MESABI TRUST Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Mesabi Trust performed this year. Instead of reading dense legal filings, you can use these takeaways to decide if this investment fits your goals.

1. What does this company do?

Think of Mesabi Trust as a landlord for a massive iron ore mine in Minnesota. They don’t mine the ore themselves. Instead, they own the land and collect "rent"—known as royalties—from the company that operates the mine (Northshore Mining, owned by Cleveland-Cliffs).

Because their income depends on how much iron ore is pulled from the ground, their performance rises and falls with mining activity and global demand for steel. The Trust’s main asset is a royalty interest in the Peter Mitchell Mine, which produces iron ore pellets.

2. Financial performance

The Trust is a "pass-through" entity. It doesn't keep money to grow the business. Instead, it collects royalties and passes the cash to you. Because they have no employees or corporate offices, their costs are very low. They mostly pay for administrative tasks, legal fees, and trustee compensation.

They hire independent consultants to ensure the mining company reports the correct amount of ore and pays the right royalties. The Trust pays distributions to you after covering its own operating expenses and setting aside a small cash reserve.

3. The Legal Battle

The biggest story this year is a legal battle. In September 2025, the Trust started arbitration against the mine operator. The Trust claims they are owed money for two main reasons:

• The "Idling" Period: The mine shut down from May 2022 to April 2023. The Trust believes they are owed damages because the operator failed to maintain operations or compensate the Trust during that closure.
• Underpaid Royalties: The Trust claims the operator underpaid royalties on "intercompany shipments" from 2023 to the present. The Trust argues that the pricing used for these internal transfers was too low, resulting in smaller royalty payments than the agreement requires.

4. Financial health and oversight

The Trust is unique because it has no debt and no employees. Four Trustees manage the Trust, meeting quarterly and visiting the mine once a year. While the Trust considers its internal controls effective, it remains entirely dependent on the mining operator for accurate data on production, pellet prices, and shipping costs.

5. Key risks

• Legal Uncertainty: The arbitration is a major wildcard. If the Trust loses, they won't recover the money they claim is owed, and the legal fees will reduce the cash available for your distributions.
• Operator Dependency: The Trust relies on one operator. If that company faces financial trouble, labor disputes, or stops mining, the Trust’s income could dry up quickly.
• No "Safety Net": Because the Trust passes almost all cash to investors, they lack a large "rainy day" fund. Any unexpected legal or operational expense directly lowers your distribution.

6. Future outlook

The future depends on the arbitration outcome. Watch for updates on this case, as it will likely dictate the Trust's cash flow in the coming year. The Trustees are taking a more aggressive stance to protect your royalty payments. Future distributions will remain volatile, as they are tied to the operator's production levels and the resolution of these royalty disputes.

Investor Takeaway: If you are considering an investment in Mesabi Trust, keep in mind that this is essentially a bet on the ongoing legal arbitration and the long-term productivity of the Peter Mitchell Mine. Because there is no growth strategy beyond collecting royalties, your returns are entirely dependent on the mine operator's success and the outcome of the current legal disputes. If you prefer stable, predictable income, the volatility associated with these legal and operational factors may be a significant consideration.