MESABI TRUST

Previous wording

This discussion should be read in conjunction with the condensed financial statements and notes presented in this Quarterly Report on Form 10-Q and the financial statements and notes in the last filed Annual Report on Form 10-K for the year ended January 31, 2024 for a full understanding of Mesabi Trust’s financial position and results of operations for the three months ended April 30, 2024.

Current wording

This discussion should be read in conjunction with the condensed financial statements and notes presented in this Quarterly Report on Form 10-Q and the financial statements and notes in the last filed Annual Report on Form 10-K for the year ended January 31, 2024 for a full understanding of Mesabi Trust’s financial position and results of operations for the three and six months ended July 31, 2024.

Previous wording

The Trustees do not intend to expand their responsibilities beyond those permitted or required by the Agreement of Trust, the Amendment to the Agreement of Trust dated October 25, 1982 (the “Amendment”), and those required under applicable law. Mesabi Trust has no employees, but it engages independent consultants to assist the Trustees in, among other things, monitoring the volume and sales prices of iron ore products shipped, based on information supplied to the Trustees by Northshore, the lessee/operator of thelands leased under the Peters Lease and Cloquet Lease (the “Peters Lease Lands” and “Cloquet Lease Lands,” respectively) and the 20% fee interest of certain lands that are particularly described in, and subject to a mining lease under, the Peters Lease (the “Mesabi Fee Lands,” and together with the Peters Lease Lands and Cloquet Lease Lands, the “Mesabi Trust Lands”), and its parent company, Cliffs. References to Northshore or NMC in this quarterly report, unless the context requires otherwise, are applicable to Cliffs as well.

Current wording

applicable law. Mesabi Trust has no employees, but it engages independent consultants to assist the Trustees in, among other things, monitoring the volume and sales prices of iron ore products shipped, based on information supplied to the Trustees by Northshore, the lessee/operator of thelands leased under the Peters Lease and Cloquet Lease (the “Peters Lease Lands” and “Cloquet Lease Lands,” respectively) and the 20% fee interest of certain lands that are particularly described in, and subject to a mining lease under, the Peters Lease (the “Mesabi Fee Lands,” and together with the Peters Lease Lands and Cloquet Lease Lands, the “Mesabi Trust Lands”), and its parent company, Cliffs. References to Northshore or NMC in this quarterly report, unless the context requires otherwise, are applicable to Cliffs as well.

Previous wording

Under the relevant agreements, Northshore has the right to mine and ship iron ore products from lands other than Mesabi Trust Lands. Northshore alone determines whether to conduct mining operations on Mesabi Trust Lands and/or such other lands based on its current mining and engineering plan. The Trustees do not exert any influence over mining operational decisions. To encourage the use of iron ore products from Mesabi Trust Lands, Mesabi Trust receives royalties on stated percentages of iron ore shipped, whether or not the iron ore products are from Mesabi Trust Lands. Mesabi Trust receives royalties at the greater of (i) the aggregate quantity of iron ore products shipped that were mined from Mesabi Trust Lands, and (ii) a portion of the aggregate quantity of all iron ore products shipped that were mined from any lands, such portion being 90% of the first four million tons shipped during such year, 85% of the next two million tons shipped during such year, and 25% of all tonnage shipped during such year in excess of six million tons. The royalty percentage paid to the Trust increases as the aggregate tonnage of iron ore products shipped, attributable to the Trust, in any calendar year increases past each of the ton volume thresholds. Assuming a consistent sales price per ton throughout a calendar year, shipments of iron ore product attributable to the Trust later in the year generate a higher royalty to the Trust, as total shipments for the year exceed the one million ton thresholds.

Current wording

of all iron ore products shipped that were mined from any lands, such portion being 90% of the first four million tons shipped during such year, 85% of the next two million tons shipped during such year, and 25% of all tonnage shipped during such year in excess of six million tons. The royalty percentage paid to the Trust increases as the aggregate tonnage of iron ore products shipped, attributable to the Trust, in any calendar year increases past each of the ton volume thresholds. Assuming a consistent sales price per ton throughout a calendar year, shipments of iron ore product attributable to the Trust later in the year generate a higher royalty to the Trust, as total shipments for the year exceed the one million ton thresholds.

Previous wording

Historically, sales volumes under most of its multi-year supply agreements with Cliffs’ customers are largely dependent on customer requirements and contain a base price that is adjusted annually using one or more adjustment factors. The factors that could result in price adjustments under Cliffs’ customer contracts include changes in the Platts 62% Price, hot-rolled coil steel price, the

Current wording

Historically, sales volumes under most of its multi-year supply agreements with Cliffs’ customers are largely dependent on customer requirements and contain a base price that is adjusted annually using one or more adjustment factors. The factors that could result in price adjustments under Cliffs’ customer contracts include changes in the Platts 62% Price, hot-rolled coil steel price, the Atlantic Basin pellet premium, published Platts international indexed freight rates and changes in specified producer price indices, including those for industrial commodities, fuel and steel.

