Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jan. 31, 2021 | Apr. 10, 2021 | Jul. 31, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Jan. 31, 2021 | ||
Entity File Number | 001-04488 | ||
Entity Registrant Name | Mesabi Trust | ||
Entity Incorporation, State or Country Code | NY | ||
Entity Tax Identification Number | 13-6022277 | ||
Entity Address, Address Line One | 60 Wall Street, 16th Floor | ||
Entity Address, City or Town | New York | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10005 | ||
City Area Code | 904 | ||
Local Phone Number | 271-2520 | ||
Title of 12(b) Security | Units of Beneficial Interest in Mesabi Trust | ||
Trading Symbol | MSB | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 13,120,010 | ||
Entity Public Float | $ 352,209,703 | ||
Current Fiscal Year End Date | --01-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000065172 | ||
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) | Jan. 31, 2021 | Jan. 31, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 12,500,941 | $ 10,177,655 |
U.S. Government securities, at amortized cost (which approximates fair value) | 9,906,669 | 13,332,474 |
Accrued income receivable | 249,477 | 69,588 |
Net contract asset | 177,251 | |
Prepaid expenses | 94,585 | 67,654 |
Current assets | 22,928,923 | 23,647,371 |
Assignments of leased property | ||
Amended assignment of Peters Lease | 1 | 1 |
Assignment of Cloquet Leases | 1 | 1 |
Certificate of beneficial interest for 13,120,010 units of Land Trust | 1 | 1 |
Total fixed property | 3 | 3 |
Total assets | 22,928,926 | 23,647,374 |
LIABILITIES, UNALLOCATED RESERVE AND TRUST CORPUS | ||
Distribution payable | 6,035,205 | 9,184,007 |
Accrued expenses | 416,672 | 120,630 |
Net contract liability | 2,511,720 | |
Total liabilities | 6,451,877 | 11,816,357 |
Unallocated reserve | 16,477,046 | 11,831,014 |
Trust corpus | 3 | 3 |
Total liabilities, unallocated reserve and trust corpus | $ 22,928,926 | $ 23,647,374 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - shares | Jan. 31, 2021 | Jan. 31, 2020 |
Balance Sheets | ||
Certificate of beneficial interest of Land Trust, units | 13,120,010 | 13,120,010 |
Statements of Income
Statements of Income - USD ($) | 12 Months Ended | ||
Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 | |
REVENUES | |||
Interest | $ 35,489 | $ 283,015 | $ 259,974 |
Total revenues | 25,950,567 | 31,990,874 | 47,293,765 |
EXPENSES | |||
Compensation of Trustees | 215,368 | 271,449 | 264,278 |
Corporate Trustee's administrative fees | 62,500 | 62,500 | 62,500 |
Professional fees and expenses: | |||
Legal | 1,456,399 | 928,586 | 636,224 |
Accounting and auditing | 165,828 | 185,109 | 140,938 |
Mining consultant and field representatives | 41,129 | 30,574 | 33,468 |
Insurance | 181,041 | 134,683 | 119,224 |
Annual stock exchange fee | 71,255 | 68,000 | 65,255 |
Transfer agent's and registrar's fees | 6,578 | 6,606 | 7,244 |
Other Trust expenses | 342,822 | 247,615 | 405,590 |
Total Expenses | 2,542,920 | 1,935,122 | 1,734,721 |
Net income | $ 23,407,647 | $ 30,055,752 | $ 45,559,044 |
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING | 13,120,010 | 13,120,010 | 13,120,010 |
Net income per unit (Note 2) (in dollars per unit) | $ 1.784 | $ 2.291 | $ 3.472 |
Distribution declared per unit (Note 3) (in dollars per unit) | $ 1.67 | $ 3.36 | $ 2.79 |
Royalties From Leases [Member] | |||
REVENUES | |||
Royalty income | $ 25,416,522 | $ 30,983,327 | $ 46,430,497 |
Royalties From Lease Fees [Member] | |||
REVENUES | |||
Royalty income | $ 498,556 | $ 724,532 | $ 603,294 |
STATEMENTS OF UNALLOCATED RESER
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS (Equity) - USD ($) | Unallocated Reserve | Trust Corpus | Total |
Beginning Balance at Jan. 31, 2018 | $ 10,606,675 | $ 3 | |
Units, Beginning Balance at Jan. 31, 2018 | 13,120,010 | ||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | |||
Net income | $ 45,559,044 | $ 45,559,044 | |
First quarter's distribution paid | (5,904,005) | ||
Second quarter's distribution paid | (2,886,402) | ||
Third quarter's distribution paid | (12,332,809) | ||
Fourth quarter's distribution declared/paid | (18,236,814) | ||
Ending Balance at Jan. 31, 2019 | $ 16,805,689 | 3 | |
Units, Ending Balance at Jan. 31, 2019 | 13,120,010 | ||
Increase (Decrease) in Unallocated Reserve and Trust Corpus | |||
Net income | $ 30,055,752 | 30,055,752 | |
First quarter's distribution paid | (11,676,809) | ||
Second quarter's distribution paid | (2,755,202) | ||
Third quarter's distribution paid | (11,414,409) | ||
Fourth quarter's distribution declared/paid | (9,184,007) | ||
Ending Balance at Jan. 31, 2020 | $ 11,831,014 | 3 | $ 11,831,017 |
Units, Ending Balance at Jan. 31, 2020 | 13,120,010 | 13,120,010 | |
Increase (Decrease) in Unallocated Reserve and Trust Corpus | |||
Net income | $ 23,407,647 | $ 23,407,647 | |
First quarter's distribution paid | (7,347,205) | ||
Second quarter's distribution paid | (656,001) | ||
Third quarter's distribution paid | (4,723,204) | ||
Fourth quarter's distribution declared/paid | (6,035,205) | ||
Ending Balance at Jan. 31, 2021 | $ 16,477,046 | $ 3 | $ 16,477,049 |
Units, Ending Balance at Jan. 31, 2021 | 13,120,010 | 13,120,010 |
STATEMENTS OF UNALLOCATED RES_2
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS (Parenthetical) - $ / shares | 12 Months Ended | ||
Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 | |
STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS | |||
First Quarterly Distribution Paid Per Unit | $ 0.56 | $ 0.89 | $ 0.45 |
Second Quarterly Distribution Paid Per Unit | 0.05 | 0.21 | 0.22 |
