Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 31, 2023 | Sep. 10, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 31, 2023 | |
Entity File Number | 1-4488 | |
Entity Registrant Name | MESABI TRUST | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 13-6022277 | |
Entity Address, Address Line One | 1 Columbus Circle, 17th Floor | |
Entity Address, Address Line Two | Mail Stop: NYC01-1710 | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10019 | |
City Area Code | 904 | |
Local Phone Number | 271-2520 | |
Title of 12(b) Security | Units of Beneficial Interest, no par value | |
Trading Symbol | MSB | |
Security Exchange Name | NYSE | |
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 | |
Current Fiscal Year End Date | --01-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000065172 | |
Amendment Flag | false |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | |
Revenues | ||||
Royalty income (loss) | $ 9,730,596 | $ (4,401,049) | $ 11,441,912 | $ 9,794,440 |
Interest | 158,645 | 34,238 | 296,178 | 34,997 |
Total revenues (loss) | 9,889,241 | (4,366,811) | 11,738,090 | 9,829,437 |
Expenses | ||||
Expenses | 705,901 | 490,560 | 1,531,611 | 1,091,623 |
Net income (loss) | $ 9,183,340 | $ (4,857,371) | $ 10,206,479 | $ 8,737,814 |
Number of units outstanding | 13,120,010 | 13,120,010 | 13,120,010 | 13,120,010 |
Net income (loss) per unit (Note 2) (in dollars per unit) | $ 0.6999 | $ (0.3702) | $ 0.7779 | $ 0.6660 |
Distribution declared per unit (Note 3) (in dollars per unit) | $ 0 | $ 0.8400 | $ 0 | $ 1.8800 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jul. 31, 2023 | Jan. 31, 2023 |
Assets | ||
Cash and cash equivalents | $ 17,750,909 | $ 13,966,500 |
Accrued income receivable | 1,812,600 | 23,562 |
Contract asset | 2,033,676 | |
Prepaid expenses | 303,942 | 127,233 |
Current assets | 21,901,127 | 14,117,295 |
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 | 21,901,130 | 14,117,298 |
Liabilities, Unallocated Reserve And Trust Corpus | ||
Accrued expenses | 256,434 | 380,960 |
Contract liability | 2,298,121 | |
Total liabilities | 256,434 | 2,679,081 |
Unallocated reserve | 21,644,693 | 11,438,214 |
Trust corpus | 3 | 3 |
Total liabilities, unallocated reserve and trust corpus | $ 21,901,130 | $ 14,117,298 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - shares | Jul. 31, 2023 | Jan. 31, 2023 |
Condensed Balance Sheets | ||
Certificate of beneficial interest of Land Trust, units | 13,120,010 | 13,120,010 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
Operating activities | ||
Royalties received | $ 5,321,510 | $ 15,857,438 |
Interest received | 295,745 | 25,666 |
Expenses paid | (1,832,846) | (1,216,251) |
Net cash from operating activities | 3,784,409 | 14,666,853 |
Investing activities | ||
Maturities of U.S. Government securities | 53,995,684 | 49,166,956 |
Purchases of U.S. Government securities | (53,995,684) | (72,503,643) |
Net cash from (used for) investing activities | (23,336,687) | |
Financing activity | ||
Distributions to unitholders | (36,604,828) | |
Net change in cash and cash equivalents | 3,784,409 | (45,274,662) |
Cash and cash equivalents, beginning of period | 13,966,500 | 47,727,522 |
Cash and cash equivalents, end of period | 17,750,909 | 2,452,860 |
Reconciliation of net income to net cash from operating activities | ||
Net income | 10,206,479 | 8,737,814 |
(Increase) decrease in accrued income receivable | (1,789,038) | 4,622,034 |
(Increase) decrease in contract asset | (2,033,676) | 1,431,633 |
Increase in prepaid expense | (176,709) | (176,940) |
(Decrease) increase in accrued expenses | (124,526) | 52,312 |
Decrease in contract liability | (2,298,121) | |
Net cash from operating activities | $ 3,784,409 | 14,666,853 |
Non cash financing activity | ||
Distributions declared and payable | $ 11,020,810 |
NATURE OF BUSINESS AND ORGANIZA
NATURE OF BUSINESS AND ORGANIZATION | 6 Months Ended |
Jul. 31, 2023 | |
NATURE OF BUSINESS AND ORGANIZATION | |
