Mesabi Trust Press Release
January 12 2023 - 4:05PM
Business Wire
Announcement of No Distribution
The Trustees of Mesabi Trust (NYSE:MSB) have determined that no
distribution will be declared this January 2023 with respect to
Units of Beneficial Interest. This compares to a distribution of
One Dollar and seventy-five cents ($1.75) per Unit for the same
period last year.
The Trustees’ announcement today of declaring no distribution
this quarter primarily reflects the Trustees’ caution about
uncertainties arising from the July 22, 2022 announcement by
Cleveland-Cliffs Inc. (“Cliffs”), the parent company of Northshore
Mining Company (“Northshore”), to extend the ongoing idling of
Northshore operations until at least April 2023 and maybe beyond.
With Northshore’s operations currently in idle mode, and no
additional information being made available to the Trustees
regarding the length of the idling, the Trustees’ decision reflects
their determination to maintain an appropriate level of reserves in
order to make adequate provision to meet current and future
expenses and present and future liabilities (whether fixed or
contingent) that may arise in the future.
The Trustees have received no specific updates on Cliffs’ plans
concerning Northshore operations. The Trustees’ determination of no
distribution this quarter also takes into account numerous other
factors, including uncertainties resulting from Cliffs’ prior
announcements to make Northshore a swing operation as Cliffs’
Minorca operation becomes increasingly utilized, Cliffs’ increased
use of scrap iron in its vertical supply chain planning, potential
volatility in the iron ore and steel industries generally, national
and global economic uncertainties, the cost and expense related to
the Trust’s initiation of arbitration against Northshore and its
parent, Cliffs, possible further disturbances from global unrest
and the potential impacts from further outbreaks of the coronavirus
(COVID-19) pandemic.
Quarterly royalty payments from Northshore for iron ore
production and shipments during the fourth calendar quarter, which
are payable to Mesabi Trust under the royalty agreement, are due
January 30, 2023, together with the quarterly royalty report. After
receiving the quarterly royalty report, Mesabi Trust plans to file
a summary of the quarterly royalty report with the Securities and
Exchange Commission in a Current Report on Form 8-K.
Commencement of Arbitration
As previously disclosed by Mesabi Trust, on October 14, 2022,
the Trust initiated arbitration against Northshore and its parent,
Cliffs (jointly, the “Operator”), the lessee/operator of the leased
lands. The arbitration proceeding was commenced with the American
Arbitration Association. The Trust seeks an award of damages
relating to the Operator’s underpayment of royalties in 2020, 2021,
and 2022 by virtue of the Operator’s failure to use the highest
price arm’s length iron ore pellet sale from the preceding four
quarters in pricing internal production during the fourth quarter
of 2020 through 2022. The Trust also seeks declaratory relief
related to the Trust’s entitlement to certain documentation and to
the time the Operator’s royalty obligation accrues on internal
production.
Forward-Looking Statements
This press release contains certain forward-looking statements
with respect to the idling of Northshore operations in 2022 and
2023 and other matters, 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 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.
Although the Mesabi Trustees 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. Additional information concerning
these and other risks and uncertainties is contained in the 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 fiscal quarters
ended April 30, 2022, July 31, 2022 and October 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.
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