Third Quarterly Distribution Paid Per Unit | 0.36 | 0.87 | 0.94 |
Fourth Quarterly Distribution Declared Or Paid Per Unit | $ 0.46 | $ 0.70 | $ 1.39 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 | |
Operating activities | |||
Royalties received | $ 23,042,360 | $ 36,531,459 | $ 46,705,036 |
Interest received | 39,347 | 296,964 | 248,667 |
Expenses paid | (2,273,809) | (2,239,182) | (1,457,039) |
Net cash from operating activities | 20,807,898 | 34,589,241 | 45,496,664 |
Investing activities | |||
Maturities of U.S. Government securities | 90,367,702 | 90,434,386 | 81,835,668 |
Sales of U.S. Government securities | 236,992 | 99,740 | |
Purchases of U.S. Government securities | (87,178,889) | (71,644,548) | (90,260,269) |
Net cash from investing activities | 3,425,805 | 18,789,838 | (8,324,861) |
Financing activity | |||
Distributions to unitholders | (21,910,417) | (44,083,234) | (36,604,828) |
Net change in cash and cash equivalents | 2,323,286 | 9,295,845 | 566,975 |
Cash and cash equivalents, beginning of period | 10,177,655 | 881,810 | 314,835 |
Cash and cash equivalents, end of period | 12,500,941 | 10,177,655 | 881,810 |
Reconciliation of net income to net cash from (used for) operating activities | |||
Net income | 23,407,647 | 30,055,752 | 45,559,044 |
Decrease (increase) in accrued income receivable | (179,889) | 2,269,472 | (382,969) |
Decrease (increase) in contract asset | (177,251) | 56,357 | 42,907 |
Decrease (increase) in prepaid expense | (26,931) | (13,182) | 168 |
Increase (decrease) in accrued expenses | 296,042 | (290,878) | 277,514 |
Increase (decrease) in contract liability | (2,511,720) | 2,511,720 | |
Net cash from operating activities | 20,807,898 | 34,589,241 | 45,496,664 |
Non cash financing activity | |||
Distributions declared and payable | $ 6,035,205 | $ 9,184,007 | $ 18,236,814 |
NATURE OF BUSINESS AND ORGANIZA
NATURE OF BUSINESS AND ORGANIZATION | 12 Months Ended |
Jan. 31, 2021 | |
NATURE OF BUSINESS AND ORGANIZATION | |
NATURE OF BUSINESS AND ORGANIZATION | NOTE 1 - NATURE OF BUSINESS AND ORGANIZATION Nature of Business Mesabi Trust (“Mesabi Trust” or the “Trust”), formed pursuant to an Agreement of Trust dated July 18, 1961 (the “Agreement of Trust”), is a trust organized under the laws of the State of New York. Mesabi Trust holds all of the interests formerly owned by Mesabi Iron Company (“MIC”), including all right, title and interest in the Amendment of Assignment, Assumption and Further Assignment of Peters Lease (the “Amended Assignment of Peters Lease”), the Amendment of Assignment, Assumption and Further Assignment of Cloquet Lease (the “Amended Assignment of Cloquet Lease” and together with the Amended Assignment of Peters Lease, the “Amended Assignment Agreements”), the beneficial interest in a trust organized under the laws of the State of Minnesota to administer the Mesabi Fee Lands (as defined below) as the trust corpus in compliance with the laws of the State of Minnesota on July 18, 1961 (the “Mesabi Land Trust”) and all other assets and property identified in the Agreement of Trust. The Amended Assignment of Peters Lease relates to an Indenture made as of April 30, 1915 among East Mesaba Iron Company (“East Mesaba”), Dunka River Iron Company (“Dunka River”) and Claude W. Peters (the “Peters Lease”) and the Amended Assignment of Cloquet Lease relates to an indenture made May 1, 1916 between Cloquet Lumber Company and Claude W. Peters (the “Cloquet Lease”). Mesabi Trust was created in 1961 upon the liquidation of Mesabi Iron Company. The sole purpose of the Trust, as set forth in the Agreement of Trust dated as of July 18, 1961, is to conserve and protect the Trust Estate and to collect and distribute the income and proceeds there from to the Trust’s certificate holders after the payment of, or provision for, expenses and liabilities. The Agreement of Trust prohibits the Trust from engaging in any business. In accordance with the Agreement of Trust, the Trust will terminate twenty-one years after the death of the survivor of twenty-five persons named in an exhibit to the Agreement of Trust, the youngest of whom was believed to be fifty-four years old as of October 1, 2014. The lessee/operator of Mesabi Trust’s mineral interests is Northshore Mining Corporation (NMC), a subsidiary of Cleveland-Cliffs Inc. (Cliffs). Prior to September 30, 1994, the lessee/operator had been a subsidiary of Cyprus Amax Minerals Company and was named Cyprus Northshore Mining Corporation (Cyprus NMC). Organization The beneficial interest in Mesabi Trust is represented by 13,120,010 transferable units distributed on July 27, 1961 to shareholders of Mesabi Iron Company. The Trust’s status as a grantor trust was confirmed by letter ruling addressed to Mesabi Iron Company from the Internal Revenue Service in 1961. As a grantor trust, Mesabi is exempt from Federal income taxes and its income is taxable directly to the Unitholders. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jan. