MESABI TRUST: Urgent Investor Update on Distribution Cut

MESABI TRUST unitholders face a significant and immediate change. This summary cuts through the technical details to provide a clear, actionable understanding of the recent SEC filing and its implications for your investment.

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1. The Core Event: A Drastic Distribution Cut

MESABI TRUST announced a drastic reduction in its cash distribution to unitholders. For the fourth quarter of 2025, the Trust declared a payment of just $0.26 per unit. This represents a staggering 95.6% decrease compared to the $5.95 per unit distributed for the fourth quarter of 2024, marking a monumental shift for income-focused investors.

2. Key Dates for Investors

MESABI TRUST issued this critical announcement on January 16, 2026, via a press release and an SEC 8-K filing.

• Record Date: Unitholders of record as of February 15, 2026, will be eligible for this distribution.
• Payment Date: The Trust will pay the distribution on February 20, 2026.

3. Understanding the "Why": Royalty Income Plunge

While the 8-K filing itself did not provide an explicit, detailed explanation for the drastic reduction, the underlying reason is clear: a significant decline in the royalty income the Trust receives. As a royalty trust, MESABI TRUST's primary function is to collect royalties from iron ore mining operations on its land and distribute that income to unitholders.

The Trust receives its main royalty income from operations conducted by Cleveland-Cliffs Inc. (or its subsidiaries). This significant distribution cut indicates that these operations generated substantially less royalty income for the Trust during the fourth quarter of 2025 than in prior periods. Potential contributing factors, though not confirmed in the filing, include:

• Reduced Production Volumes: Cleveland-Cliffs may have mined and shipped less iron ore.
• Lower Iron Ore Prices: A decrease in the market price for iron ore directly reduces royalty revenue, as royalties often tie to sales value.
• Increased Operating Costs/Deductions: The royalty agreement may allow the operator certain deductions before calculating the Trust's share, which could have increased.

While the 8-K did not disclose specific royalty income figures for the period, the distribution amount directly reflects the distributable cash generated.

4. Financial Impact

The declared cash distribution of $0.26 per unit for the fourth quarter of 2025 directly and substantially impacts the Trust's distributable income. This 95.6% decrease from the prior quarter's $5.95 per unit distribution signifies a corresponding drastic reduction in the total cash available for unitholders. While the 8-K filing did not explicitly state the total dollar amount of royalty income received or the aggregate distribution amount for the period, the per-unit figure directly reflects the distributable cash generated from its royalty interests. This reduction fundamentally affects the Trust's primary function of distributing income from its mineral interests.

5. Impact and Significance: A Fundamental Shift

This event is more than a minor adjustment; it fundamentally challenges MESABI TRUST's investment thesis for many.

• Income Investors: For those holding MESABI TRUST units primarily for consistent, high-yield distributions, this cut devastates their expected income stream.
• Trust's Financial Health: While royalty trusts typically have minimal operating expenses, a sustained reduction in royalty income could strain the Trust's ability to cover administrative costs, potentially affecting future operations or requiring structural adjustments.
• Market Perception: This signals significant headwinds for the iron ore market or the specific operations tied to the Trust, raising questions about the long-term sustainability of previous distribution levels.

6. Who Is Affected?

• MESABI TRUST Unitholders: This group bears the direct financial impact through reduced income.
• The Trustee: The independent trustee, responsible for managing the Trust's administrative affairs and distributing income, will need to address investor concerns and ensure compliance with the Trust agreement under these new financial realities.
• Cleveland-Cliffs Inc.: While the direct impact on Cliffs is not detailed, their operational decisions (production, pricing, costs) are the root cause of the reduced royalty payments to the Trust.

7. What Happens Next? Navigating Uncertainty

• Immediate Market Reaction: Expect significant negative volatility in MESABI TRUST's unit price as the market digests this news and re-evaluates the Trust's future income potential.
• Investor Scrutiny: The Trustee will likely face intense questions from unitholders regarding the reasons for the decline and any outlook for future distributions. While royalty trusts are generally passive, further communications or filings might be necessary to provide clarity.
• Long-Term Outlook: Investors must determine if this is a temporary dip due to Q4 2025 market conditions or a signal of a permanently lower baseline for royalty income and distributions. This event fundamentally alters the risk profile and potential returns of investing in MESABI TRUST. Investors should consider the broader economic outlook for steel and iron ore, as well as Cleveland-Cliffs' operational guidance.

8. Key Takeaways for Investors

• Re-evaluate Your Investment Thesis: If you own MESABI TRUST for income, this event demands a complete re-evaluation of your investment. The income stream has been drastically altered.
• Understand the Risks: Investing in royalty trusts carries inherent risks tied to commodity prices, production volumes, and the operating company's financial health. This event underscores the materialization of these risks.
• Seek Further Information: Monitor future SEC filings from MESABI TRUST and Cleveland-Cliffs for any additional details or forward-looking statements that might clarify the sustainability of royalty income.
• Tax Implications: Remember that distributions from royalty trusts are typically taxed as ordinary income, and a significant reduction will affect your taxable income from this investment. Consult a tax advisor for personalized guidance.
• Due Diligence is Paramount: Do not make decisions based solely on headlines. Understand the full implications of this distribution cut for the Trust's underlying assets, the royalty agreement, and broader iron ore market conditions.