MESABI TRUST_October 31, 2025

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-4488

MESABI TRUST

(Exact name of registrant as specified in its charter)

New York

13-6022277

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

c/o Deutsche Bank Trust Company Americas

Trust & Agency Services

1 Columbus Circle, 17th Floor

Mail Stop: NYC01-1710

New York, New York

10019

(Address of principal executive offices)

(Zip Code)

(904) 271-2520

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Units of Beneficial Interest, no par value	MSB	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 11, 2025, there were 13,120,010 Units of Beneficial Interest in Mesabi Trust outstanding.

Table of Contents

TABLE OF CONTENTS

	Page

PART I – FINANCIAL INFORMATION	3
Item 1. Financial Statements. (Note 1)	3
Condensed Statements of Income Three and Nine Months Ended October 31, 2025 and 2024	3
Condensed Balance Sheets October 31, 2025 and January 31, 2025	4
Condensed Statements of Cash Flows Nine Months Ended October 31, 2025 and 2024	5
Notes to Condensed Financial Statements	6
Item 2. Trustees’ Discussion and Analysis of Financial Condition and Results of Operations.	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	19
Item 4. Controls and Procedures.	20

PART II - OTHER INFORMATION	21
Item 1. Legal Proceedings	21
Item 1A. Risk Factors	21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3. Defaults upon Senior Securities	21
Item 4. Mine Safety Disclosures	21
Item 5. Other Information	21
Item 6. Exhibits.	22

SIGNATURES	23

Forward-Looking Statements

Certain information included in this Quarterly Report on Form 10-Q contains, or incorporates by reference, not only historical information, but also “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All such forward-looking statements, including those statements regarding estimation of iron ore pellet production, shipments, pricing, royalties and other matters, are based on information from the lessee/operator (and its parent corporation) of the mine located on the lands owned and held in trust for the benefit of the holders of units of beneficial interest of Mesabi Trust (“Mesabi Trust” or the “Trust”). These statements may be identified by the use of forward-looking words, such as “may,” “will,” “could,” “project,” “predict,” “intend,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “should,” “assume,” “forecast” and other similar words. Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual results and future developments could differ materially from the results or developments expressed in or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, volatility of iron ore and steel prices, market supply and demand, competition, environmental hazards, health and safety conditions, regulation or government action, litigation, uncertainties about estimates of reserves, general adverse business and industry economic trends, uncertainties arising from war, terrorist events and other global events, higher or lower customer demand for steel and iron ore, decisions by mine operators regarding curtailments or idling production lines or entire plants, environmental compliance uncertainties, difficulties in obtaining and renewing necessary operating permits, higher imports of steel and iron ore substitutes, processing difficulties, consolidation and restructuring in the domestic steel market, market inputs tied to indexed price adjustment factors found in some Cliffs’ customer contracts resulting in future adjustments to royalties payable to Mesabi Trust, and other factors. Further, substantial portions of royalties earned by Mesabi Trust are based on estimated prices that are subject to interim and final adjustments, which can be positive or negative, and are dependent in part on multiple price and inflation index factors under agreements to which Mesabi Trust is not a party and that are not known until after the end of a contract year. It is possible that future negative price adjustments could partially or even completely offset royalties or royalty income that would otherwise be payable to the Trust in any particular quarter, or at year-end, thereby potentially reducing cash available for distribution to the Trust’s Unitholders (as defined below) in future quarters.

For a discussion of the factors, including without limitation, those that could materially and adversely affect Mesabi Trust’s actual results and performance, see “Risk Factors” set forth on pages 4 through 19 of Mesabi Trust’s Annual Report for the fiscal year ended January 31, 2025. These risks and uncertainties are not exclusive and further information concerning the Trust, including factors that potentially could materially affect our operating results, financial condition or the market price of the Units, may emerge from time to time. Mesabi Trust undertakes no obligation, other than that imposed by law, to make any revisions to the forward-looking statements contained in this filing or to update them to reflect circumstances occurring after the date of this filing. We advise you, however, to consult any further disclosures we make on related subjects in our future Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K that we file with or furnish to the Securities and Exchange Commission.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements. (Note 1)