NATURE OF BUSINESS AND ORGANIZATION | Note 1. The condensed financial statements and notes to the condensed financial statements included herein have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Trustees of Mesabi Trust (the “Trustees”), all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the results of operations for the three and six months ended July 31, 2023 and 2022, (b) the financial position as of July 31, 2023 and (c) the cash flows for the six months ended July 31, 2023 and 2022, have been made. For further information, refer to the financial statements and footnotes included in Mesabi Trust’s Annual Report on Form 10-K for the year ended January 31, 2023. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jul. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. Net income per unit is based on 13,120,010 units outstanding during all periods presented. The Trust accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers . All revenue is recognized as the performance obligations are satisfied. In accordance with the royalty agreement, the Trust recognizes revenue upon providing access to the lands and minerals only after the consideration that is entitled to be received is determinable. The Trust is entitled to payment upon production of all pellet grades to be sold for internal use by facilities owned by Cliffs or its subsidiaries. For revenue recognition purposes, the Trust recognizes revenue for internal use pellets upon production of those pellets, which is when Cliffs deems these pellets to be shipped under the royalty agreement. Pellets that are not designated for internal use by Cliffs, or its subsidiaries, are recognized as revenue upon shipment from Silver Bay, Minnesota. Disaggregation of Revenues The following table represents a disaggregation of revenue for the three and six months ended July 31, 2023 and July 31, 2022. Three Months Ended July 31, 2023 2022 Base overriding royalties $ 5,373,668 $ (4,402,501) Bonus royalties 4,090,094 (10) Fee royalties 266,834 1,462 Total royalty income (loss) $ 9,730,596 $ (4,401,049) Six Months Ended July 31, 2023 2022 Base overriding royalties $ 6,335,466 $ 3,829,720 Bonus royalties 4,797,934 5,722,317 Fee royalties 308,512 242,403 Total royalty income $ 11,441,912 $ 9,794,440 Base overriding royalties The performance obligation for the base overriding royalty consists of providing 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 relates to the volume of iron ore actually shipped to third parties, or deemed shipped upon production for internal use, by Northshore. Cliffs considers pellets designated for internal use by Cliffs to be “deemed shipped” upon production, entitling the Trust to payment under the provisions of the royalty agreement at this time. Mesabi Trust receives royalties at the greater of (i) the aggregate quantity of iron ore products shipped, or deemed shipped, that were mined from Mesabi Trust Lands, and (ii) a portion of the aggregate quantity of all iron ore products shipped, or deemed 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, or deemed shipped, attributable to the Trust, in any calendar year increases. The Trust earns a beyond four million tons. 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, or deemed shipped, for the calendar year. The Trust estimates the variable consideration it expects to be entitled to receive over the contractual period associated with the royalty agreement. Under the royalty agreement, measurement of the total cumulative volumes of iron ore shipped, or deemed shipped, and the applicable royalty percentages, is reset 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 third party shipments and deemed shipments for internal use, for the fiscal quarter at the estimated royalty percentage as described above and based on the estimated prices for iron ore products sold under Cliffs’ Customer Contracts. On May 1, 2022, Cliffs idled Northshore. On July 22, 2022, Cliffs announced that it was extending the ongoing idle at Northshore through at least April of 2023. Based on the change in the anticipated timing of the idling of Northshore operations, the Trust’s estimate of the variable consideration relating to the base overriding royalties to be received was determined to be constrained during the second quarter ended July 31, 2022, and all variable consideration expected to be received through the end of the fiscal year ended January 31, 2023 was reversed in the second fiscal quarter ended July 31, 2022, resulting in negative base overriding royalties during that quarter. On April 25, 2023, Cliff's announced a partial restart of some operations at Northshore and that Cliffs will continue to treat Northshore as a swing operation. The Trust has recommenced recording a contract asset for variable consideration in the current fiscal year for base overriding royalties, based on estimated cumulative tons shipped for the current fiscal year at estimated prices for iron ore products sold under Cliffs’ Customer Contracts that will be collected in subsequent quarters as the uncertainty associated with the variable consideration