Mesabi Trust Reports $4.73 Million Revenue, Net Income Increases Despite Decline in Royalty Income

Mesabi Trust reported a total revenue of $4.73 million for the three months ended April 30, 2025, a decrease of 24.3% from $6.25 million in the same period last year. The decline in revenue was primarily driven by a significant drop in royalty income, which fell to $4.35 million from $6.01 million, attributed to reduced iron ore pellet production and shipments due to an extended maintenance shutdown at Northshore Mining Company. Despite the decrease in revenue, the Trust's net income increased to $3.63 million, up from $3.48 million in the prior year, largely due to a substantial reduction in expenses, which decreased from $2.77 million to $1.10 million.

The Trust's operational metrics reflected a decrease in iron ore pellet production and shipments, both totaling 637,186 tons for the quarter, down from 978,498 tons in the same quarter of 2024. This reduction was directly linked to the maintenance activities at Northshore. The Trust's royalty income components also showed declines, with base overriding royalties decreasing by $992,551 and bonus royalties down by $666,298 compared to the previous year. The fee royalties saw a minor decrease of $2,287.

In terms of financial management, Mesabi Trust declared a distribution of $0.56 per unit, payable on May 20, 2025, which is a notable increase from the $0.29 per unit declared in the same quarter of the previous year. The total distribution payable amounted to $7.35 million, reflecting the Trust's strategy to maintain a balance between distributions to unitholders and the need to retain adequate reserves. The Trust's unallocated reserve decreased to $19.61 million as of April 30, 2025, down from $20.65 million a year earlier, primarily due to the impact of the maintenance shutdown on cash flow.

Looking ahead, the Trust's outlook remains cautious, as it is heavily reliant on the operational decisions of Northshore and market conditions affecting iron ore prices. The Trust's revenue is subject to fluctuations based on production volumes and pricing adjustments tied to customer contracts, which can vary significantly. The Trustees continue to monitor economic conditions and operational updates from Northshore to inform future distribution decisions. The Trust's financial health is also influenced by ongoing litigation and regulatory developments concerning Northshore's operations, which could impact future royalty income and distributions.