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents The Trust considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of January 31, 2021 and 2020, the Trust held money market fund that invests primarily in obligations of the U.S. Treasury, which it considers to be cash and cash equivalents. Investments The Trust invests solely in U.S. Government Securities. The Trustees determine the appropriate classifications of the securities at the time they are acquired and evaluate the appropriateness of such classifications as of each balance sheet date. The U.S. Government Securities are classified as held-to-maturity securities as the Trust has the positive intent and ability to hold to maturity and are therefore stated at amortized cost. Revenue Recognition Base Overriding Royalties The performance obligation for the base overriding royalty consists of providing Northshore Mining Company (“Northshore”) access to the Peters Lands, Cloquet Lands, and Mesabi Lands and the right to mine on these lands. The consideration to be received from this access under the Amended Assignment Agreements relates to the volume of iron ore shipped from Silver Bay, Minnesota by Northshore. 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 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 first -million ton volume thresholds. The base overriding royalties contain variable consideration, as the transaction price is based on a percentage that varies based on the total cumulative tons of iron ore shipped for the calendar year. The Trust estimates the variable consideration it expects to be entitled to receive over the contractual period associated with royalty agreement, which resets the royalty percentages at the beginning of each calendar year. The Trust evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, the Trust includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For the base overriding royalties, the Trust estimates the base overriding royalty percentage using the expected value method, which calculates the estimate based off the historical, current, and forecasted shipments. The Trust recognizes base overriding royalties on a quarterly basis based on the actual shipments for the fiscal quarter at the estimated royalty percentage as described above and based on the estimated prices for iron ore products sold under the Cliffs Pellet Agreements. Bonus Royalties The performance obligation for the bonus royalties consists of providing Northshore Mining access to the Peters Lands, Cloquet Lands, and Mesabi Lands and the right to mine on these lands and the consideration to be received from this access under the Amended Assignment Agreements relates to the volume of iron ore shipped by Northshore. The Trust recognizes bonus royalties on a quarterly basis based on the actual shipments of the fiscal quarter at the actual royalty percentage for those shipments and based on the anticipated prices for iron ore products sold under the Cliffs Pellet Agreements. Fee Royalties The performance obligation for the fee royalties consists of the volume of crude ore mined on a quarterly basis. The Trust recognizes fee royalties on a quarterly basis based on the actual crude ore mined during the fiscal quarter. Accrued Income Receivable The accrued income receivable represents royalty income earned but not yet received by the Trust under the royalty agreements described elsewhere in these notes. Accrued income receivable is calculated based on (i) shipments during the last month of Mesabi Trust’s fiscal year, if any, and (ii) net price adjustments resulting from the price adjustment mechanisms in the agreements between Cliffs and its customers that determine the final sales price of the shipments from Silver Bay, Minnesota. Contract Asset and Contract Liability The contract asset and contract liability are presented net in the accompanying condensed balance sheets as both the contract asset and contract liability are derived from one customer contract. A net contract asset in the amount of $177,251 is reflected on the Balance Sheet as of January 31, 2021. The net contract asset is made up of a contract asset in the amount of $239,132 and a contract liability in the amount of $61,881. As of January 31, 2020, the Trust recorded a net contract liability of $2,511,720, made up of a contract asset in the amount of $192,059 and a contract liability in the amount of $2,703,779. The contract asset is based on the revenue recognized on the base overriding royalties, at the estimated prices for iron ore products sold under the Cliffs Pellet Agreements, that will be collected in subsequent quarters as the uncertainty associated with the variable consideration is resolved. The contract asset is not available for distribution to the Unitholders until the applicable royalties are actually received by the Trust. The Trust includes estimated future royalty rates on current contracted volumes within contract asset. The contract liability represents iron ore that has not been shipped by Northshore, but for which the Trust has received a royalty payment during the fiscal year ended January 31, 2020 based on an initial estimated price. Revenue will be recognized in accordance with the Trust’s revenue recognition policy at the estimated prices for iron ore products sold under the Cliffs Pellet Agreements as shipments of these products are made. The contract liability also represents an estimate of decreases in royalty revenue related to tons of iron ore that were shipped by Northshore, but for which Northshore has indicated that final pricing is not yet known and is adjusted in accordance with the Trust’s revenue recognition policy each quarter as updated pricing information is received. Fixed Property, Including Intangibles The Trust’s fixed property, including intangibles, is recorded at nominal values and includes the following: 1. The entire beneficial interest as assignor in the Amended Peters Lease Assignment and the Amended Cloquet Lease Assignment covering taconite properties in Minnesota which are leased to NMC. 2. The entire beneficial interest in Mesabi Land Trust which owns a 20% fee interest in the lands subject to the Peters Lease and the entire fee interest in other properties in Minnesota. Net Income Per Unit Net income per unit is computed by dividing net income by the weighted average number of units outstanding. Concentration of Credit Risk Financial instruments which potentially subject the Trust to concentrations of credit risk consist primarily of cash that is maintained at an FDIC insured financial institution. At times during the year, the Trust’s cash balance may exceed insured limits. As further described in Note 1, NMC is the lessee/operator of the Mesabi Trust land. All royalty income earned by the Trust is received from NMC, and accordingly, substantially all of the accrued income receivable, contract assets and contract liabilities are also with NMC. Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Trustees to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Specifically, the accrued income receivable, contract asset, contract liability and related royalty revenue are significant estimates which are subject to change in the near term, and changes to these estimates could have a material effect on the Trust’s financial statements. On December 9, 2019, the Trustees of Mesabi Trust announced that the Trust initiated arbitration against Northshore, the lessee/operator of the leased lands, and its parent, Cliffs. The arbitration proceeding was commenced with the American Arbitration Association. The Trust asserts claims concerning the calculation of royalties related to the production, shipment and sale of iron ore, including DR-grade pellets. More particularly, the claims involve the Trust’s allegations that Northshore and Cliffs have improperly manipulated royalty amounts with respect to DR-grade pellets by orchestrating isolated sale transactions of low silica iron ore into international markets at prices significantly below standard pellet pricing. Based on information currently available to the Trust, the Trust seeks an award of damages, along with specific performance and declaratory relief. The arbitration is in its early stages and no hearings have been set. It is difficult to foresee the results of legal actions, arbitration matters and other proceedings currently involving the Mesabi Trust or of those which may arise in the future, and an adverse result in these matters could have a material adverse effect on the market value of Mesabi Trust units and on Mesabi Trust’s asset value, royalty income, results of operations and financial condition. To date, no amounts for loss or gain contingencies related to this arbitration have been recognized in the financial statements. Subsequent Events On April 12, 2021, the Trustees of Mesabi Trust declared a distribution of eighty-nine cents ($0.89) per Unit of Beneficial Interest payable on May 20, 2021 to Mesabi Trust Unitholders of record at the close of business on April 30, 2021. Material subsequent events are evaluated for recognition or disclosure in the accompanying financial statements. Fair Value Measures Valuation Hierarchy GAAP establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. ● Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement. The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. The carrying amounts of financial instruments approximated fair value as of January 31, 2021 and 2020, because of the relative short maturity of these instruments. Recent Accounting Pronouncements Various accounting standards and interpretations were issued during the fiscal year ended January 31, 2021. The Trust has evaluated the recently issued accounting pronouncements that are effective for the fiscal year ended January 31, 2021 and believe they will not have a material effect on the Trust’s financial position, results of operations or cash flows when adopted. |
U. S. GOVERNMENT SECURITIES
U. S. GOVERNMENT SECURITIES | 12 Months Ended |
Jan. 31, 2021 | |
U. S. GOVERNMENT SECURITIES | |
U. S. GOVERNMENT SECURITIES | NOTE 3 - U.S. GOVERNMENT SECURITIES U.S. Government Securities at January 31, 2021 and 2020 are classified as held-to-maturity and mature as follows: 2021 2020 Carrying Carrying Value Fair Value Value Fair Value Due within one year $ 9,906,669 $ 9,906,847 $ 13,332,474 $ 13,337,529 Due after one year — — — — $ 9,906,669 $ 9,906,847 $ 13,332,474 $ 13,337,529 The fair value of U.S. Government Securities have been valued using level 1 inputs. |
ROYALTY AGREEMENT
ROYALTY AGREEMENT | 12 Months Ended |
Jan. 31, 2021 | |
ROYALTY AGREEMENT | |
ROYALTY AGREEMENT | NOTE 4 - ROYALTY AGREEMENT The current royalty rate schedule became effective on August 17, 1989, which was established pursuant to the Amended Assignment Agreements the Trust entered into with Cyprus Northshore Mining Corporation (“Cyprus NMC”). Pursuant to the Amended Assignment Agreements, overriding royalties are determined by both the volume and selling price of iron ore products shipped. Pursuant to the Amended Assignment Agreements, NMC is obligated to pay Mesabi Trust base overriding royalties, in varying amounts constituting a percentage of the gross proceeds of shipments, from Silver Bay, Minnesota, of iron ore product produced from Mesabi Trust lands or, to a limited extent, other lands. NMC is obligated to make payments of overriding royalties on product shipments within 30 days following the calendar quarter in which such shipments occur. NMC resumed mining operations and shipping product from Silver Bay in the second calendar quarter of 1990, and the first payment of overriding royalties was made in July 1990. Royalty bonuses are payable on all iron ore products produced from Mesabi Ore shipped from Silver Bay during a calendar quarter and sold at prices above the Adjusted Threshold Price. The Adjusted Threshold Price was per ton for calendar year 2021. The Adjusted Threshold Price is subject to adjustment (but not below NMC is obligated to pay to Mesabi Trust a minimum advance royalty of $500,000 per annum, subject to adjustment for inflation and deflation (but not below $500,000 ), which is credited against base overriding royalties and royalty bonuses. NMC is obligated to make quarterly payments of the minimum advance royalty in January, April, July and October of each year. For the calendar year ending December 31, 2021, the minimum advance royalty threshold is . The minimum annual advance royalty threshold was |