is resolved. Bonus royalties The performance obligation for the bonus royalties consists of providing Northshore 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 relates to the volume of iron ore shipped, or deemed shipped, by Northshore. The Trust recognizes bonus royalties on a quarterly basis based on the actual third party shipments and deemed shipments for internal use, of the fiscal quarter at the actual royalty percentage for those shipments and based on the anticipated prices for iron ore products sold under Cliffs’ Customer Contracts. The Trust is paid royalty bonuses when iron ore products shipped are sold at anticipated prices above a threshold price per ton. The royalty bonus is based on a percentage of the gross proceeds of product shipped. The royalty bonus percentage ranges from 1/2 or more above the threshold price). The threshold price is adjusted annually for inflation and is Fee royalties 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. Fee royalties are payable to the Mesabi Land Trust, a Minnesota land trust, which holds a interest as fee owner in the Amended Assignment of Peters Lease. Mesabi Trust holds the entire beneficial interest in the Mesabi Land Trust for which U.S. Bank N.A. acts as the corporate trustee. Mesabi Trust receives the net income of the Mesabi Land Trust, which is generated from royalties on the amount of crude ore mined after the payment of expenses to U.S. Bank N.A. for its services as the corporate trustee. The fee royalty on crude ore is based on an agreed price per ton, subject to certain indexing. Accrued income receivable The accrued income receivable is included in net income per unit. The Trust recorded 2023 (unaudited). As of January 31, 2023, the Trust recorded accrued income receivable of . Accrued income receivable represents royalty income earned but not yet received by the Trust. Accrued income receivable is calculated using estimated prices and includes (i) shipments during the last month of Mesabi Trust’s fiscal quarter, if any, and (ii) net positive adjustments (which may include the sum of positive and negative price adjustments) calculated using the pricing adjustment mechanisms in the iron ore pellet sales 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 is reflected on the Condensed Balance Sheet as of July 31, 2023 (unaudited). The net contract asset is made up of a contract asset in the amount of . As of January 31, 2023 the Trust recorded a net contract liability of . The net contract liability is made up of a contract asset in the amount of . The contract asset is based on the revenue recognized on the base overriding royalties, at the estimated prices for iron ore products sold under Cliffs’ Customer Contracts 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 an estimate of decreases in royalty revenue related to tons of iron ore that were shipped, or deemed 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, as well as payment for tons credited to the Trust at a minimum of in the calendar quarter. The contract liability as of January 31, 2023 was offset against royalty payments owed to the Trust during the second fiscal quarter ended July 31, 2023. The Trust is entitled to payment upon production of pellets to be sold for internal use by facilities owned by Cliffs or its subsidiaries. Revenue is recognized in accordance with the Trust’s revenue recognition policy at the estimated prices for iron ore products sold under Cliffs’ Customer Contracts as actual third party shipments and deemed shipments for internal use, of these products are made |
DIVIDEND AND DISTRIBUTION
DIVIDEND AND DISTRIBUTION | 6 Months Ended |
Jul. 31, 2023 | |
DIVIDEND AND DISTRIBUTION | |
DIVIDEND AND DISTRIBUTION | Note 3. The Trustees determine whether to declare a distribution each year in April, July, October and January. The Trust’s financial statements are prepared on an accrual basis and present the Trust’s results of operations based on each of the Trust’s fiscal quarters, which end after the close of each calendar quarter. Because (i) distributions, if any, are declared by the Trustees based on, among other considerations, the amount of royalties actually paid to the Trust through the end of each calendar quarter prior to April, July, October and January of each year, the Trustees’ evaluation of known and projected Trust expenses in the current and future quarters, the then-current level of Unallocated Reserve and general economic conditions, and (ii) the Trust’s Net Income is calculated as of the end of each fiscal quarter, the 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. |