Mesabi Trust

Condensed Statements of Income

Three and Nine Months Ended October 31, 2025 and 2024


	Three Months Ended				Nine Months Ended
	October 31,				October 31,
	2025		2024		2025		2024
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
A. Condensed Statements of Income

Revenues
Royalty income	$	3,390,609	$	7,348,366	$	13,156,985	$	19,613,693
Arbitration award		—		71,185,029		—		71,185,029
Interest		199,841		468,445		774,762		943,600

Total revenues		3,590,450		79,001,840		13,931,747		91,742,322

Expenses		822,987		676,315		2,789,193		4,535,119

Net income	$	2,767,463	$	78,325,525	$	11,142,554	$	87,207,203

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING
Number of units outstanding		13,120,010		13,120,010		13,120,010		13,120,010

Net income per unit (Note 2)	$	0.2109	$	5.9699	$	0.8493	$	6.6469

Distributions declared per unit (Note 4)	$	0.3400	$	0.3900	$	1.0200	$	0.9800

See Notes to Condensed Financial Statements.

Table of Contents

Mesabi Trust

Condensed Balance Sheets

October 31, 2025 and January 31, 2025


	October 31, 2025		January 31, 2025
	(unaudited)
B. Condensed Balance Sheets

Assets
Cash and cash equivalents	$	23,191,923	$	100,204,531
Accrued income receivable		1,522,367		1,160,761
Contract asset		1,055,605		240,642
Prepaid expenses		229,306		122,518
Current assets		25,999,201		101,728,452

Fixed property, including intangibles, at nominal values

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
		3		3

Total assets	$	25,999,204	$	101,728,455

Liabilities, Unallocated Reserve And Trust Corpus

Liabilities
Distribution payable	$	4,460,803	$	78,064,060
Accrued expenses		450,538		336,675
Total liabilities		4,911,341		78,400,735

Unallocated reserve		21,087,860		23,327,717

Trust corpus		3		3

Total liabilities, unallocated reserve and trust corpus	$	25,999,204	$	101,728,455

See Notes to Condensed Financial Statements.

Table of Contents

Mesabi Trust

Condensed Statements of Cash Flows

Nine Months Ended October 31, 2025 and 2024


	Nine Months Ended
	October 31,
	2025		2024
		(unaudited)		(unaudited)
C. Condensed Statements of Cash Flows

Operating activities
Royalties received	$	11,732,605	$	17,741,099
Arbitration award		—		71,185,029
Interest received		1,022,573		675,772
Expenses paid		(2,782,118)		(5,076,989)

Net cash from operating activities		9,973,060		84,524,911

Financing activity
Distributions to unitholders		(86,985,668)		(12,595,210)

Net change in cash and cash equivalents		(77,012,608)		71,929,701

Cash and cash equivalents, beginning of period		100,204,531		23,980,448

Cash and cash equivalents, end of period	$	23,191,923	$	95,910,149

Reconciliation of net income to net cash from operating activities

Net income	$	11,142,554	$	87,207,203
Increase in accrued income receivable		(361,606)		(1,923,042)
Increase in contract asset		(814,963)		(217,380)
(Increase) decrease in prepaid expense		(106,788)		93,448
Increase (decrease) in accrued expenses		113,863		(635,318)

Net cash from operating activities	$	9,973,060	$	84,524,911

Non cash financing activity

Distributions declared and payable	$	4,460,803	$	5,116,804

See Notes to Condensed Financial Statements.

Table of Contents

Mesabi Trust

Notes to Condensed Financial Statements

October 31, 2025 (Unaudited)

Note 1. The condensed financial statements and notes to the condensed financial statements of Mesabi Trust (the “Trust”) 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 nine months ended October 31, 2025 and 2024, (b) the financial position as of October 31, 2025 and (c) the cash flows for the nine months ended October 31, 2025 and 2024, 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, 2025.