UNALLOCATED RESERVE AND DISTRIB
UNALLOCATED RESERVE AND DISTRIBUTIONS | 12 Months Ended |
Jan. 31, 2021 | |
UNALLOCATED RESERVE AND DISTRIBUTIONS | |
UNALLOCATED RESERVE AND DISTRIBUTIONS | NOTE 5 - UNALLOCATED RESERVE AND DISTRIBUTIONS 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 known or contingent) in determining a prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry and current economic conditions. The actual amount of the Unallocated Reserve will fluctuate from time to time and may increase or decrease from its current level. Accordingly, 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 expected that future distributions will be highly dependent upon royalty payments received quarterly and the level of Trust expenses that the Trustees anticipate occurring in subsequent quarters. As of January 31, 2021 and January 31, 2020, the unallocated cash and U.S. Government Securities portion of the Trust’s Unallocated Reserve consisted of the following components: January 31, 2021 January 31, 2020 Cash and U.S. Government securities $ 22,407,610 $ 23,510,129 Distribution payable (6,035,205) (9,184,007) Unallocated cash and U.S. Government securities $ 16,372,405 $ 14,326,122 A reconciliation of the Trust’s Unallocated Reserve from January 31, 2020 to January 31, 2021 is as follows: Unallocated Trust Reserve Corpus Total Balances at January 31, 2020 $ 11,831,014 $ 3 $ 11,831,017 Net income 23,407,647 — 23,407,647 Distributions declared (18,761,615) — (18,761,615) Balances at January 31, 2021 $ 16,477,046 $ 3 $ 16,477,049 The Trustees determine the level of distributions on a quarterly basis after receiving notification from NMC as to the amount of royalty income that will be received and after determination of any known or anticipated expenses, liabilities and obligations of the Trust. As a result of fluctuations in the accrued income receivable portion of the Unallocated Reserve, future distributions may vary depending upon the adjustments to royalty income, which are determined by NMC, and the level of Trust expenses that the Trustees anticipate occurring in subsequent quarters. During the fiscal years ended January 31, 2021, 2020, and 2019, the Trustees distributed cash payments totaling $21,910,417 ($1.67 per Unit), $44,083,234 ($3.36 per Unit), and $36,604,828 ($2.79 per Unit), respectively. In addition, in January 2021, the Trustees declared a distribution of |
SUMMARY OF QUARTERLY EARNINGS (
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | 12 Months Ended |
Jan. 31, 2021 | |
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | |
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | NOTE 6 - SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) The quarterly results of operations for the years ended January 31, 2021 and 2020 are presented below: 2021 First Second Third Fourth Quarter Quarter Quarter Quarter Revenue $ 2,168,763 $ 7,218,385 $ 5,737,255 $ 10,826,164 Expenses 557,142 542,382 610,856 832,540 Net income $ 1,611,621 $ 6,676,003 $ 5,126,399 $ 9,993,624 Net income per unit $ 0.123 $ 0.509 $ 0.391 $ 0.762 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Revenue $ 5,466,873 $ 14,344,224 $ 6,560,841 $ 5,618,936 Expenses 556,585 432,537 410,645 535,355 Net income $ 4,910,288 $ 13,911,687 $ 6,150,196 $ 5,083,581 Net income per unit $ 0.374 $ 1.060 $ 0.469 $ 0.387 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jan. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Trust considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of January 31, 2021 and 2020, the Trust held money market fund that invests primarily in obligations of the U.S. Treasury, which it considers to be cash and cash equivalents. |
Investments | Investments The Trust invests solely in U.S. Government Securities. The Trustees determine the appropriate classifications of the securities at the time they are acquired and evaluate the appropriateness of such classifications as of each balance sheet date. The U.S. Government Securities are classified as held-to-maturity securities as the Trust has the positive intent and ability to hold to maturity and are therefore stated at amortized cost. |