Previous wording

In order to calculate the royalties owed by Northshore to Mesabi Trust, the Royalty Agreement requires that Northshore make sales of iron ore products to third parties on an arm’s-length basis without regard to any other business relationship between Northshore and the third-party buyer of the iron ore products. In order to calculate royalties on less than arm’s-length sales (including sales from Northshore to Cliffs’ corporate affiliates), the Royalty Agreement requires reference to the highest contract price obtained by Northshore in the preceding four calendar quarters in a sale to a buyer not affiliated with Northshore and made on an arms’-length basis without regard to any other business relationship. Since Cliffs’ acquisition of ArcelorMittal USA in late-2020, and accelerating after Cliffs’ Toledo HBI plant came online in mid-2021, Northshore has increased the proportion of iron ore mined from the Mesabi Trust Lands that it sells to Cliffs’ corporate affiliates and decreased the proportion of such iron ore that it sells to third parties in arms’-length transactions. Cliffs’ public statements beginning in third quarter of 2021 have indicated that Cliffs will be limiting the tonnage of iron ore pellets that it sells to third parties from all of its mines, and particularly Northshore. Cliffs’ royalty reports have not shown any additional third party arms’-length sale transactions of iron ore pellets since reporting two low volume shipments of iron ore pellets to a single third-party customer in June 2023. On April 30, 2024, Mesabi Trust received the quarterly royalty report of iron ore shipments out of Silver Bay, Minnesota during the quarter ended March 31, 2024 (the “Royalty Report”) from Cliffs. Cliff's’ Royalty Report used the higher price from these two June 2023 transactions to set the price for royalty purposes for subsequent shipments intended for Cliffs’ affiliates’ internal consumption beginning in July 2023. The Trustees are continuing due diligence review of these transactions to evaluate whether such transactions meet the requirements of the Royalty Agreement. See “Risk Factors --- Risks Related to Pass – Through Trust Structure of Mesabi Trust – – The limited or lack of arms’-length third-party sales of iron ore pellets (processed at Northshore using Mesabi Trust’s iron ore) by Cliffs could lead to uncertainty under the Royalty Agreement with respect to the calculation of royalties, which could in turn result in potential disputes regarding the amount of royalties owed to the Trust,” as set forth on page 6 of Mesabi Trust’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024 (filed April 24, 2024).

Current wording

In order to calculate the royalties owed by Northshore to Mesabi Trust, the Royalty Agreement requires that Northshore make sales of iron ore products to third parties on an arm’s-length basis without regard to any other business relationship between Northshore and the third-party buyer of the iron ore products. In order to calculate royalties on less than arm’s-length sales (including sales from Northshore to Cliffs’ corporate affiliates), the Royalty Agreement requires reference to the highest contract price obtained by Northshore in the preceding four calendar quarters in a sale to a buyer not affiliated with Northshore and made on an arms’-length basis without regard to any other business relationship. Since Cliffs’ acquisition of ArcelorMittal USA in late-2020, and accelerating after Cliffs’ Toledo HBI plant came online in mid-2021, Northshore has increased the proportion of iron ore mined from the Mesabi Trust Lands that it sells to Cliffs’ corporate affiliates and decreased the proportion of such iron ore that it sells to third parties in arms’-length transactions. Cliffs’ public statements beginning in third quarter of 2021 have indicated that Cliffs will be limiting the tonnage of iron ore pellets that it sells to third parties from all of its mines, and particularly Northshore. The current Cliffs’ Royalty Report dated July 30, 2024 reported two low-volume sale transactions of iron ore pellets to a single third-party customer, one in May 2024 and one in June 2024. These two sale transactions are the only reported third-party pellet sales transactions since Cliffs’ July 28, 2023 quarterly royalty report when it reported two low-volume sales transactions to the same third-party customer in June 2023. The Trustees are continuing due diligence review of these transactions to evaluate whether such transactions meet the requirements of the Royalty Agreement. See “Risk Factors --- Risks Related to Pass – Through Trust Structure of Mesabi Trust – – The limited or lack of arms’-length third-party sales of iron ore pellets (processed at Northshore using Mesabi Trust’s iron ore) by Cliffs could lead to uncertainty under the Royalty Agreement with respect to the calculation of royalties, which could in turn result in potential disputes regarding the amount of royalties owed to the Trust,” as set forth on page 6 of Mesabi Trust’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024 (filed April 24, 2024).