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. 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 dated August 17, 1989 among the trustees of Mesabi Trust, Bruce D. Sherling, as Trustee in Bankruptcy for the Estate of Reserve Mining Company, and Cypress Northshore Mining Corporation, predecessor to Northshore Mining Company (referred to as the “Amended Assignment of Peters Lease” or the “Royalty Agreement”). In accordance with the Royalty Agreement, the Trust recognizes revenue for providing access to the lands and minerals only after the consideration that it is entitled to receive is determinable. The Trust is entitled to payment upon production of pellets to be sold for internal use by facilities owned by Cleveland Cliffs Inc. (“Cliffs”), the parent company of Northshore Mining Company (“Northshore” or “NMC”), or its subsidiaries. As a result, the Trust recognizes revenue for internal use pellets upon production of those pellets, which are deemed to be shipped under the Royalty Agreement, regardless of pellet grade. Pellets that are not designated for internal use by Cliffs, or its subsidiaries, are recognized as revenue upon shipment from Silver Bay, Minnesota. Shipped product and deemed shipped product are hereafter collectively referred to as “shipped.”

Disaggregation of Revenues

The following table represents a disaggregation of royalty revenue for the three and nine months ended October 31, 2025 and October 31, 2024.


	Three Months Ended October 31,
	2025		2024
Base overriding royalties	$	2,263,892	$	4,150,083
Bonus royalties		902,047		3,027,705
Fee royalties		224,670		170,578
Total royalty income	$	3,390,609	$	7,348,366


	Nine Months Ended October 31,
	2025		2024
Base overriding royalties	$	7,905,014	$	11,131,795
Bonus royalties		4,704,321		8,024,502
Fee royalties		547,650		457,396
Total royalty income	$	13,156,985	$	19,613,693

Base overriding royalties

The performance obligation for the base overriding royalty consists of providing NMC 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 of Peters Lease relates to the volume of iron ore shipped. The 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 during the calendar year, such portion being 90% of the first four million tons shipped during such year, 85% of the next two million tons shipped, during such year, and 25% of all tonnage shipped in excess of six million tons during such year.

Table of Contents

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. The Trust earns a 2.5% royalty on the first million tons shipped in a calendar year, 3.5% on the second million tons, 5.0% on the third million tons, 5.5% on the fourth million tons and 6.0% 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. Under the Royalty Agreement, measurement of the total cumulative volumes of iron ore shipped and the applicable royalty percentages are reset at the beginning of each calendar year. The Trust estimates the variable consideration it expects to be entitled to receive based on the estimated average royalty percentage over the calendar year periods that are included in the Trust’s fiscal year. The Trust evaluates the estimate of the variable consideration to determine whether the estimate needs to be constrained and 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. The Trust estimates the base overriding royalty percentage using the expected value method, which calculates the estimate based on historical, current, and forecasted shipments. At each quarter end, the Trust updates its estimate of total tons expected to be shipped for the calendar year and applies the estimated annual royalty rate to actual tons shipped in the quarter. The Trust recognizes revenue for base overriding royalties on a quarterly basis based on actual shipments, the estimated annual royalty rate and estimated prices for iron ore products sold under Cliffs’ customer contracts.

Bonus royalties

The performance obligation for the bonus royalties consists of providing NMC 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 of Peters Lease relates to the volume of iron ore shipped by NMC. The Trust recognizes bonus royalties on a quarterly basis based on shipments for 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 of 1% of the gross proceeds (on all tonnage shipped for sale at prices between the threshold price and $2.00 above the threshold price) to 3% of the gross proceeds (on all tonnage shipped for sale at prices $10.00 or more above the threshold price). The threshold price is adjusted annually for inflation and is $69.41 per ton for calendar year 2025 and was $67.75 per ton for calendar year 2024.

AAA Arbitration 2024 Final Award

As previously reported, on October 14, 2022, Mesabi Trust initiated arbitration against Northshore, the lessee/operator of the leased lands, and its parent, Cliffs, with the American Arbitration Association (“AAA”). The Trust sought an award of damages relating to Cliffs’ and Northshore’s underpayment of royalties in 2020, 2021, and the first four months of 2022 by virtue of Cliffs’ and Northshore’s failure to use the highest priced arms’-length iron ore pellet sale from the preceding four quarters in pricing certain pellet shipments from 2020 through the first four months of 2022. The Trust also sought declaratory relief related to the Trust’s entitlement to certain documentation and to the time when Cliffs’ and Northshore’s royalty obligations accrue.