Revenue recognition | Revenue Recognition Base Overriding Royalties The performance obligation for the base overriding royalty consists of providing Northshore Mining Company (“Northshore”) access to the Peters Lands, Cloquet Lands, and Mesabi Lands and the right to mine on these lands. The consideration to be received from this access under the Amended Assignment Agreements relates to the volume of iron ore shipped from Silver Bay, Minnesota by Northshore. 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 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 first -million ton volume thresholds. The base overriding royalties contain variable consideration, as the transaction price is based on a percentage that varies based on the total cumulative tons of iron ore shipped for the calendar year. The Trust estimates the variable consideration it expects to be entitled to receive over the contractual period associated with royalty agreement, which resets the royalty percentages at the beginning of each calendar year. The Trust evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, the Trust includes the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For the base overriding royalties, the Trust estimates the base overriding royalty percentage using the expected value method, which calculates the estimate based off the historical, current, and forecasted shipments. The Trust recognizes base overriding royalties on a quarterly basis based on the actual shipments for the fiscal quarter at the estimated royalty percentage as described above and based on the estimated prices for iron ore products sold under the Cliffs Pellet Agreements. Bonus Royalties The performance obligation for the bonus royalties consists of providing Northshore Mining access to the Peters Lands, Cloquet Lands, and Mesabi Lands and the right to mine on these lands and the consideration to be received from this access under the Amended Assignment Agreements relates to the volume of iron ore shipped by Northshore. The Trust recognizes bonus royalties on a quarterly basis based on the actual shipments of the fiscal quarter at the actual royalty percentage for those shipments and based on the anticipated prices for iron ore products sold under the Cliffs Pellet Agreements. Fee Royalties The performance obligation for the fee royalties consists of the volume of crude ore mined on a quarterly basis. The Trust recognizes fee royalties on a quarterly basis based on the actual crude ore mined during the fiscal quarter. Accrued Income Receivable The accrued income receivable represents royalty income earned but not yet received by the Trust under the royalty agreements described elsewhere in these notes. Accrued income receivable is calculated based on (i) shipments during the last month of Mesabi Trust’s fiscal year, if any, and (ii) net price adjustments resulting from the price adjustment mechanisms in the agreements between Cliffs and its customers that determine the final sales price of the shipments from Silver Bay, Minnesota. Contract Asset and Contract Liability The contract asset and contract liability are presented net in the accompanying condensed balance sheets as both the contract asset and contract liability are derived from one customer contract. A net contract asset in the amount of $177,251 is reflected on the Balance Sheet as of January 31, 2021. The net contract asset is made up of a contract asset in the amount of $239,132 and a contract liability in the amount of $61,881. As of January 31, 2020, the Trust recorded a net contract liability of $2,511,720, made up of a contract asset in the amount of $192,059 and a contract liability in the amount of $2,703,779. The contract asset is based on the revenue recognized on the base overriding royalties, at the estimated prices for iron ore products sold under the Cliffs Pellet Agreements, that will be collected in subsequent quarters as the uncertainty associated with the variable consideration is resolved. The contract asset is not available for distribution to the Unitholders until the applicable royalties are actually received by the Trust. The Trust includes estimated future royalty rates on current contracted volumes within contract asset. The contract liability represents iron ore that has not been shipped by Northshore, but for which the Trust has received a royalty payment during the fiscal year ended January 31, 2020 based on an initial estimated price. Revenue will be recognized in accordance with the Trust’s revenue recognition policy at the estimated prices for iron ore products sold under the Cliffs Pellet Agreements as shipments of these products are made. The contract liability also represents an estimate of decreases in royalty revenue related to tons of iron ore that were shipped by Northshore, but for which Northshore has indicated that final pricing is not yet known and is adjusted in accordance with the Trust’s revenue recognition policy each quarter as updated pricing information is received. |
Fixed Property, Including Intangibles | Fixed Property, Including Intangibles The Trust’s fixed property, including intangibles, is recorded at nominal values and includes the following: 1. The entire beneficial interest as assignor in the Amended Peters Lease Assignment and the Amended Cloquet Lease Assignment covering taconite properties in Minnesota which are leased to NMC. 2. The entire beneficial interest in Mesabi Land Trust which owns a 20% fee interest in the lands subject to the Peters Lease and the entire fee interest in other properties in Minnesota. |
Net Income Per Unit | Net Income Per Unit Net income per unit is computed by dividing net income by the weighted average number of units outstanding. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments which potentially subject the Trust to concentrations of credit risk consist primarily of cash that is maintained at an FDIC insured financial institution. At times during the year, the Trust’s cash balance may exceed insured limits. As further described in Note 1, NMC is the lessee/operator of the Mesabi Trust land. All royalty income earned by the Trust is received from NMC, and accordingly, substantially all of the accrued income receivable, contract assets and contract liabilities are also with NMC. |