Previous wording

Comparison of Iron Ore Pellet Production and Shipments for the Three Months Ended April 30, 2024 and April 30, 2023

Current wording

Comparison of Iron Ore Pellet Production and Shipments for the Three and Six Months Ended July 31, 2024 and July 31, 2023

Previous wording

As shown in the table below, during the three months ended April 30,2024, production and shipments of iron ore pellets at Northshore from Mesabi Trust Lands both totaled 978,498 tons. By comparison, pellet production and shipments for the comparable period in 2023 were both 155,300 tons. The increase in production and shipments is attributable to a full quarter of operations of Northshore’s facilities during the three months ended April 30, 2024 as compared to the three months ended April 30, 2023, when Northshore’s facilities were idled until late April. For the three months ended April 30, 2024, 100% of shipments originated from Trust lands.

Current wording

As shown in the table below, during the six months ended July 31,2024, production and shipments of iron ore pellets at Northshore from Mesabi Trust Lands both totaled 1,953,030 tons. By comparison, pellet production and shipments for the comparable period in 2023 were both 1,204,581 tons. The increase in production and shipments is attributable to two full quarters of operations of Northshore’s facility during the six months ended July 31, 2024 as compared to the six months ended July 31, 2023, when Northshore’s facilities were idled until late April. For the six months ended July 31, 2024, 100% of shipments originated from Trust lands.

Previous wording

Comparison of Royalty Income for the Three Months Ended April 30, 2024 and April 30, 2023

Current wording

Comparison of Royalty Income for the Three and Six Months Ended July 31, 2024 and July 31, 2023

Previous wording

As reflected in the table below, the Trust’s total royalty income for the three months ended April 30, 2024 increased by $4,299,292 to $6,010,608 as compared to the three months ended April 30,2023. The increase in total royalty income is attributable to a full quarter of operations of Northshore’s facilities during the three months ended April 30, 2024 as compared to the three months

Current wording

As reflected in the table below, the Trust’s total royalty income for the three months ended July 31, 2024 decreased by $3,475,877 to $6,254,719 as compared to the three months ended July 31,2023. The decrease in total royalty income is attributable to a decrease in both pricing and shipments of iron ore during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023.

Previous wording

The table below shows that the base overriding royalties increased $2,455,847 and the bonus royalties increased by $1,742,293 for the three months ended April 30, 2024, as compared to the three months ended April 30,2023. Fee royalties increased by $101,152 over the same period. The increase in the base overriding royalties, bonus royalties and fee royalties is attributable to the operations of Northshore’s facilities during the three months ended April 30, 2024 as compared to the three months ended April 30, 2023, when Northshore’s facilities were partially idled.

Current wording

The table below shows that the base overriding royalties increased $646,245 and the bonus royalties increased by $198,863 for the six months ended July 31, 2024, as compared to the six months ended July 31,2023. Fee royalties decreased by $21,694 over the same period. The increase in the base overriding royalties and bonus royalties is attributable to two full quarters of operations of Northshore’s facility during the six months ended July 31, 2024, as compared to the six months ended July 31, 2023, when

Previous wording

Comparison of Net Income, Expenses and Distributions for the Three Months Ended April 30, 2024 and April 30, 2023

Current wording

Comparison of Net Income, Expenses and Distributions for the Three and Six Months Ended July 31, 2024 and July 31, 2023

Previous wording

Net income for the three months ended April 30, 2024 was $3,483,785, an increase of $2,460,646 as compared to the three months ended April 30,2023. The increase in net income for the three months ended April 30,2024 is attributable to a full quarter of operations of Northshore’s facilities during the three months ended April 30, 2024 as compared to the three months ended April 30, 2023, when Northshore’s facilities were idled until late April. The Trust’s expenses for the three months ended April 30, 2024 were $2,766,787, an increase of $1,941,077 compared to the expenses for the three months ended April 30,2023. The increase in expenses was primarily attributable to an increase in legal fees and expenses incurred for the three months ended April 30, 2024 (primarily related to the pending arbitration), as compared to the prior comparable period. The table below summarizes the Trust’s income and expenses for the three months ended April 30, 2024 and April 30, 2023, respectively.

Current wording

Net income for the three months ended July 31, 2024 was $5,397,894, a decrease of $3,785,446 as compared to the three months ended July 31,2023. The decrease in net income for the three months ended July 31,2024 is primarily attributable to a decrease in royalty income which is attributable to a decrease in pricing and shipments of iron ore compared to the three months ended July 31, 2023. In addition, the Trust’s expenses for the three months ended July 31, 2024 were $1,092,015, an increase of $386,114 compared to the expenses for the three months ended July 31,2023. The increase in expenses was primarily attributable to an increase in legal fees and expenses incurred for the three months ended July 31, 2024 (mostly related to the pending arbitration), as compared to the prior comparable period. The table below summarizes the Trust’s income and expenses for the three months ended July 31, 2024 and July 31, 2023, respectively.