The evidentiary hearing was completed before a panel of three arbitrators in March 2024 under the commercial rules of the AAA. Post-hearing briefs were exchanged in May 2024. Post-hearing oral arguments and final submissions were concluded in June 2024. The Trust received the final award on September 6, 2024, which unanimously awarded the Trust damages in the amount of $59,799,977 for underpaid royalties in 2020, 2021 and the first four months of 2022, plus pre-award interest in the amount of $11,385,052, calculated at the rate of 10% simple interest per annum from the date of the initial demand through the date of the award. Pursuant to the award, Cliffs and Northshore were required to pay the Trust the amounts specified in the Award by no later than October 6, 2024. The Tribunal approved the parties’ stipulated Consent Award approving the Trust’s ongoing entitlement to certain documentation related to verifying royalty calculations. The Tribunal denied the Trust’s request for declaratory relief regarding the time at which Cliffs’ and Northshore’s royalty obligations accrue.

Pursuant to the AAA tribunal’s unanimous final award dated September 6, 2024, Northshore and Cliffs paid Mesabi Trust $71,185,029 on October 4, 2024 as a final award, including interest. This non-recurring revenue was reflected as “Arbitration Award” under “Revenues” on the Trust’s Condensed Statement of Income for the quarter ended October 31, 2024.

Fee royalties

Fee royalties are determined based on 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 20% interest as fee owner in the Amended Assignment of Peters Lease. The Trust holds the entire beneficial interest in the Mesabi Land Trust for which U.S. Bank N.A. acts as the corporate trustee. The Trust receives the net income of the Mesabi Land Trust, which is generated from royalties on the amount of crude ore

Table of Contents

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

Accrued income receivable represents royalty income earned but not yet received by the Trust. Accrued income receivable is comprised of (i) shipments during the last month of the Trust’s fiscal quarter, if any, and (ii) net positive price adjustments, if any, (which may include the sum of positive and negative price adjustments) resulting from 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 balance sheets as both the contract asset and contract liability are derived from one customer contract. A net contract asset in the amount of $1,055,605 is reflected on the Balance Sheet as of October 31, 2025. The net contract asset is made up of a contract asset in the amount of $1,055,605 and no contract liability. As of January 31, 2025, the Trust recorded a net contract asset in the amount of $240,642, made up of a contract asset of $240,642 and no contract liability. The contract asset relates to variable consideration for base overriding royalties that occurs as a result of escalating base overriding royalty rates earned as thresholds for tons of ore shipped are reached, as described in the base overriding royalties section above. The recorded contract asset represents the additional revenue earned based on the estimated annual royalty rate compared to the effective contracted rate for tons shipped during the period. The contract asset is not available for distribution to the Unitholders until the applicable royalties are actually received by the Trust.

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 one month 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.

Note 4. On October 10, 2025, the Trustees declared a distribution of $0.34 per Unit of Beneficial Interest payable on November 20, 2025 to Mesabi Trust Unitholders of record at the close of business on October 30, 2025. The declared distribution of $4,460,803 is recorded as a distribution payable on the Condensed Balance Sheet for the quarter ended October 31, 2025 (unaudited) as compared to a distribution payable of $0.39 per Unit of Beneficial Interest for the quarter ended October 31, 2024.

On October 30, 2025, the Trustees received the quarterly royalty report of iron ore production and shipment during the calendar quarter ended September 30, 2025 from Cliffs. See “Recent Developments— Receipt of Quarterly Royalty Report and Royalty Payment from Cliffs” as set forth on page 15 of this Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2025.

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 a prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry, current economic conditions and current communications from Cliffs as it relates to NMC.

Pursuant to the Agreement of Trust, the Trustees make decisions about cash distributions to Unitholders based on the royalty payments it receives from Cliffs 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.