Accounting Estimates | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the Trustees to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Specifically, the accrued income receivable, contract asset, contract liability and related royalty revenue are significant estimates which are subject to change in the near term, and changes to these estimates could have a material effect on the Trust’s financial statements. On December 9, 2019, the Trustees of Mesabi Trust announced that the Trust initiated arbitration against Northshore, the lessee/operator of the leased lands, and its parent, Cliffs. The arbitration proceeding was commenced with the American Arbitration Association. The Trust asserts claims concerning the calculation of royalties related to the production, shipment and sale of iron ore, including DR-grade pellets. More particularly, the claims involve the Trust’s allegations that Northshore and Cliffs have improperly manipulated royalty amounts with respect to DR-grade pellets by orchestrating isolated sale transactions of low silica iron ore into international markets at prices significantly below standard pellet pricing. Based on information currently available to the Trust, the Trust seeks an award of damages, along with specific performance and declaratory relief. The arbitration is in its early stages and no hearings have been set. It is difficult to foresee the results of legal actions, arbitration matters and other proceedings currently involving the Mesabi Trust or of those which may arise in the future, and an adverse result in these matters could have a material adverse effect on the market value of Mesabi Trust units and on Mesabi Trust’s asset value, royalty income, results of operations and financial condition. To date, no amounts for loss or gain contingencies related to this arbitration have been recognized in the financial statements. |
Subsequent Events | Subsequent Events On April 12, 2021, the Trustees of Mesabi Trust declared a distribution of eighty-nine cents ($0.89) per Unit of Beneficial Interest payable on May 20, 2021 to Mesabi Trust Unitholders of record at the close of business on April 30, 2021. Material subsequent events are evaluated for recognition or disclosure in the accompanying financial statements. |
Fair Value Measures | Fair Value Measures Valuation Hierarchy GAAP establishes a three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. ● Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement. The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. The carrying amounts of financial instruments approximated fair value as of January 31, 2021 and 2020, because of the relative short maturity of these instruments. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Various accounting standards and interpretations were issued during the fiscal year ended January 31, 2021. The Trust has evaluated the recently issued accounting pronouncements that are effective for the fiscal year ended January 31, 2021 and believe they will not have a material effect on the Trust’s financial position, results of operations or cash flows when adopted. |
U. S. GOVERNMENT SECURITIES (Ta
U. S. GOVERNMENT SECURITIES (Tables) | 12 Months Ended |
Jan. 31, 2021 | |
U. S. GOVERNMENT SECURITIES | |
Schedule of U.S. government securities classified as held-to-maturity | 2021 2020 Carrying Carrying Value Fair Value Value Fair Value Due within one year $ 9,906,669 $ 9,906,847 $ 13,332,474 $ 13,337,529 Due after one year — — — — $ 9,906,669 $ 9,906,847 $ 13,332,474 $ 13,337,529 |
UNALLOCATED RESERVE AND DISTR_2
UNALLOCATED RESERVE AND DISTRIBUTIONS (Tables) | 12 Months Ended |
Jan. 31, 2021 | |
UNALLOCATED RESERVE AND DISTRIBUTIONS | |
Schedule of unallocated cash and U.S. Government securities portion of the Trust's Unallocated Reserve | January 31, 2021 January 31, 2020 Cash and U.S. Government securities $ 22,407,610 $ 23,510,129 Distribution payable (6,035,205) (9,184,007) Unallocated cash and U.S. Government securities $ 16,372,405 $ 14,326,122 |
Schedule of reconciliation of Trust's Unallocated Reserve | Unallocated Trust Reserve Corpus Total Balances at January 31, 2020 $ 11,831,014 $ 3 $ 11,831,017 Net income 23,407,647 — 23,407,647 Distributions declared (18,761,615) — (18,761,615) Balances at January 31, 2021 $ 16,477,046 $ 3 $ 16,477,049 |
SUMMARY OF QUARTERLY EARNINGS_2
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) (Tables) | 12 Months Ended |
Jan. 31, 2021 | |
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | |
Summary of quarterly results of operations | 2021 First Second Third Fourth Quarter Quarter Quarter Quarter Revenue $ 2,168,763 $ 7,218,385 $ 5,737,255 $ 10,826,164 Expenses 557,142 542,382 610,856 832,540 Net income $ 1,611,621 $ 6,676,003 $ 5,126,399 $ 9,993,624 Net income per unit $ 0.123 $ 0.509 $ 0.391 $ 0.762 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Revenue $ 5,466,873 $ 14,344,224 $ 6,560,841 $ 5,618,936 Expenses 556,585 432,537 410,645 535,355 Net income $ 4,910,288 $ 13,911,687 $ 6,150,196 $ 5,083,581 Net income per unit $ 0.374 $ 1.060 $ 0.469 $ 0.387 |
NATURE OF BUSINESS AND ORGANI_2
NATURE OF BUSINESS AND ORGANIZATION (Details) | 12 Months Ended | |
Jan. 31, 2021itemshares | Jan. 31, 2020shares | |
NATURE OF BUSINESS AND ORGANIZATION | ||
Period of termination of the Trust after the death of the survivor of persons named in the exhibit | 21 years | |
Number of persons named in the exhibit to the Agreement of Trust | item | 25 | |
Age of the youngest survivor | 54 years | |