Previous wording

As presented on the “Trust’s Condensed Statements of Operations” on page 3 of this quarterly report, the Trust’s net income per unit increased $0.1875 per unit to $0.2655 per unit for the fiscal quarter ended April 30, 2024 as compared to the fiscal quarter ended April 30,2023. On April 16, 2024, the Trust declared a distribution of $0.29 per unit payable on May 20, 2024 to Unitholders of record on April 30, 2024. Comparatively, the Trust declared no distribution during the quarter ended April 30, 2023.

Current wording

As presented on the “Trust’s Condensed Statements of Operations” on page 3 of this quarterly report, the Trust’s net income per unit decreased $0.2885 per unit to $0.4114 per unit for the fiscal quarter ended July 31, 2024 as compared to the fiscal quarter ended July 31,2023. On July 12, 2024, the Trust declared a distribution of $0.30 per unit payable on August 20, 2024 to Unitholders of record on July 30, 2024. Comparatively, the Trust declared no distribution during the quarter ended July 31, 2023. During the six months ended July 31, 2024 and July 31, 2023, the Trust declared distributions totaling $0.59 per unit to Unitholders of record and $0.00, respectively.

Previous wording

On a quarterly basis, the Trustees review a variety of financial and economic data and information impacting the Trust, and upon the Trustees’ determination, distributions may be declared approximately ten weeks after the Trustees receive a quarterly royalty report from Northshore and Cliffs and the Trust receives the actual royalty payment with respect to royalty income that is payable for iron ore shipments through the end of each prior calendar quarter. Royalty payments may include pricing adjustments with respect to shipments made during prior periods. The Trust accounts for and reports accrued income receivable based on shipments during the last month of each of the Trust’s fiscal quarters (April, July, Octoberand January) and price adjustments under Cliffs’ customer contracts (which can be positive or negative and can result in significant variations in royalties received by Mesabi Trust and cash available for distribution to Unitholders) as reported to the Trust by Northshore. The Trust accounts for these amounts by using estimated prices and reports such amounts as revenue even though accrued income receivable is not available for distribution to Unitholders until it is received by the Trust. Accordingly, distributions declared by the Trust are not equivalent to the Trust’s net income during the periods reported in this Quarterly Report on Form 10-Q.

Current wording

On a quarterly basis, the Trustees review a variety of financial and economic data and information impacting the Trust, and upon the Trustees’ determination, distributions may be declared approximately ten weeks after the Trustees receive a quarterly royalty report from Northshore and Cliffs and the Trust receives the actual royalty payment with respect to royalty income that is payable for iron ore shipments through the end of each prior calendar quarter. Royalty payments may include pricing adjustments with respect to shipments made during prior periods. The Trust accounts for and reports accrued income receivable based on shipments during the last month of each of the Trust’s fiscal quarters (April, July, Octoberand January) and price adjustments under Cliffs’ customer contracts (which can be positive or negative and can result in significant variations in royalties received by Mesabi Trust and cash available for distribution to Unitholders) as reported to the Trust by Northshore. The Trust accounts for these amounts by using

Previous wording

as of April 30, 2024. The increase in the accrued income receivable portion of the Unallocated Reserve is attributable to an increase in shipments in the last month of the fiscal quarter ended April 30, 2024 as compared to the prior comparable period. The increase in the contract asset portion of the Unallocated Reserve is attributable to estimates of variable consideration related to shipments calendar year-to-date through April 30, 2024, with no offsetting contract liability, as compared to April 30, 2023, when a net contract liability existed. The net contract liability portion of the unallocated reserve at April 30, 2023 was offset by royalties paid to the Trust in the second quarter of fiscal year 2024. See “Note 2” for further discussion of contract asset and contract liability.

Current wording

As set forth in the table below, Unallocated Reserve increased from $21,644,693 as of July 31, 2023 to $22,116,015 as of July 31,2024. The increase in Unallocated Reserve as of July 31, 2024, as compared to July 31,2023, is primarily the result of an increase in accrued income receivable, offset by a decrease in contract asset. The increase in the accrued income receivable portion of the Unallocated Reserve is attributable to an increase in pricing and shipments in the last month of the fiscal quarter ended July 31, 2024 as compared to the prior comparable period. The decrease in the contract asset portion of the Unallocated Reserve is attributable to a decrease in estimated variable consideration calendar year-to-date through July 31, 2024 as compared to the prior comparable period. See “Note 2” for further discussion of contract asset and contract liability.

Previous wording

The Trust’s Unallocated Reserve as of April 30, 2024 decreased by $321,018 to $20,654,125, as compared to the fiscal year ended January 31,2024. The decrease in the Unallocated Reserve as of April 30, 2024, as compared to January 31,2024, is primarily the result of a decrease in unallocated cash and cash equivalents and accrued income receivable, offset by an increase in the contract asset. The decrease in the unallocated cash and cash equivalents portion of the Unallocated Reserve is attributable to an increase in expenses paid of $2,770,086 during the fiscal quarter ended April 30, 2024 compared to expenses paid of $1,043,405 during the fiscal quarter ended January 31, 2024 which was due to an increase in legal fees and related expenses primarily related to pending arbitration (commenced in October 2022). The increase in the contract asset portion of the Unallocated Reserve is attributable to estimates of variable considerations related to the shipments calendar year-to-date through April 30, 2024, as compared to only one month of shipments for the quarter ended January 31, 2024.