Table of Contents

As of October 31, 2025 and January 31, 2025, 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 maturities of 3 months or less as of the date of acquisition by the Trust.


	October 31, 2025		January 31, 2025
Cash and cash equivalents	$	23,191,923	$	100,204,531
Distribution payable		(4,460,803)		(78,064,060)

Unallocated cash and cash equivalents	$	18,731,120	$	22,140,471

A reconciliation of the Trust’s Unallocated Reserve and Trust Corpus for the three and nine months ended October 31, 2025 and 2024 is as follows:


		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of July 31, 2025	$	22,781,200	$	3	$	22,781,203

Net income		2,767,463		—		2,767,463
Distributions declared - $0.3400 per unit		(4,460,803)		—		(4,460,803)

Balances as of October 31, 2025	$	21,087,860	$	3	$	21,087,863


		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2025	$	23,327,717	$	3	$	23,327,720

Net income		11,142,554		—		11,142,554
Distributions declared - $1.0200 per unit		(13,382,411)		—		(13,382,411)

Balances as of October 31, 2025	$	21,087,860	$	3	$	21,087,863


		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of July 31, 2024	$	22,116,015	$	3	$	22,116,018

Net income		78,325,525		—		78,325,525
Distributions declared - $0.3900 per unit		(5,116,804)		—		(5,116,804)

Balances as of October 31, 2024	$	95,324,736	$	3	$	95,324,739


		Unallocated		Trust
		Reserve		Corpus		Total
Balances as of January 31, 2024	$	20,975,143	$	3	$	20,975,146

Net income		87,207,203		—		87,207,203
Distributions declared - $0.9800 per unit		(12,857,610)		—		(12,857,610)

Balances as of October 31, 2024	$	95,324,736	$	3	$	95,324,739

Item 2. Trustees’ Discussion and Analysis of Financial Condition and Results of Operations.

This discussion should be read in conjunction with the condensed financial statements and notes presented in this Quarterly Report on Form 10-Q and the financial statements and notes in the last filed Annual Report on Form 10-K for the year ended January 31, 2025 for a full understanding of Mesabi Trust’s financial position and results of operations for the three and nine months ended October 31, 2025.

All references in this discussion and in this Quarterly Report on Form 10-Q to iron ore products “shipped” or “shipments” shall include iron ore products that are actually shipped from Silver Bay, Minnesota and/or stockpiled for intercompany use that Cleveland Cliffs Inc. (“Cliffs”) has deemed shipped, as referenced by the parties to, and in accordance with, the Amended Assignment

Table of Contents

of Peters Lease. Following the outcome of the 2019 arbitration, Cliffs began accruing royalty payments to the Trust for both DR pellets and standard pellets to be sold for internal use at facilities owned by Cliffs or its subsidiaries. This accrual method was upheld in the September 6, 2024 award. As a result, the Trust recognizes revenue for internal use pellets upon production of those pellets, regardless of pellet grade. Pellets produced by Northshore Mining Company (“Northshore” or “NMC”) that are not designated for internal use by Cliffs, or its subsidiaries, and instead are intended for sale to third parties in arms’-length sales, continue to be recognized as revenue upon shipment from Silver Bay, Minnesota.

Background

Mesabi Trust, formed pursuant to 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 dated August 17, 1989 among the trustees of Mesabi Trust, Bruce D. Sherling, as Trustee in Bankruptcy for the Estate of Reserve Mining Company, and Cypress Northshore Mining Corporation, predecessor to Northshore (referred to as the “Amended Assignment of Peters Lease” or the “Royalty Agreement”), 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”).

The Agreement of Trust specifically prohibits the Trustees of the Mesabi Trust (the “Trustees”) from entering into or engaging in any business. This prohibition applies even to business activities the Trustees may deem necessary or proper for the preservation and protection of the Trust Estate. Accordingly, the Trustees’ activities in connection with the administration of Trust assets are limited to collecting income, paying expenses and liabilities, distributing net income to the holders of Certificates of Beneficial Interest in Mesabi Trust (“Unitholders”) after the payment of, or provision for, such expenses and liabilities, and protecting and conserving the assets held by the Trust.

