New York-based Mesabi Trust (NYSE: MSB) recently released its quarterly report for the period ended April 30, 2023, shedding light on the company’s overall financial performance. The report highlights a total revenue of $1.8 million, which is a significant drop compared to $14.2 million reported in the same period last year.
Mesabi Trust, a royalty trust organized under the laws of the State of New York, holds profits from mining activities carried out on various lands in the Mesabi Iron Range in Minnesota. The primary income comes from royalties based on the volume of iron ore mined, shipped, or deemed shipped by its lessee/operator, Northshore Mining Company, a subsidiary of Cleveland-Cliffs (NYSE: CLF).
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Q1 2023 Financial Highlights
In Q1 2023, Mesabi Trust reported $1.71 million in total royalty income, which includes $961,798 in base overriding royalties, $707,840 in bonus royalties, and $41,678 in fee royalties. This is a substantial decline compared to the $14,195,489 in total royalty income generated during the same period in 2022. The slump in royalty income can be attributed to various factors such as volatility in iron ore and steel prices, environmental compliance uncertainties, and lower customer demand for steel and iron ore.
Moreover, the trust reported interest income of $137,533, which was also considerably lower than the $759 reported in the three months ended April 30, 2022. The trust’s total expenses for the quarter amounted to $825,710, a slight increase compared to $601,063 incurred during the same period the previous year.
Net Income and Distributions
As a result of the decrease in revenues and the rise in expenses, Mesabi Trust’s net income for the quarter ended April 30, 2023, stood at $1,023,139, substantially lower than the $13,595,185 reported in the same quarter of 2022. The substantial decline in net income reflects the challenging market conditions faced by the trust, as well as the mining industry as a whole.
The trust’s net income per unit for Q1 2023 was $0.0780, a significant decrease compared to $1.0362 per unit in Q1 2022. Due to lower net income, no distributions were declared per unit for the quarter, compared to $1.0400 per unit declared in the same period last year. As of June 10, 2023, there were 13,120,010 units of beneficial interest in Mesabi Trust outstanding.
In conclusion, Mesabi Trust’s Q1 2023 financial performance showcased a significant decline in total revenues and net income per unit compared to the same period in 2022. The decline in royalty income primarily stemmed from unfavorable market conditions and various other risk factors. Investors and stakeholders in the company need to closely monitor the trust’s performance and the overall market situation to assess the potential risks and returns in the future.
Note that we may hold securities mentioned in this article. The source of this article are the SEC filings available at https://www.sec.gov/Archives/edgar/data/65172/000155837023011040/msb-20230430x10q.htm that we extracted with the help of various software tools. Even though we have implemented various fact-checking processes, some incorrect information may have remained in the article (false positive). Let us know if you find any inconsistencies!