Current wording

The Trust’s Unallocated Reserve as of July 31, 2024 increased by $1,140,872 to $22,116,015, as compared to the fiscal year ended January 31,2024. The increase in the Unallocated Reserve as of July 31, 2024, as compared to January 31, 2024, is the result of an increase in the contract asset and accrued income receivable and a decrease in accrued expenses, offset by a decrease in unallocated cash and cash equivalents. The increase in the contract asset portion of the Unallocated Reserve is attributable to estimates of variable considerations related to the shipments calendar year-to-date through July 31, 2024, as compared to only one month of shipments for the quarter ended January 31, 2024. See “Note 2” for further discussion of contract asset and contract liability. The increase in the accrued income receivable portion of the Unallocated Reserve is attributable to an increase in pricing in the last month of the fiscal quarter ended July 31, 2024 as compared to the last month of the fiscal year ended January 31, 2024. The decrease in the unallocated cash and cash equivalents portion of the Unallocated Reserve is attributable to a decrease of royalties received in the last month of the fiscal quarter ended July 31, 2024 compared to royalties received in the last month of the fiscal year ended January 31, 2024. The decrease in accrued expenses of the Unallocated Reserve is attributable to a decrease in legal fees in the last month of the fiscal quarter ended July 31, 2024 as compared to the last month of the fiscal year ended January 31, 2024.

Previous wording

Each quarter, as authorized by the Agreement of Trust, the Trustees will reevaluate all relevant factors including all costs, expenses, obligations, and present and future liabilities of the Trust (whether fixed or contingent) in determining a prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry, current and projected future mining operations and current economic conditions. Although the actual amount of the Unallocated Reserve will fluctuate from time to time and may increase or decrease from its current level, it is currently anticipated that future distributions will be highly dependent upon royalty income as it is received and the level of Trust expenses. The amount of future royalty income available for distribution will be subject to the volume of iron ore product shipments and the dollar level of sales by Northshore. Shipping activity is greatly reduced during the winter months. As previously disclosed, on April 25, 2023, Cliffs announced that “higher levels of steel production have led to the partial restart of some operations at … [its] iron ore mining and pelletizing swing facility at Northshore earlier this month.” Cliffs also announced that it “…will continue to treat that facility as our swing operation. And at this time, we still do not expect to operate Northshore in full any time this year.” The Trustees have not been provided with any additional information regarding the anticipated volume of production, stockpiling or shipping of iron ore products at the Northshore operations in Babbitt and Silver Bay, Minnesota. General adverse business and industry economic trends, uncertainties arising from war, terrorist events, the impact 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 production lines or entire plants, environmental compliance uncertainties, difficulties in obtaining and renewing necessary operating permits, higher imports of steel and iron ore substitutes, processing difficulties and consolidation and restructuring in the domestic steel market may adversely affect the amount and timing of such future shipments and sales. The Trustees will continue to monitor the economic and other circumstances of the Trust to strike a responsible balance between distributions to Unitholders and the need to maintain adequate reserves at a prudent level, given the unpredictable nature of the iron ore and steel industry, the Trust’s dependence on the actions of Cliffs/Northshore, and the fact that the Trust essentially has no other liquid assets.

Current wording

Each quarter, as authorized by the Agreement of Trust, the Trustees will reevaluate all relevant factors including all costs, expenses, obligations, and present and future liabilities of the Trust (whether fixed or contingent) in determining a prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry, current and projected future mining operations and current economic conditions. Although the actual amount of the Unallocated Reserve will fluctuate from time to time and may increase or decrease from its current level, it is currently anticipated that future distributions will be highly dependent upon royalty income as it is received and the level of Trust expenses. The amount of future royalty income available for distribution will be subject to the volume of iron ore product shipments and the dollar level of sales by Northshore. Shipping activity is greatly reduced during the winter months. As previously disclosed, on April 25, 2023, Cliffs announced that “higher levels of steel production have led to the partial restart of some operations at … [its] iron ore mining and pelletizing swing facility at Northshore earlier this month.” Cliffs also announced that it “…will continue to treat that facility as our swing operation. And at this time, we still do not expect to operate Northshore in full any time this year.” The Trustees have not been provided with any additional information regarding the anticipated volume of production, stockpiling or shipping of iron ore products at the Northshore operations in Babbitt and Silver Bay, Minnesota. General adverse business and industry economic trends, uncertainties arising from war, terrorist events, the impact of the coronavirus (COVID-19) pandemic and other global events, higher or lower customer demand for steel and iron ore, decisions by mine operators

Previous wording

Receipt of Quarterly Royalty Report and Royalty Payment from Cliffs

Current wording

Receipt* of Quarterly Royalty Report and Royalty Payment f rom *Cliffs

Previous wording

On April 30, 2024, Mesabi Trust received the quarterly royalty report of iron ore shipments out of Silver Bay, Minnesota during the quarter ended March 31, 2024 (the “Royalty Report”) from Cliffs, the parent company of Northshore.

