MESABI TRUST (MSB)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 royalty receipts declined sequentially to $4.01M from $5.30M in Q2, driven by a smaller bonus royalty despite higher tonnage; tonnage rose modestly YoY to 987,370 tons vs 972,154 tons in Q3 2024 .
• Trustees declared a $0.34/unit distribution (payable Nov 20, 2025), down from $0.39/unit in the year-ago period; the decision reflected the July 30 royalty of $5.30M and a conservative reserve posture .
• Cleveland-Cliffs’ Royalty Report flagged three third‑party pellet sale transactions in September that remain under due diligence, and reiterated that pricing inputs are subject to change—adding uncertainty to near‑term royalty calculations .
• No formal guidance or earnings call; forward‑looking disclosures continue to emphasize risks from macro/steel demand, tariffs, and potential idling decisions at Northshore, leaving distributions sensitive to shipment schedules and pricing indices .

What Went Well and What Went Wrong

• What Went Well

  • YoY volume uptick: Northshore credited the Trust with 987,370 tons in Q3 2025, up from 972,154 in Q3 2024, indicating continued operational throughput despite macro uncertainty .
  • Continued cash distributions: Trustees declared $0.34/unit for Nov 20, 2025, supported by Q2 royalty inflows of $5.30M on July 30, 2025 .
  • Third‑party pellet activity: Cliffs reported three third‑party pellet sale transactions in September—potentially supportive for realized pricing mix pending completion of due diligence review .

• What Went Wrong

  • Sequential royalty decline: Total Q3 royalty receipts of $4.01M were below Q2’s $5.30M, as the bonus royalty fell to $0.97M from $2.59M, reflecting less favorable pricing/mix and index effects .
  • Pricing visibility: Cliffs reiterated that royalty calculations are based on prices “subject to change,” sustaining uncertainty on realized revenues that flow through to base/bonus royalties .
  • Persistent risk overhangs: Management disclosures continue to highlight vulnerabilities from tariffs, macro/steel demand, and potential production curtailments at Northshore that could quickly compress future distributions .

Financial Results

Royalty and volume trend (calendar quarters; oldest → newest):

Year-over-year reference (tonnage):

Distribution declarations during Q3 window:

Qualitative quarterly notes:

• Q1 2025 and Q2 2025: Cliffs reported no new third‑party arm’s‑length pellet sales beyond two low‑volume December 2024 shipments (Q1 report) and “no additional” third‑party sales (Q2 report) .
• Q3 2025: Three third‑party pellet sale transactions in September; calculations subject to continued due diligence and price changes .

Guidance Changes

Note: The Trust does not issue formal revenue/EPS guidance. Distributions reflect received royalties, reserve decisions, and macro/operational factors disclosed in filings .

Earnings Call Themes & Trends

Note: No earnings call transcript was filed; themes reflect SEC 8‑K and press releases.

Management Commentary

• “The royalties paid to Mesabi Trust are based on the volume of iron ore pellets and other products produced or shipped during the quarter and the year to date, the pricing of iron ore product sales, and the percentage of iron ore pellet production and shipments from Mesabi Trust lands rather than from non-Mesabi Trust lands.”
• “The Trustees have received no specific updates on Cliffs’ plans for the current year concerning Northshore iron ore operations or Northshore’s production, sale or shipment of iron ore products.”
• “Cliffs’ Royalty Report reported three sale transactions of iron ore pellets shipped to a single third‑party during September 2025, which are subject to continued due diligence review. Cliffs’ Royalty Report also indicated that royalty calculations are based on prices that are subject to change.”
• Risk posture: forward‑looking statements continue to cite macro/tariff uncertainties, potential curtailments, and index‑linked pricing adjustments that could materially affect royalties and distributions .

Q&A Highlights

• No Q3 2025 earnings call transcript was available in SEC filings; no analyst Q&A disclosed for the period.

Estimates Context

• Wall Street consensus estimates (S&P Global) were not retrievable at this time due to access limits; as a result, we do not present an estimates vs. actual comparison for Q3 2025. We will update this section once S&P Global consensus becomes available.

Key Takeaways for Investors

• Sequential normalization: Q3 royalties fell to $4.01M from $5.30M in Q2 as bonus royalties compressed, despite higher quarter-over-quarter tonnage—highlighting the primacy of pricing/mix over volume in near‑term cash flows .
• Volume recovery: Tonnes credited improved YoY to 987k in Q3, suggesting stable Northshore activity within Cliffs’ swing‑operation framework, though shipment schedules remain variable .
• Distribution cadence: The $0.34 Nov 2025 distribution, down from $0.39 last year, reflects July’s strong royalty inflow offset by prudent reserve decisions; future payouts will hinge on Q4 shipment/pricing and any adjustments from the September third‑party sales .
• Watch pricing adjustments: Royalty calculations remain subject to price changes and index factors; any revisions tied to the September third‑party transactions could affect subsequent distributions .
• Risk monitor: Policy/tariff changes, steel demand, and potential production curtailments at Northshore remain salient catalysts—positive or negative—for royalty trajectories and unit distributions .
• Actionable focus: Track the next Royalty Report (due late January) for Q4 seasonality and potential pricing adjustments; distribution declaration timing and reserve commentary will be critical to near‑term unit yield expectations .