Beneficial interest in the Trust (in units) | shares | 13,120,010 | 13,120,010 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue (Details) | Apr. 12, 2021$ / shares | Jan. 31, 2021USD ($)itemcontractMT$ / shares | Jan. 31, 2020USD ($)$ / shares | Jan. 31, 2019$ / shares |
Cash and Cash Equivalents | ||||
Amount held by the Trust in a money market fund | $ 12,500,941 | $ 768,512 | ||
Revenue from Contract with Customer [Abstract] | ||||
Accrued income receivable | $ 249,477 | 69,588 | ||
Number of customer contracts | contract | 1 | |||
Net contract asset | $ 177,251 | |||
Net contract liability | 2,511,720 | |||
Contract asset | 239,132 | 192,059 | ||
Contract liability | $ 61,881 | $ 2,703,779 | ||
Fixed Property, Including Intangibles | ||||
Percentage of fee interest owned by Mesabi Land Trust in the lands subject to the Peters Lease | 20.00% | |||
Distributions declared per unit (in dollars per unit) | $ / shares | $ 1.67 | $ 3.36 | $ 2.79 | |
Subsequent Event [Member] | ||||
Fixed Property, Including Intangibles | ||||
Distributions declared per unit (in dollars per unit) | $ / shares | $ 0.89 | |||
Base Overriding Royalties | ||||
Revenue from Contract with Customer [Abstract] | ||||
Base overriding royalties, first tier portion percentage | 90.00% | |||
Base overriding royalties, first tier shipment ceiling (in million tons) | MT | 4 | |||
Base overriding royalties, second tier portion percentage | 85.00% | |||
Base overriding royalties, second tier shipment ceiling (in million tons) | MT | 2 | |||
Base overriding royalties, third tier portion percentage | 25.00% | |||
Base overriding royalties, third tier shipment threshold (in million tons) | MT | 6 | |||
Base overriding royalties, number of volume thresholds for transaction price | item | 4 | |||
Base overriding royalties, volume threshold for transaction price | MT | 1 |
U. S. GOVERNMENT SECURITIES (De
U. S. GOVERNMENT SECURITIES (Details) - U.S. government securities - USD ($) | Jan. 31, 2021 | Jan. 31, 2020 |
Carrying Value | ||
Due within one year | $ 9,906,669 | $ 13,332,474 |
Total | 9,906,669 | 13,332,474 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value | ||
Due within one year | 9,906,847 | 13,337,529 |
Total | $ 9,906,847 | $ 13,337,529 |
ROYALTY AGREEMENT (Details)
ROYALTY AGREEMENT (Details) - Cyprus NMC | 12 Months Ended | |||
Dec. 31, 2021USD ($)$ / T | Jan. 31, 2021USD ($)$ / T | Dec. 31, 2020USD ($)$ / T | Dec. 31, 2019USD ($)$ / T | |
ROYALTY AGREEMENT | ||||
Adjusted threshold price (in dollars per ton) | 57.85 | 56.93 | ||
Maximum | ||||
ROYALTY AGREEMENT | ||||
Period for payments of overriding royalties on product shipments | 30 days | |||
Minimum | ||||
ROYALTY AGREEMENT | ||||
Adjusted threshold price (in dollars per ton) | 30 | |||
Advance royalty threshold | $ | $ 500,000 | $ 964,659 | $ 949,295 | |
Forecast [Member] | ||||
ROYALTY AGREEMENT | ||||
Adjusted threshold price (in dollars per ton) | 58.58 | |||
Forecast [Member] | Minimum | ||||
ROYALTY AGREEMENT | ||||
Advance royalty threshold | $ | $ 976,765 |
UNALLOCATED RESERVE AND DISTR_3
UNALLOCATED RESERVE AND DISTRIBUTIONS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 | |
Unallocated Cash and Securities portion of Unallocated Reserve | |||||||||||
Cash and U.S. Government securities | $ 22,407,610 | $ 23,510,129 | $ 22,407,610 | $ 23,510,129 | |||||||
Distribution payable | (6,035,205) | (9,184,007) | (6,035,205) | (9,184,007) | |||||||
Unallocated cash and U.S. Government securities | 16,372,405 | 14,326,122 | 16,372,405 | 14,326,122 | |||||||
Reconciliation of Trust's Unallocated Reserve | |||||||||||
Beginning Balance | $ 11,831,017 | 11,831,017 | |||||||||
Net income | 9,993,624 | $ 5,126,399 | $ 6,676,003 | 1,611,621 | 5,083,581 | $ 6,150,196 | $ 13,911,687 | $ 4,910,288 | 23,407,647 | 30,055,752 | $ 45,559,044 |
Distributions declared | (18,761,615) | ||||||||||
Ending Balance | 16,477,049 | 11,831,017 | $ 16,477,049 | $ 11,831,017 | |||||||
Distributions declared per unit (in dollars per unit) | $ 1.67 | $ 3.36 | $ 2.79 | ||||||||
Distribution declared per unit | $ 0.46 | $ 0.70 | $ 1.39 | ||||||||
Unallocated Reserve | |||||||||||
Reconciliation of Trust's Unallocated Reserve | |||||||||||
Beginning Balance | 11,831,014 | 16,805,689 | $ 11,831,014 | $ 16,805,689 | $ 10,606,675 | ||||||
Net income | 23,407,647 | 30,055,752 | 45,559,044 | ||||||||
Distributions declared | (18,761,615) | ||||||||||
Ending Balance | 16,477,046 | 11,831,014 | 16,477,046 | 11,831,014 | 16,805,689 | ||||||
Trust Corpus | |||||||||||
Reconciliation of Trust's Unallocated Reserve | |||||||||||
Beginning Balance | $ 3 | $ 3 | 3 | 3 | 3 | ||||||
Ending Balance | $ 3 | $ 3 | $ 3 | $ 3 | $ 3 |
SUMMARY OF QUARTERLY EARNINGS_3
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Jan. 31, 2020 | Oct. 31, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Jan. 31, 2021 | Jan. 31, 2020 | Jan. 31, 2019 | |
SUMMARY OF QUARTERLY EARNINGS (UNAUDITED) | |||||||||||
Revenue | $ 10,826,164 | $ 5,737,255 | $ 7,218,385 | $ 2,168,763 | $ 5,618,936 | $ 6,560,841 | $ 14,344,224 | $ 5,466,873 | $ 25,950,567 | $ 31,990,874 | $ 47,293,765 |
Expenses | 832,540 | 610,856 | 542,382 | 557,142 | 535,355 | 410,645 | 432,537 | 556,585 | 2,542,920 | 1,935,122 | 1,734,721 |
Net income | $ 9,993,624 | $ 5,126,399 | $ 6,676,003 | $ 1,611,621 | $ 5,083,581 | $ 6,150,196 | $ 13,911,687 | $ 4,910,288 | $ 23,407,647 | $ 30,055,752 | $ 45,559,044 |
Net income (loss) per unit (in dollars per unit) | $ 0.762 | $ 0.391 | $ 0.509 | $ 0.123 | $ 0.387 | $ 0.469 | $ 1.060 | $ 0.374 | $ 1.784 | $ 2.291 | $ 3.472 |