Current wording

On July 30, 2024, Cliffs, the parent company of Northshore, sent the Trustees of Mesabi Trust the quarterly royalty report of iron ore shipments out of Silver Bay, Minnesota during the calendar quarter ended June 30, 2024 (the “Royalty Report”).

Previous wording

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 March 31, 2024, Mesabi Trust was credited with a base royalty of $2,106,086. For the three months ended March 31, 2024, Mesabi Trust was also credited with a bonus royalty in the amount of $2,520,601. The royalty payment received by the Trust also included an increase of $279,222 as a result of positive adjustments related to prior quarters. In addition, a royalty payment of $153,738 was paid to the Mesabi Land Trust. Accordingly, the total royalty payments received by Mesabi Trust on April 30, 2024 from Cliffs were $5,059,648.

Current wording

As Cliffs reported to Mesabi Trust in the Royalty Report, Cliffs credited Mesabi Trust with a base royalty of $2,783,747 based on shipments of iron ore products by Northshore during the three months ended June 30, 2024. For the three months ended June 30, 2024, Cliffs also credited Mesabi Trust with a bonus royalty in the amount of $2,386,069. Cliffs reported that no adjustments were made in the second quarter. In addition, a royalty payment of** $155,706 was paid to the Mesabi Land Trust. Accordingly, the total royalty payments Cliffs made to Mesabi Trust on July 30, 2024 were **$5,325,522.

Previous wording

The royalties paid to Mesabi Trust are based on the volume of iron ore pellets and other products 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 production and shipments from Mesabi Trust lands rather than from non-Mesabi Trust lands. In the first calendar quarter of 2024, Cliffs credited Mesabi Trust with 1,006,692 tons of iron ore shipped, as compared to zero (0) tons shipped during the first calendar quarter of 2023.

Current wording

The royalties paid to Mesabi Trust are based on the volume of iron ore pellets and other products 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 production and shipments from Mesabi Trust lands rather than from non-Mesabi Trust lands. In the second calendar quarter of 2024, Cliffs credited Mesabi Trust with 949,718 tons of iron ore shipped, as compared to 886,301 tons shipped or produced during the second calendar quarter of 2023. The current Royalty Report reported two low-volume sale transactions of iron ore pellets to a single third-party customer, one in May 2024 and one in June 2024. These two sale transactions are the only reported third-party pellet sales transactions since Cliffs’ July 28, 2023 quarterly royalty report when it reported two low-volume sales transactions to the same third-party customer in June 2023. The Trust is continuing to review and evaluate whether these transactions meet the requirements of the royalty agreement.

Previous wording

The Trustees of Mesabi Trust have received no specific updates concerning Cliffs’ plans with respect to Northshore iron ore operations. The last reported Cliffs’ public announcements made in April 2023 included that Northshore was then being partially restarted and would be run at less than full capacity for the remainder of 2023, and that Cliffs would continue to treat Northshore as a swing operation. With respect to calendar year 2024, Northshore has not advised Mesabi Trust of its expected shipments of iron ore products, or what percentage of 2024 shipments will be from Mesabi Trust iron ore.

Current wording

Cliffs has not provided the Trustees of Mesabi Trust with any specific updates concerning Cliffs’ plans with respect to Northshore iron ore operations. The last reported Cliffs’ public announcements made in April 2023 included that Northshore was then being partially restarted and would be run at less than full capacity for the remainder of 2023, and that Cliffs would continue to treat Northshore as a swing operation. With respect to calendar year 2024, Northshore has not advised Mesabi Trust of its expected shipments of iron ore products, or what percentage of 2024 shipments will be from Mesabi Trust iron ore.

Previous wording

On April 16, 2024, Mesabi Trust issued a press release announcing that the Trustees of Mesabi Trust declared a distribution of twenty-nine cents ($0.29) per Unit of Beneficial Interest payable on May 20, 2024 to Mesabi Trust Unitholders of record at the close of business on April 30, 2024.

Current wording

On July 12, 2024, Mesabi Trust issued a press release announcing that the Trustees of Mesabi Trust declared a distribution of thirty cents ($0.30) per Unit of Beneficial Interest payable on August 20, 2024 to Mesabi Trust Unitholders of record at the close of business on July 30, 2024.

