ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

6 Months Ended

Jul. 31, 2022

UNALLOCATED RESERVE AND DISTRIBUTIONS

ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS

Note 4.  On July 15, 2022, the Trustees declared a distribution of $0.84 per Unit of Beneficial Interest payable on August 20, 2022 to Mesabi Trust Unitholders of record at the close of business on July 30, 2022.

On July 29, 2022, the Trustees received the quarterly royalty report of iron ore product during the calendar quarter ended June 30, 2022 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, 2022 and January 31, 2022, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components:

	July 31, 2022		January 31, 2022
Cash and U.S. Government securities	$	25,789,547	$	47,727,522
Distribution payable		(11,020,810)		(22,960,018)
Unallocated cash and U.S. Government securities	$	14,768,737	$	24,767,504

A reconciliation of the Trust’s Unallocated Reserve and Trust Corpus for the three and six months ended July 31, 2022 and 2021 is as follows:

		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 - $0.8400 per unit		(11,020,810)		—		(11,020,810)
Balances as of July 31, 2022	$	14,866,943	$	3	$	14,866,946

		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2021	$	16,477,046	$	3	$	16,477,049
Net income		35,329,900		—		35,329,900
Distributions declared - $0.9800 per unit		(12,857,610)		—		(12,857,610)
Balances as of July 31, 2021	$	38,949,336	$	3	$	38,949,339

		Unallocated		Trust
		Reserve		Corpus		Total
Balances at April 30, 2021	$	13,374,107	$	3	$	13,374,110
Net income		26,756,030		—		26,756,030
Distributions declared - $0.0900 per unit		(1,180,801)		—		(1,180,801)
Balances as of July 31, 2021	$	38,949,336	$	3	$	38,949,339