Item 2.02Results of Operations and Financial Condition.
Announcement of Receipt of Quarterly Royalty Report
On October 28, 2022, Mesabi Trust received the quarterly royalty report of iron
ore shipments out of Silver Bay, Minnesota during the quarter ended September
30, 2022 (the "Royalty Report") from Cleveland-Cliffs Inc. ("Cliffs"), the
parent company of Northshore Mining Company ("Northshore"). The Royalty Report
indicated that, because of the current and ongoing idling of Northshore, the
Trust received no royalty payment.
Item 7.01Regulation FD.
Quarterly Royalty Report
On October 28, 2022, the Trustees of Mesabi Trust received the Royalty Report
from Cliffs, the parent company of Northshore.
As reported to Mesabi Trust by Cliffs in the Royalty Report, based on shipments
of iron ore products by Northshore during the three months ended September 30,
2022, Mesabi Trust was credited with a base royalty of zero dollars ($0.00). For
the three months ended September 30, 2022, Mesabi Trust was also credited with a
bonus royalty in the amount of zero dollars ($0.00). No adjustments were taken
by Cliffs for the quarter. In addition, because of the current idling of
Northshore, a royalty payment of zero dollars ($0.00) was paid to the Mesabi
Land Trust. Accordingly, the total royalty payments received by Mesabi Trust on
October 28, 2022 from Cliffs was zero dollars ($0.00).
The royalties paid to Mesabi Trust are based on the volume of iron ore pellets
produced or shipped during the quarter and the year to date, the pricing of iron
ore product sales, and the percentage of iron ore pellet shipments from Mesabi
Trust lands rather than from non-Mesabi Trust lands. In the third calendar
quarter of 2022, Cliffs credited Mesabi Trust with zero (0) tons of iron ore
shipped, as compared to 1,169,461 tons shipped during the third calendar quarter
of 2021.
The volume of iron ore pellets (and other iron ore products) produced and
shipped by Northshore varies from quarter to quarter and year to year based on a
number of factors, including, among others, Cliffs' decisions to idle Northshore
operations, the requested delivery schedules of customers, general economic
conditions in the iron ore industry, production schedules and weather conditions
on the Great Lakes. These multiple factors can result in significant variations
in royalties received by Mesabi Trust (and in turn, the resulting funds
available for distribution to Unitholders by Mesabi Trust) from quarter to
quarter and from year to year. These variations, which can be positive or
negative, cannot be predicted by the Trustees of Mesabi Trust. Based on the
above factors, and as indicated by Mesabi Trust's historical distribution
payments, the royalties received by Mesabi Trust, and the distributions paid to
Unitholders, if any, in any particular quarter are not necessarily indicative of
royalties that will be received, or distributions that will be paid, if any, in
any subsequent quarter or full year.
As previously announced by Cliffs on July 22, 2022, the current idling of
Northshore operations was extended until at least April 2023 and maybe beyond.
Cliffs' Royalty Report stated that the reported royalty amounts were based on
estimated iron ore pellet prices that are subject to change. It is possible that
future negative price adjustments could offset, or even eliminate, royalties or
royalty income that would otherwise be payable to Mesabi Trust in any particular
quarter, or at year end, thereby potentially reducing cash available for
distribution to Mesabi Trust's Unitholders in future quarters.
Forward-looking Statements
This report contains certain forward-looking statements based on Cliffs'
publicly announced plans with respect to Northshore in the future, which
statements are intended to be made under the safe harbor protections of the
Private Securities Litigation Reform Act of 1995, as amended. The length of the
idling of Northshore operations could differ materially from current
expectations due to inherent risks and uncertainties such as general adverse
business and industry economic trends, uncertainties arising from war, terrorist
events, recession, potential future impacts of the coronavirus (COVID-19)
pandemic, and other global events, higher or lower customer demand for steel and
iron ore, decisions by mine operators regarding
2
curtailments or idling of production lines or entire plants, announcements and
implementation of trade tariffs, environmental compliance uncertainties,
difficulties in obtaining and renewing necessary operating permits, higher
imports of steel and iron ore substitutes, processing difficulties,
consolidation and restructuring in the domestic steel market, and other factors.
Cliffs' implementation of, or changes to, these plans are beyond Mesabi Trust's
control. As such, such statements are subject to risks and uncertainties, which
could cause actual results to differ materially. Additional information
concerning these and other risks and uncertainties is contained in Mesabi
Trust's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the fiscal year ended January 31, 2022 and
Quarterly Reports on Form 10-Q for the quarters ended April 30, 2022 and July
31, 2022. Mesabi Trust undertakes no obligation to publicly update or revise any
of the forward-looking statements made herein to reflect events or circumstances
after the date hereof.
In accordance with general instruction B.2 to Form 8-K, the information in this
Form 8-K shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section.
3
© Edgar Online, source Glimpses