Previous wording

The Trustees’ April 16, 2024 announcement of a twenty-nine cents ($0.29) per Unit distribution, as compared to no distribution announced by the Trust during April 2023, reflects an increase in the distribution, which increase is primarily attributable to the restart of Northshore operations in April 2023, and to an increase in the total royalties received by the Trust in January 2024, as compared to the total royalties received by the Trust in January 2023. In particular, the Trust’s receipt of total royalty payments of

Current wording

The Trustees’ recent announcement of a thirty cents ($0.30) per Unit distribution, as compared to no distribution announced by the Trust at the same time last year, is primarily attributable to the increase in the total royalties received by the Trust in April 2024, as compared to the total royalties received by the Trust in April 2023. In particular, the Trust’s receipt of total royalty payments of $5,059,648 on April 30, 2024 from Cliffs, the parent company of Northshore, was higher than the total royalty payments of zero dollars ($0.00) received by the Trust from Cliffs in April 2023, which resulted from the idling of Northshore operations from May 2022 until the restart of operations in April 2023.

Previous wording

The distribution announced April 16, 2024 also reflects that, until July 30, 2023, the Trust had received no royalties in the Trust’s three previous fiscal quarters, as well as the current continuing uncertainties related to previous announcements by Cliffs about its intention to continue to treat Northshore as a swing operation. Accordingly, the Trustees’ distribution decision also 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.

Current wording

Cliffs about its intention to continue to treat Northshore as a swing operation. Accordingly, the Trustees’ distribution announcement also 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.

Previous wording

The Trustees have received no specific updates on Cliffs’ plans for the current year concerning Northshore iron ore operations. The Trustees’ distribution announcement also considered numerous other factors, including uncertainties resulting from Cliffs’ prior announcements to increase the use of scrap iron in its vertical supply chain planning, the potential volatility in the iron ore and steel industries generally, national and global economic uncertainties, the cost and expense related to the Trust’s pending arbitration against Northshore and Cliffs, and further potential disturbances from global unrest.

Current wording

The Trustees’ distribution announcement July 12, 2024 also accounts for numerous other factors, including uncertainties resulting from Cliffs’ prior announcements to increase the use of scrap iron in its vertical supply chain planning, the potential volatility in the iron ore and steel industries generally, national and global economic uncertainties, the cost and expense related to the Trust’s pending arbitration against Northshore and Cliffs, and further potential disturbances from global unrest.

Previous wording

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. 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, 2024 (filed April 24, 2024). 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.

Current wording

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. 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.

Previous wording

Neither Mesabi Trust nor the Trustees have any control over the operations and activities of Northshore, except within the framework of the Amended Assignment of Peters Lease. Cliffs alone controls (i) historical operating data, including iron ore production volumes, decisions to reduce or idle the Northshore plant and mining operations, marketing of iron ore products, operating and capital expenditures as they relate to Northshore, environmental and other liabilities and the effects of regulatory changes; (ii)plans for Northshore’s future operating and capital expenditures; (iii) geological data relating to ore reserves; (iv) projected production of iron ore products; (v) contracts between Cliffs and Northshore with their customers; and (vi) the decision to mine off Mesabi Trust and/or state lands, based on Cliffs’ current mining and engineering plan. The Trustees do not exert any influence over mining operational decisions at Northshore, nor do the Trustees provide any input regarding the ore reserve estimated at Northshore as reported by Cliffs. While the Trustees request relevant information from Cliffs and Northshore in accordance with the Royalty Agreement for use in periodic reports as part of their evaluation of Mesabi Trust’s disclosure controls and procedures, the Trustees do not control this information and they rely on the information in Cliffs’ periodic and current filings with the SEC to provide accurate and timely information in Mesabi Trust’s reports filed with the SEC.

Current wording

Neither Mesabi Trust nor the Trustees have any control over the operations and activities of Northshore, except within the framework of the Royalty Agreement. Cliffs alone controls (i) historical operating data, including iron ore production volumes, decisions to reduce or idle the Northshore plant and mining operations, marketing of iron ore products, operating and capital expenditures as they relate to Northshore, environmental and other liabilities and the effects of regulatory changes; (ii) plans for Northshore’s future operating and capital expenditures; (iii) geological data relating to ore reserves; (iv) projected production of iron ore products; (v) contracts between Cliffs and Northshore with their customers; and (vi) the decision to mine off Mesabi Trust and/or state lands, based on Cliffs’ current mining and engineering plan. The Trustees do not exert any influence over mining operational decisions at Northshore, nor do the Trustees provide any input regarding the ore reserve estimated at Northshore as reported by Cliffs. While the Trustees request relevant information from Cliffs and Northshore in accordance with the Royalty Agreement for use in periodic reports as part of their evaluation of Mesabi Trust’s disclosure controls and procedures, the Trustees do not control this information and they rely on the information in Cliffs’ periodic and current filings with the SEC to provide accurate and timely information in Mesabi Trust’s reports filed with the SEC.