The Trustees do not intend to expand their responsibilities beyond those permitted or required by the Agreement of Trust, as amended by the Amendment to the Agreement of Trust dated October 25, 1982 (the “Agreement of Trust”), and those required under applicable law. Mesabi Trust has no employees, but it engages independent consultants to assist the Trustees in, among other things, monitoring the volume and sales prices of iron ore products shipped, based on information supplied to the Trustees by Northshore, the lessee/operator of the lands leased under the Peters Lease and Cloquet Lease (the “Peters Lease Lands” and “Cloquet Lease Lands,” respectively) and the 20% fee interest of certain lands that are particularly described in, and subject to a mining lease under, the Peters Lease (the “Mesabi Fee Lands,” and together with the Peters Lease Lands and Cloquet Lease Lands, the “Mesabi Trust Lands”), and its parent company, Cliffs. References to Northshore or NMC in this quarterly report, unless the context requires otherwise, are applicable to Cliffs as well.

Leasehold royalty income constitutes the principal source of the Trust’s revenue. The income of the Trust is highly dependent upon the activities and operations of Northshore. Royalty rates and the resulting royalty payments received by the Trust are determined in accordance with the terms of the Trust’s leases and assignments of leases.

Three types of royalties, as well as royalty bonuses, comprise the Trust’s leasehold royalty income:

●

Base overriding royalties. Base overriding royalties have historically constituted the majority of the Trust’s royalty income. Base overriding royalties are determined by both the volume and selling price of iron ore products shipped. Northshore is obligated to pay the Trust base overriding royalties in varying amounts, based on the volume of iron ore products shipped. Base overriding royalties are calculated as a percentage of the gross proceeds of iron ore products produced at Mesabi Trust Lands (and to a limited extent other lands) and shipped. The percentage ranges from 2-1/2% of the gross proceeds for the first one million tons of iron ore products shipped annually to 6% of the gross proceeds for all iron ore products in excess of four million tons shipped annually. Base overriding royalties typically are subject to interim and final price adjustments under Cliffs’ customer contracts (to the extent they are utilized) and, as described elsewhere in this report, such adjustments may be positive or negative.

●

Royalty bonuses. The Trust earns royalty bonuses when iron ore products shipped are sold at prices above a threshold price per ton. The royalty bonus is based on a percentage of the gross proceeds of product shipped. The threshold price is adjusted (but not below $30.00 per ton) on an annual basis for inflation and deflation (the “Adjusted Threshold Price”). The Adjusted Threshold Price is $69.41 per ton for calendar year 2025 and was $67.75 per ton for calendar year 2024. The royalty bonus percentage ranges from 1/2 of 1% of the gross proceeds (on all tonnage shipped for sale at prices between the Adjusted Threshold Price and $2.00 above the Adjusted Threshold Price) to 3% of the gross proceeds (on all tonnage shipped for sale at prices $10.00 or more

Table of Contents

above the Adjusted Threshold Price). Royalty bonuses typically are subject to price adjustments under Cliffs’ customer contracts (to the extent they are utilized) and, as described elsewhere in this report, such adjustments may be positive or negative.

●

Fee royalties. Fee royalties have historically constituted a smaller component of the Trust’s total royalty income. Fee royalties are payable to the Mesabi Land Trust, a Minnesota land trust, which holds a 20% 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. Crude ore is the source of iron oxides used to make iron ore pellets and other products. The fee royalty on crude ore is based on an agreed price per ton, subject to certain indexing.

●

Minimum advance royalties. Northshore’s obligation to pay base overriding royalties and royalty bonuses with respect to the sale of iron ore products generally accrues upon the shipment of those products. However, regardless of whether any shipment has occurred, Northshore is obligated to pay to Mesabi Trust a minimum advance royalty. Each year, the amount of the minimum advance royalty is adjusted (but not below $500,000 per annum) for inflation or deflation. The minimum advance royalty is $1,157,261 for calendar year 2025 and was $1,129,615 for calendar year 2024. Until overriding royalties (and royalty bonuses, if any) for a particular year equal or exceed the minimum advance royalty for the year, Northshore must make quarterly payments of up to 25% of the minimum advance royalty for the year. Because minimum advance royalties are essentially prepayments of base overriding royalties and royalty bonuses earned each year, any minimum advance royalties paid in a fiscal quarter are recouped by credits against base overriding royalties and royalty bonuses earned in later fiscal quarters during the year.