ROYALTY AGREEMENT, UNALLOCATED
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS | 6 Months Ended |
Jul. 31, 2023 | |
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS | |
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS | Note 4. On July 14, 2023, the Trustees declared no distribution per Unit of Beneficial Interest for the quarter ended July 31, 2023 as compared to a distribution of $0.84 per Unit of Beneficial Interest for the quarter ended July 31, 2022. On July 28, 2023, the Trustees received the quarterly royalty report of iron ore production and shipment during the calendar quarter ended June 30, 2023 from Cliffs, the parent company of Northshore. Each quarter, as authorized by the Agreement of Trust dated July 18, 1961, as amended (the “Agreement of Trust”), the Trustees evaluate all relevant factors, including all costs, expenses, obligations, and present and future liabilities of the Trust (whether fixed or contingent) in determining the prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry and current economic conditions. Pursuant to the Agreement of Trust, the Trustees make decisions about cash distributions to Unitholders based on the royalty payments it receives from Northshore when received, rather than as royalty income is recorded in accordance with the Trust’s revenue recognition policy. Refer to Note 3 for further information. As of July 31, 2023 and January 31, 2023, the unallocated cash and cash equivalents portion of the Trust’s Unallocated Reserve was comprised of the following components. Cash equivalents consists of U.S. government securities with original maturities of 3 months or less. July 31, 2023 January 31, 2023 Cash and cash equivalents $ 17,750,909 $ 13,966,500 Distribution payable — — Unallocated cash and cash equivalents $ 17,750,909 $ 13,966,500 A reconciliation of the Trust’s Unallocated Reserve and Trust Corpus for the three and six months ended July 31, 2023 and 2022 is as follows: Unallocated Trust Reserve Corpus Total Balances as of January 31, 2023 $ 11,438,214 $ 3 $ 11,438,217 Net income 10,206,479 — 10,206,479 Distributions declared - $0.0000 per unit — — — Balances as of July 31, 2023 $ 21,644,693 $ 3 $ 21,644,696 Unallocated Trust Reserve Corpus Total Balances as of April 30, 2023 $ 12,461,353 $ 3 $ 12,461,356 Net income 9,183,340 — 9,183,340 Distributions declared - $0.0000 per unit — — — Balances as of July 31, 2023 $ 21,644,693 $ 3 $ 21,644,696 Unallocated Trust Reserve Corpus Total Balances as of January 31, 2022 $ 30,794,749 $ 3 $ 30,794,752 Net income 8,737,814 — 8,737,814 Distributions declared - $1.8800 per unit (24,665,620) — (24,665,620) Balances as of July 31, 2022 $ 14,866,943 $ 3 $ 14,866,946 Unallocated Trust Reserve Corpus Total Balances as of April 30, 2022 $ 30,745,124 $ 3 $ 30,745,127 Net loss (4,857,371) — (4,857,371) Distributions declared - $.8400 per unit (11,020,810) — (11,020,810) Balances as of July 31, 2022 $ 14,866,943 $ 3 $ 14,866,946 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jul. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Net Income Per Unit | Net income per unit is based on 13,120,010 units outstanding during all periods presented. |
Revenue recognition | The Trust accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers . All revenue is recognized as the performance obligations are satisfied. In accordance with the royalty agreement, the Trust recognizes revenue upon providing access to the lands and minerals only after the consideration that is entitled to be received is determinable. The Trust is entitled to payment upon production of all pellet grades to be sold for internal use by facilities owned by Cliffs or its subsidiaries. For revenue recognition purposes, the Trust recognizes revenue for internal use pellets upon production of those pellets, which is when Cliffs deems these pellets to be shipped under the royalty agreement. Pellets that are not designated for internal use by Cliffs, or its subsidiaries, are recognized as revenue upon shipment from Silver Bay, Minnesota. Disaggregation of Revenues The following table represents a disaggregation of revenue for the three and six months ended July 31, 2023 and July 31, 2022. Three Months Ended July 31, 2023 2022 Base overriding royalties $ 5,373,668 $ (4,402,501) Bonus royalties 4,090,094 (10) Fee royalties 266,834 1,462 Total royalty income (loss) $ 9,730,596 $ (4,401,049) Six Months Ended July 31, 2023 2022 Base overriding royalties $ 