Previous wording

In accordance with the Agreement of Trust and the Amendment, the Trustees are entitled to, and in fact do, rely upon certain experts in good faith, including (i) the independent consultants with respect to monthly production and shipment reports, which include figures on crude ore production and iron ore pellet shipments, and discussions concerning the condition and accuracy of the scales and plans regarding the development of Mesabi Trust’s mining property; and (ii) the accounting firm they have contracted with for non-audit services, including reviews of financial data related to shipping and sales reports provided by Northshore and a review of the schedule of leasehold royalties payable to Mesabi Trust.

Current wording

In accordance with the Agreement of Trust, the Trustees are entitled to, and in fact do, rely upon certain experts in good faith, including (i) the independent consultants with respect to monthly production and shipment reports, which include figures on crude ore production and iron ore pellet shipments, and discussions concerning the condition and accuracy of the scales and plans regarding the development of Mesabi Trust’s mining property; and (ii) the accounting firm they have contracted with for non-audit services, including reviews of financial data related to shipping and sales reports provided by Northshore and a review of the schedule of leasehold royalties payable to Mesabi Trust.

Previous wording

Historically, when Cliffs produces iron ore for arms’-length sales to third party customers, some portion of the royalties paid to Mesabi Trust were based in part on estimated prices for certain iron ore products sold under some of the Cliffs’ customer contracts. Mesabi Trust is not a party to any of the Cliffs’ customer contracts. Generally, prices in some of such contracts are subject to interim and final pricing adjustments, which can be positive or negative, and which adjustments are dependent in part on a variety of price and inflation index factors, including but not limited to various benchmark pellet prices, hot band steel prices and various Producer Price Indexes. Although Northshore makes interim adjustments to the royalty payments on a quarterly basis, these price adjustments typically were not finalized until after the end of a contract year. In such circumstances, significant and frequent variations in royalties paid to the Trust could result. Iron ore products that are sold internally to Cliffs’ affiliates do not include such contract adjustment provisions.

Current wording

Cliffs has recently disclosed that marketing and selling iron ore pellets to third party customers in arms-length transactions is no longer a core aspect of Northshore’s business. Historically, when Cliffs produced iron ore for arms’-length sales to third-party customers, some portion of the royalties Cliffs paid to Mesabi Trust were based in part on estimated prices for certain iron ore products sold under some of Cliffs’ customer contracts. Mesabi Trust is not a party to any of the Cliffs’ customer contracts. Generally, prices in some of such contracts were subject to interim and final pricing adjustments, which can be positive or negative, and which adjustments are dependent in part on a variety of price and inflation index factors, including but not limited to various

Previous wording

There have been no material changes in the Trust’s critical accounting policies or significant accounting estimates during the three months ended April 30,2024. For a complete description of the Trust’s significant accounting policies, please see Note 2 to the financial statements included in the Trust’s Annual Report on Form 10-K for the year ended January 31, 2024 (filed April 24, 2024).

Current wording

There have been no material changes in the Trust’s critical accounting policies or significant accounting estimates during the three months ended July 31,2024. For a complete description of the Trust’s significant accounting policies, please see Note 2 to the financial statements included in the Trust’s Annual Report on Form 10-K for the year ended January 31, 2024 (filed April 24, 2024).

Previous wording

The Trust is not taxable as a corporation for federal or state income tax purposes and is instead qualified as a nontaxable grantor trust. Since the Trust’s inception, 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. As such, in lieu of the Trust paying income taxes, Unitholders report their pro rata share of the various items of Trust income and deductions on their income tax returns. This reporting is required whether or not the earnings of the Trust are distributed as to Unitholders. During calendar year 2021, any funds retained to increase the Trust’s unallocated reserve, which were derived from reportable royalty income, will nonetheless become taxable as reportable income to Unitholders, depending on each individual’s personal tax situation. Information regarding the

Current wording

The Trust is not taxable as a corporation for federal or state income tax purposes and is instead qualified as a nontaxable grantor trust. Since the Trust’s inception, 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. As such, in lieu of the Trust paying income taxes, Unitholders report their pro rata share of the various items of Trust income and deductions on their income tax returns. This reporting is required whether or not the earnings of the Trust are distributed as to Unitholders. During calendar year 2021, any funds retained to increase the Trust’s unallocated reserve, which were derived from reportable royalty income, will nonetheless become taxable as reportable income to Unitholders, depending on each individual’s personal tax situation. Information regarding the background on the changes in the Trust’s unallocated reserve is described above under “Results of Operations — Comparison of Unallocated Reserve as of July 31, 2024, July 31, 2023 and January 31,2024” beginning on page 14. Unitholders are encouraged to consult with their own tax advisors to plan for any financial impact related to this and to review their personal tax situations related to investing in, holding or selling units of beneficial interest in Mesabi Trust.