production increased to 1.95 million tons from 1.20 million tons, reflecting a full operational period in 2024 compared to idled facilities in early 2023.

The Trust continues to rely on independent consultants for monitoring iron ore sales and prices, as it has no employees. Cliffs, which controls operational decisions at Northshore, has shifted its focus away from third-party sales, impacting the royalty structure. The Trust's royalties and distributions are subject to significant variability based on market conditions and operational decisions.