6,335,466 $ 3,829,720 Bonus royalties 4,797,934 5,722,317 Fee royalties 308,512 242,403 Total royalty income $ 11,441,912 $ 9,794,440 Base overriding royalties The performance obligation for the base overriding royalty consists of providing 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 relates to the volume of iron ore actually shipped to third parties, or deemed shipped upon production for internal use, by Northshore. Cliffs considers pellets designated for internal use by Cliffs to be “deemed shipped” upon production, entitling the Trust to payment under the provisions of the royalty agreement at this time. Mesabi Trust receives royalties at the greater of (i) the aggregate quantity of iron ore products shipped, or deemed shipped, that were mined from Mesabi Trust Lands, and (ii) a portion of the aggregate quantity of all iron ore products shipped, or deemed 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, or deemed shipped, attributable to the Trust, in any calendar year increases. The Trust earns a beyond four million tons. 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, or deemed shipped, for the calendar year. The Trust estimates the variable consideration it expects to be entitled to receive over the contractual period associated with the royalty agreement. Under the royalty agreement, measurement of the total cumulative volumes of iron ore shipped, or deemed shipped, and the applicable royalty percentages, is reset 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 third party shipments and deemed shipments for internal use, for the fiscal quarter at the estimated royalty percentage as described above and based on the estimated prices for iron ore products sold under Cliffs’ Customer Contracts. On May 1, 2022, Cliffs idled Northshore. On July 22, 2022, Cliffs announced that it was extending the ongoing idle at Northshore through at least April of 2023. Based on the change in the anticipated timing of the idling of Northshore operations, the Trust’s estimate of the variable consideration relating to the base overriding royalties to be received was determined to be constrained during the second quarter ended July 31, 2022, and all variable consideration expected to be received through the end of the fiscal year ended January 31, 2023 was reversed in the second fiscal quarter ended July 31, 2022, resulting in negative base overriding royalties during that quarter. On April 25, 2023, Cliff's announced a partial restart of some operations at Northshore and that Cliffs will continue to treat Northshore as a swing operation. The Trust has recommenced recording a contract asset for variable consideration in the current fiscal year for base overriding royalties, based on estimated cumulative tons shipped for the current fiscal year at estimated prices for iron ore products sold under Cliffs’ Customer Contracts that will be collected in subsequent quarters as the uncertainty associated with the variable consideration is resolved. Bonus royalties The performance obligation for the bonus royalties consists of providing Northshore 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 relates to the volume of iron ore shipped, or deemed shipped, by Northshore. The Trust recognizes bonus royalties on a quarterly basis based on the actual third party shipments and deemed shipments for internal use, of the fiscal quarter at the actual royalty percentage for those shipments and based on the anticipated prices for iron ore products sold under Cliffs’ Customer Contracts. The Trust is paid royalty bonuses when iron ore products shipped are sold at anticipated prices above a threshold price per ton. The royalty bonus is based on a percentage of the gross proceeds of product shipped. The royalty bonus percentage ranges from 1/2 or more above the threshold price). The threshold price is adjusted annually for inflation and is Fee royalties 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. Fee royalties are payable to the Mesabi Land Trust, a Minnesota land trust, which holds a interest as fee owner in the Amended Assignment of Peters Lease. Mesabi Trust holds the entire beneficial interest in the Mesabi Land Trust for which U.S. Bank N.A. acts as the corporate trustee. Mesabi Trust receives the net income of the Mesabi Land Trust, which is generated from royalties on the amount of crude ore mined after the payment of expenses to U.S. Bank N.A. for its services as the corporate trustee. The fee royalty on crude ore is based on an agreed price per ton, subject to certain