The current royalty rate schedule became effective on August 17, 1989 pursuant to the Amended Assignment Agreements, which 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. In 1994, Cyprus NMC was sold by its parent corporation to Cliffs and renamed Northshore Mining Company. Cliffs now operates Northshore as a wholly owned subsidiary.

Under the relevant agreements, Northshore has the right to mine and ship iron ore products from lands other than Mesabi Trust Lands. Northshore alone determines whether to conduct mining operations on Mesabi Trust Lands and/or such other lands based on its current mining and engineering plan. The Trustees do not exert any influence over mining operational decisions. To encourage the use of iron ore products from Mesabi Trust Lands, Mesabi Trust receives royalties on stated percentages of iron ore shipped, whether or not the iron ore products are from Mesabi Trust Lands. 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 90% of the first four million tons shipped during such year, 85% of the next two million tons shipped during such year, and 25% of all tonnage shipped during such year in excess of six 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 ton volume thresholds. Assuming a consistent sales price per ton throughout a calendar year, shipments of iron ore product attributable to the Trust later in the year generate a higher royalty to the Trust, as total shipments for the year exceed the one million ton thresholds.

During the course of its typical fiscal year, historically some portion of royalties expected to be paid to Mesabi Trust would be based in part on estimated prices for certain iron ore products sold under some of the Cliffs’ customer contracts. Generally, Cliffs’ customer contracts have typically used estimated prices which are subject to interim and final pricing adjustments, which can be positive or negative, and are dependent in part on multiple price and inflation index factors that are not known until after the end of a contract year. Even though Mesabi Trust is not a party to the Cliffs’ customer contracts, these adjustments can result in significant variations in royalties payable to Mesabi Trust (and, in turn, the resulting amount available for distribution to Unitholders by the Trust) from quarter to quarter and on a comparative historical basis, and these variations, which can be positive or negative, cannot be predicted by the Trust. In either case, when used in Cliffs’ third party customer contracts, these price adjustments would impact future royalties payable to the Trust and, in turn, would impact cash reserves that may become available for distribution to Unitholders.

Historically, sales volumes under most of its multi-year supply agreements with Cliffs’ customers, in general, are largely dependent on customer requirements and contain a base price that is adjusted annually using one or more adjustment factors. The factors that could result in price adjustments under Cliffs’ customer contracts include changes in the Platts 62% Price, hot-rolled coil steel price, the Atlantic Basin pellet premium, published Platts international indexed freight rates and changes in specified producer price indices, including those for industrial commodities, fuel and steel.

As also described elsewhere in this report, the Trust receives a bonus royalty equal to a percentage of the gross proceeds of iron ore products (mined from Mesabi Trust Lands) shipped and sold at prices above the Adjusted Threshold Price. Although 98.3% of all the iron ore products shipped during calendar 2024 was sold at prices higher than the Adjusted Threshold Price, the Trustees are unable to project whether Cliffs will continue to be able to sell iron ore products at prices above the applicable Adjusted Threshold Price, entitling the Trust to any future bonus royalty payments.

