NEW YORK, Oct 13, 2006 (BUSINESS WIRE) --
The Trustees of Mesabi Trust
(MSB)
declared a distribution
of $0.585 per Unit of Beneficial Interest payable on November 20, 2006
to Mesabi Trust unitholders of record at the close of business on
October 30, 2006. This compares to a distribution of $0.36 per Unit
for the same period last year.
This increase in the distribution of $0.225 per Unit, as compared
to the same quarter last year, is due to higher prices of iron ore
pellets and a 34.5% increase in the volume of shipments by Northshore
Mining Company ("Northshore"), the lessee/operator. The higher prices
and increased shipment volume resulted in a higher base royalty
payment and a larger royalty bonus payment for iron ore shipments from
Silver Bay, Minnesota at prices above a predetermined threshold price.
The distribution includes certain positive adjustments to royalties
paid in the previous two quarters. These adjustments are the result of
pricing adjustments under term contracts between Northshore,
Northshore's parent Cleveland-Cliffs Inc ("CCI") and certain of their
customers (the "CCI Pellet Agreements").
The total royalty payment is expected to be approximately
$7,857,318 (which includes the fee royalty received by the Mesabi Land
Trust). With respect to shipments of iron ore during the third
calendar quarter of 2006, Mesabi Trust received a base royalty of
$4,701,010 and a bonus royalty of $2,974,956. The base royalty and
bonus royalty amounts were increased by $85,953, representing positive
adjustments of $42,528 and $43,425, respectively, to base royalty and
bonus royalty amounts credited to the Trust during the first two
calendar quarters of 2006.
The prices under the CCI Pellet Agreements are subject to interim
and final pricing adjustments, dependent in part on multiple price and
inflation index factors that are not known until after the end of a
contract year. This can result in significant and frequent variations
in royalties received by Mesabi Trust (and in turn the resulting
amount available for distribution to Unitholders by the Trust) from
quarter to quarter and on a comparative historical basis. These
variations, which can be positive or negative, cannot be predicted by
Mesabi Trust. Royalty payments received by the Trust in 2006 reflect
pricing estimates for shipments of iron ore products that may be
subject to further adjustment (upward or downward) in accordance with
the CCI Pellet Agreements.
The volume of shipments of iron ore pellets by Northshore varies
from quarter to quarter and year to year based on a number of factors,
including weather conditions on the Great Lakes, the requested
delivery schedules of customers and general economic conditions in the
iron ore industry. The royalties paid to the Trust are dependent on
the volume of shipments of iron ore pellets for the quarter and the
year to date, the pricing of the iron ore product sales and the
percentage of iron ore pellet shipments from Mesabi Trust lands rather
than from other lands. Northshore has not advised Mesabi Trust as to
its expected 2006 shipments of iron ore products or what percentage of
2006 shipments will be from Mesabi Trust iron ore.
This news release contains certain forward-looking statements with
respect to iron ore pellet production, iron ore pricing, shipments at
Northshore in 2006 and royalty (including bonus royalty) amounts,
which statements are intended to be made under the safe harbor
protections of the Private Securities Litigation Reform Act of 1995,
as amended. Actual production, prices and shipments of iron ore
pellets, as well as actual royalty levels (including bonus royalties)
could differ materially from current expectations due to inherent
risks such as general and industry economic trends, uncertainties
arising from war, terrorist events and other global events, higher or
lower demand for steel and iron ore, higher imports of steel and iron
ore substitutes, processing difficulties, consolidation and
restructuring in the domestic steel market or other factors. Further,
substantial portions of royalties earned by Mesabi Trust are based on
estimated prices that are subject to interim and final adjustments,
which can be positive or negative, and are dependent in part on
multiple price and inflation index factors under agreements to which
the Trust is not a party and that are not known until after the end of
a contract year. Although the Trustees of the Mesabi Trust believe
that any such forward-looking statements are based on reasonable
assumptions, such statements are subject to risks and uncertainties,
which could cause actual results to differ materially. Mesabi Trust
does not undertake any obligation to update any forward-looking
statements to reflect events or circumstances occurring after the date
of this press release.
SOURCE: Mesabi Trust
Mesabi Trust SHR Unit
Deutsche Bank Trust Company Americas
615-835-2749
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