indexing. Accrued income receivable The accrued income receivable is included in net income per unit. The Trust recorded 2023 (unaudited). As of January 31, 2023, the Trust recorded accrued income receivable of . Accrued income receivable represents royalty income earned but not yet received by the Trust. Accrued income receivable is calculated using estimated prices and includes (i) shipments during the last month of Mesabi Trust’s fiscal quarter, if any, and (ii) net positive adjustments (which may include the sum of positive and negative price adjustments) calculated using the pricing adjustment mechanisms in the iron ore pellet sales 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 is reflected on the Condensed Balance Sheet as of July 31, 2023 (unaudited). The net contract asset is made up of a contract asset in the amount of . As of January 31, 2023 the Trust recorded a net contract liability of . The net contract liability is made up of a contract asset in the amount of . The contract asset is based on the revenue recognized on the base overriding royalties, at the estimated prices for iron ore products sold under Cliffs’ Customer Contracts 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 an estimate of decreases in royalty revenue related to tons of iron ore that were shipped, or deemed 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, as well as payment for tons credited to the Trust at a minimum of in the calendar quarter. The contract liability as of January 31, 2023 was offset against royalty payments owed to the Trust during the second fiscal quarter ended July 31, 2023. The Trust is entitled to payment upon production of pellets to be sold for internal use by facilities owned by Cliffs or its subsidiaries. Revenue is recognized in accordance with the Trust’s revenue recognition policy at the estimated prices for iron ore products sold under Cliffs’ Customer Contracts as actual third party shipments and deemed shipments for internal use, of these products are made |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jul. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of disaggregation of revenues | Three Months Ended July 31, 2023 2022 Base overriding royalties $ 5,373,668 $ (4,402,501) Bonus royalties 4,090,094 (10) Fee royalties 266,834 1,462 Total royalty income (loss) $ 9,730,596 $ (4,401,049) Six Months Ended July 31, 2023 2022 Base overriding royalties $ 6,335,466 $ 3,829,720 Bonus royalties 4,797,934 5,722,317 Fee royalties 308,512 242,403 Total royalty income $ 11,441,912 $ 9,794,440 |
ROYALTY AGREEMENT, UNALLOCATE_2
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS (Tables) | 6 Months Ended |
Jul. 31, 2023 | |
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS | |
Schedule of unallocated cash and U.S. Government securities portion of the Trust's Unallocated Reserve | July 31, 2023 January 31, 2023 Cash and cash equivalents $ 17,750,909 $ 13,966,500 Distribution payable — — Unallocated cash and cash equivalents $ 17,750,909 $ 13,966,500 |
Schedule of reconciliation of Trust's Unallocated Reserve | Unallocated Trust Reserve Corpus Total Balances as of January 31, 2023 $ 11,438,214 $ 3 $ 11,438,217 Net income 10,206,479 — 10,206,479 Distributions declared - $0.0000 per unit — — — Balances as of July 31, 2023 $ 21,644,693 $ 3 $ 21,644,696 Unallocated Trust Reserve Corpus Total Balances as of April 30, 2023 $ 12,461,353 $ 3 $ 12,461,356 Net income 9,183,340 — 9,183,340 Distributions declared - $0.0000 per unit — — — Balances as of July 31, 2023 $ 21,644,693 $ 3 $ 21,644,696 Unallocated Trust Reserve Corpus Total Balances as of January 31, 2022 $ 30,794,749 $ 3 $ 30,794,752 Net income 8,737,814 — 8,737,814 Distributions declared - $1.8800 per unit (24,665,620) — (24,665,620) Balances as of July 31, 2022 $ 14,866,943 $ 3 $ 14,866,946 Unallocated Trust Reserve Corpus Total Balances as of April 30, 2022 $ 30,745,124 $ 3 $ 30,745,127 Net loss (4,857,371) — (4,857,371) Distributions declared - $.8400 per unit (11,020,810) — (11,020,810) Balances as of July 31, 2022 $ 14,866,943 $ 3 $ 14,866,946 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 31, 2023 USD ($) shares | Jul. 31, 2022 USD ($) shares | Jul. 31, 2023 USD ($) contract MT $ / T shares | Jul. 31, 2022 USD ($) shares | Jan. 31, 2023 USD ($) $ / T | |
Disaggregation of Revenue [Line Items] | |||||
Number of units outstanding | shares | 13,120,010 | 13,120,010 | 13,120,010 | 13,120,010 | |
Revenue from Contract with Customer [Abstract] | |||||
Royalty income (loss) | $ 9,730,596 | $ (4,401,049) | $ 11,441,912 | $ 9,794,440 | |
