Financial Performance - Total revenues for the three months ended April 30, 2024, were $6,250,572, a significant increase of 238% compared to $1,848,849 in the same period of 2023[15]. - Royalty income reached $6,010,608, up 251% from $1,711,316 in the prior year[26]. - Net income for the quarter was $3,483,785, representing a 241% increase from $1,023,139 in the same quarter of 2023[15]. - The net income per unit increased to $0.2655 from $0.0780 year-over-year[15]. - The Trust's expenses for the three months ended April 30, 2024, were $2,766,787, an increase of $1,941,077 from $825,710 in the same period of 2023, primarily due to higher legal fees[67][68]. - Total royalty income for the three months ended April 30, 2024, increased by $4,299,292 to $6,010,608 compared to $1,711,316 in the same period of 2023, driven by increased production and shipments[63][66]. - Base overriding royalties rose to $3,417,645, up from $961,798, while bonus royalties increased to $2,450,133 from $707,840 for the same periods[66]. - Net income for the three months ended April 30, 2024, was $3,483,785, an increase of $2,460,646 compared to $1,023,139 in the same period of 2023[67][68]. Distributions - Distributions declared per unit were $0.2900, compared to no distributions in the same quarter of 2023[15]. - The Trust declared distributions of $0.2900 per unit for the quarter ended April 30, 2024, totaling $3,804,803[40]. - The Trust declared a distribution of $0.29 per unit payable on May 20, 2024, compared to no distribution in the same quarter of 2023[68]. - The Trust declared a distribution of $0.29 per Unit of Beneficial Interest, payable on May 20, 2024, reflecting an increase from no distribution in April 2023[83][84]. Cash and Assets - Cash and cash equivalents at the end of the period were $21,629,973, down from $23,980,448 at the beginning of the period[18]. - As of April 30, 2024, the Trust's unallocated cash and cash equivalents were $17,825,170, down from $19,126,044 as of January 31, 2024, reflecting a decrease of approximately 6.8%[40]. - The Trust's unallocated reserve balance as of April 30, 2024, was $20,654,125, a decrease from $20,975,143 as of January 31, 2024[40]. - The increase in unallocated cash and cash equivalents was 36.0%, rising to $17,825,170 as of April 30, 2024, from $13,102,857 as of April 30, 2023[73]. - Accrued Income Receivable rose by 31.8% to $1,828,842 as of April 30, 2024, compared to $1,387,449 as of April 30, 2023[73]. Operations and Production - For the three months ended April 30, 2024, iron ore pellet production and shipments totaled 978,498 tons, a significant increase from 155,300 tons in the same period of 2023, reflecting a full quarter of operations[61][62]. - The volume of iron ore shipped by Northshore during the first calendar quarter of 2024 was 1,006,692 tons, compared to zero tons shipped in the same quarter of 2023[79]. - Approximately 97.4% of iron ore products shipped in 2023 were sold at prices above the Adjusted Threshold Price, indicating strong market performance[57]. - The Trust's financial performance is highly dependent on Northshore's operations, with royalty rates influenced by the volume and selling price of iron ore products shipped[46]. Liabilities and Contracts - Total liabilities decreased to $4,477,027 from $5,715,206 at the end of January 2024[18]. - The Trust recorded a net contract asset of $1,559,969 as of April 30, 2024, compared to $451,896 as of January 31, 2024[34]. - The minimum advance royalty for calendar year 2024 is set at $1,129,615, an increase from $1,100,498 in 2023[53]. - The royalty bonus threshold price for 2024 is set at $67.75 per ton, up from $66.00 per ton in 2023[31]. - The Adjusted Threshold Price for royalty bonuses in 2024 is $67.75 per ton, up from $66.00 per ton in 2023[53]. Market and Operational Risks - The Trustees noted that uncertainties related to Cliffs' operations and market conditions could affect future royalty payments and distributions[86][87]. - Cliffs has indicated intentions to limit third-party sales of iron ore products, which may impact the calculation of royalties owed to the Trust[80]. - The Trustees have not received specific updates on Cliffs' plans for Northshore operations for the current year, leading to uncertainties in expected shipments[82]. - Future distributions will be highly dependent on royalty income and the level of Trust expenses, with potential uncertainties due to market conditions and operational decisions[75]. Regulatory and Compliance - The Trust's operations are subject to extensive regulation, and it is exempt from many corporate governance requirements due to its nature as a pass-through royalty trust[95]. - The Trust is not taxable as a corporation, and all net taxable income is attributed directly to Unitholders for tax purposes[99]. - The Trust's financial reporting is subject to oversight by independent consultants who verify production and shipping data[104]. - Cliffs has started reporting mine safety results at Northshore as required by the Dodd-Frank Act[114]. Legal Matters - Mesabi Trust initiated arbitration against Northshore and Cliffs for underpayment of royalties from 2020 to April 2022, seeking damages and declaratory relief[109]. - The arbitration evidentiary hearing took place in March 2024, with post-hearing briefs exchanged in May 2024[109]. Governance and Internal Controls - The Trust's disclosure controls and procedures have been evaluated and deemed effective by the Trustees[105]. - There were no changes in the Trust's internal control over financial reporting that materially affected its operations during the last fiscal quarter[106]. - The Trust employs certified public accountants and geological consultants to ensure the accuracy of financial disclosures[103].
Mesabi Trust(MSB) - 2025 Q1 - Quarterly Report