Mesabi Trust Declares No November Distribution as Royalty Payments Fall to $1,807,779

Mesabi Trust said on October 15, 2026 that its trustees declared no distribution for the quarter, so nothing will be paid to unitholders in November 2026 — a year after the trust distributed $0.34 per Unit. The filing is a distribution announcement, not a full earnings report: it carries no income statement, and the royalty payment it turns on arrived on July 30, 2026 at $1,807,779, against $5,300,287 a year earlier.

The trust's July payment from Cleveland-Cliffs Inc., the parent of Northshore Mining Company, landed on July 30, 2026 at $1,807,779, which is 65.89% below the $5,300,287 the trust received in July 2025, and the announcement states that Cliffs' April 30, 2026 and July 30, 2026 royalty reports each credited the trust with zero bonus royalties.

Bonus royalties vanish and take most of the cash with them

The trust's own account of the payment is blunt: it “included no bonus royalty payment and were lower than the total royalty payments of $5,300,287 received by the Trust from Cliffs in July 2025”. The reason sits in Cliffs' pricing reports. Every deemed shipment out of Silver Bay in the two 2026 quarters was priced below the 2026 adjusted bonus royalty threshold of $71.70 per ton, up from $69.41 per ton for calendar 2025, and the prices Cliffs used traced back to a single third-party sale that closed in September 2025.

Bonus royalties are the swing factor in this trust's revenue rather than a rounding item. “The Trust is paid royalty bonuses when iron ore products shipped are sold at anticipated prices above a threshold price per ton.” When shipments price below that line, as they did in the quarters ended March 31 and June 30, 2026, the trust records nothing on top of the base royalty. Mesabi's fiscal second-quarter filing says the two reports “reported zero bonus royalties for shipments of iron ore pellets made during the applicable quarters”, the first such readings in years outside the period when Cliffs idled Northshore between May 2022 and April 2023.

The reserve the trustees chose to protect

The trustees said their determination primarily reflected the lower royalty payment from Cliffs, and they listed the desire to maintain adequate reserve levels among the several other factors they took into account. Mesabi's Unallocated Reserve was $17,590,519 at July 31, 2026, which is 22.78% below the $22,781,200 reported a year earlier and $2,812,353 lower than the level at the fiscal year end of January 31, 2026. Total royalty income for the fiscal quarter ended July 31, 2026 was $2,328,523 against $5,416,904 in the same quarter a year earlier, a 57.01% decline, and the trust posted a net loss of $95,013 as expenses climbed to $2,575,369 from $862,873 — a jump the trust attributed primarily to legal fees and expenses tied to its arbitration.

The trustees said the no-distribution call reflects, among other factors, the wish to keep funds available “in order to meet current expenses for ongoing matters as well as those related to its pending arbitration”. Mesabi's filing cautions that declared distributions are not equivalent to the trust's reported net income, because trustees act on royalties actually received and decide on distributions in April, July, October and January, weighing known and projected expenses and the then-current level of the Unallocated Reserve. The trust's filing record covers the same stretch: the same zero bonus royalties appear in the royalty summaries the trust filed on May 4, 2026 and July 31, 2026.

A check that does not arrive, and the next dated test

A royalty trust that pays nothing still hands its holders taxable income. The trust reports that “all net taxable income is annually attributable directly to Unitholders for tax purposes regardless of whether the income is distributed or retained by the Trust in its reserve account”. Cash and tax treatment therefore part company for the quarter.

The next hard date is October 30, 2026, when Cliffs and Northshore owe the quarterly royalty payment covering third-calendar-quarter production and shipments, together with the accompanying report; Mesabi says it will then file a summary of that report on Form 8-K. The trustees added that they have received no specific updates on Cliffs' plans for Northshore this year. Mesabi's arbitration against Northshore and Cliffs, initiated on September 26, 2025, remains pending, seeking damages and declaratory relief over the idling of Northshore from May 2022 to April 2023 and alleged underpayment of royalties on intercompany shipments. Royalty amounts themselves stay provisional: historically some royalties have rested on estimated prices that are subject to interim and final adjustments which can be positive or negative.