Base overriding royalties, first tier portion percentage | 90% | ||||
Base overriding royalties, first tier shipment ceiling (in million tons) | MT | 4 | ||||
Base overriding royalties, second tier portion percentage | 85% | ||||
Base overriding royalties, second tier shipment ceiling (in million tons) | MT | 2 | ||||
Base overriding royalties, third tier portion percentage | 25% | ||||
Base overriding royalties, third tier shipment threshold (in million tons) | MT | 6 | ||||
Bonus royalty percentage | 0.50% | ||||
Royalty bonuses, price above adjusted threshold price per ton | $ / T | 2 | ||||
Accrued income receivable | 1,812,600 | $ 1,812,600 | $ 23,562 | ||
Number of customer contracts | contract | 1 | ||||
Net contract asset | 2,033,676 | $ 2,033,676 | |||
Net contract liability | 2,298,121 | ||||
Contract asset | 2,185,978 | 2,185,978 | 0 | ||
Contract liability | 152,302 | $ 152,302 | $ 2,298,121 | ||
Minimum percentage of total shipments | 90% | ||||
Percentage of actual tons shipped | 90% | ||||
Adjusted threshold price (in dollars per ton) | $ / T | 66 | ||||
Fixed Property, Including Intangibles | |||||
Percentage of fee interest owned by Mesabi Land Trust in the lands subject to the Peters Lease | 20% | ||||
Minimum | |||||
Revenue from Contract with Customer [Abstract] | |||||
Bonus royalty, gross proceeds percentage | 1% | ||||
Maximum | |||||
Revenue from Contract with Customer [Abstract] | |||||
Bonus royalty, gross proceeds percentage | 3% | ||||
Royalty bonuses, adjusted threshold price | $ / T | 10 | ||||
First Million Tons Shipped or Deemed Shipped [Member] | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty earned on tons shipped or deemed shipped, percentage | 2.50% | ||||
Second Million Tons Shipped or Deemed Shipped [Member] | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty earned on tons shipped or deemed shipped, percentage | 3.50% | ||||
Third Million Tons Shipped or Deemed Shipped [Member] | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty earned on tons shipped or deemed shipped, percentage | 5% | ||||
Fourth Million Tons Shipped or Deemed Shipped [Member | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty earned on tons shipped or deemed shipped, percentage | 5.50% | ||||
Beyond Four Million Tons Shipped or Deemed Shipped [Member] | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty earned on tons shipped or deemed shipped, percentage | 6% | ||||
Base Overriding Royalties | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty income (loss) | 5,373,668 | (4,402,501) | $ 6,335,466 | 3,829,720 | |
Bonus Royalties | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty income (loss) | 4,090,094 | (10) | 4,797,934 | 5,722,317 | |
Fee Royalties | |||||
Revenue from Contract with Customer [Abstract] | |||||
Royalty income (loss) | $ 266,834 | $ 1,462 | $ 308,512 | $ 242,403 |
DIVIDEND AND DISTRIBUTION (Deta
DIVIDEND AND DISTRIBUTION (Details) | 6 Months Ended |
Jul. 31, 2023 | |
DIVIDEND AND DISTRIBUTION | |
Period after the close of each calendar quarter when the fiscal quarter ends | 1 month |
ROYALTY AGREEMENT, UNALLOCATE_3
ROYALTY AGREEMENT, UNALLOCATED RESERVE AND DISTRIBUTIONS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jul. 14, 2023 | Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | Jan. 31, 2023 | |
Unallocated Cash and Securities portion of Unallocated Reserve | ||||||
Cash and cash equivalents | $ 17,750,909 | $ 17,750,909 | $ 13,966,500 | |||
Unallocated cash and cash equivalents | 17,750,909 | 17,750,909 | $ 13,966,500 | |||
Reconciliation of Trust's Unallocated Reserve | ||||||
Beginning Balance | 12,461,356 | $ 30,745,127 | 11,438,217 | $ 30,794,752 | ||
Net income | 9,183,340 | (4,857,371) | 10,206,479 | 8,737,814 | ||
Distributions declared | (11,020,810) | (24,665,620) | ||||
Ending Balance | $ 21,644,696 | $ 14,866,946 | $ 21,644,696 | $ 14,866,946 | ||
Distributions declared per unit (in dollars per unit) | $ 0 | $ 0 | $ 0.8400 | $ 0 | $ 1.8800 | |
Unallocated Reserve member | ||||||
Reconciliation of Trust's Unallocated Reserve | ||||||
Beginning Balance | $ 12,461,353 | $ 30,745,124 | $ 11,438,214 | $ 30,794,749 | ||
Net income | 9,183,340 | (4,857,371) | 10,206,479 | 8,737,814 | ||
Distributions declared | (11,020,810) | (24,665,620) | ||||
Ending Balance | 21,644,693 | 14,866,943 | 21,644,693 | 14,866,943 | ||
Trust Corpus | ||||||
Reconciliation of Trust's Unallocated Reserve | ||||||
Beginning Balance | 3 | 3 | 3 | 3 | ||
Ending Balance | $ 3 | $ 3 | $ 3 | $ 3 |