Table of Contents

In order to calculate the royalties owed by Northshore to Mesabi Trust, the 1989 Royalty Agreement requires that Northshore make sales of iron ore products to third parties on an arms’-length basis without regard to any other business relationship between Northshore and the third-party buyer of the iron ore products. In order to calculate royalties on less than arms’-length sales (including sales from Northshore to Cliffs’ corporate affiliates), the Royalty Agreement requires reference to the highest contract price obtained by Northshore in the preceding four calendar quarters in a sale to a buyer not affiliated with Northshore and made on an arms’-length basis. Since Cliffs’ acquisition of ArcelorMittal USA in late-2020, and accelerating after Cliffs’ Toledo HBI plant came online in mid-2021, Northshore has increased the proportion of iron ore mined from the Mesabi Trust Lands that it sells to Cliffs’ corporate affiliates and decreased the proportion of such iron ore that it sells to third parties in arms’-length transactions. Cliffs’ public statements beginning in October 2021 have indicated that Cliffs will be limiting the tonnage of iron ore pellets that it sells to third parties from all of its mines, and particularly Northshore, which Cliffs idled from May 2022 to April 2023. Cliffs also said it will continue to run Northshore as a swing operation. For the twelve-month period ended December 31, 2023, Cliffs has reported to the Trust two low volume shipments of iron ore pellets (produced from iron ore principally mined from Mesabi Trust Lands) to a single third-party customer. Cliffs’ quarterly royalty report used the highest price from those two transactions to set the price for royalty purposes for subsequent shipments intended for Cliffs’ affiliates internal consumption beginning in July 2023. For the twelve-month period ended December 31, 2024, Cliffs has reported to the Trust four low volume shipments of iron ore pellets (produced with iron ore principally mined from Mesabi Trust Lands) to a single third-party customer. Cliffs’ quarterly royalty report used the highest price from certain of those transactions to set the price for royalty purposes for subsequent shipments intended for Cliffs’ affiliates’ internal consumption beginning in July 2024, subject to the newly reported arms’-length third-party customer sales transactions thereafter. According to Cliffs’ quarterly royalty reports, beginning with the third calendar quarter of 2025, the highest contract price obtained by Northshore in the preceding four calendar quarters in a sale to a buyer not affiliated with Northshore and made on an arms’-length basis decreased, resulting in a lower bonus royalty rate for the Trust beginning July 1, 2025. The Trust is continuing to evaluate whether such transactions meet the requirements of the Royalty Agreement. Without consistent arms’-length sales from Northshore to third parties, the calculation of royalties on iron ore Northshore ships to Cliffs’ affiliates could be uncertain under the Royalty Agreement, which could in turn result in potential disputes regarding the amount of royalties owed to the Trust.

Deutsche Bank Trust Company Americas, the Corporate Trustee of Mesabi Trust, performs certain administrative functions for Mesabi Trust. The Trust maintains a website at www.mesabi-trust.com. The Trust makes available (free of charge) its annual, quarterly and current reports (and any amendments thereto) filed with the SEC through its website as soon as reasonably practicable after electronically filing or furnishing such material with or to the SEC.

Results of Operations

Comparison of Iron Ore Pellet Production and Shipments for the Three and Nine Months Ended October 31, 2025 and October 31, 2024

As shown in the table below, during the three months ended October 31, 2025, production and shipments of iron ore pellets at Northshore from Mesabi Trust Lands both totaled 915,605 tons. By comparison, pellet production and shipments for the comparable period in 2024 were both 1,066,665 tons. The decrease in production and shipments is attributable to lower demand from Northshore’s customers as compared to the prior comparable period. For the three months ended October 31, 2025, 100% of shipments originated from Trust lands.


	Pellets Produced from	Pellets Shipped from
	Trust Lands	Trust Lands
Three Months Ended	(Tons)	(Tons)
October 31, 2025	915,605	915,605
October 31, 2024	1,066,665	1,066,665

As shown in the table below, during the nine months ended October 31, 2025, production and shipments of iron ore pellets at Northshore from Mesabi Trust Lands both totaled 2,496,746 tons. By comparison, pellet production and shipments for the comparable period in 2024 were both 3,019,695 tons. The decrease in production and shipments is primarily attributable to Northshore being in an extended maintenance shut down in February 2025. For the nine months ended October 31, 2025, 100% of shipments originated from Trust lands.


	Pellets Produced from	Pellets Shipped from
	Trust Lands	Trust Lands
Nine Months Ended	(Tons)	(Tons)
October 31, 2025	2,496,746	2,496,746
October 31, 2024	3,019,695	3,019,695

Table of Contents

Comparison of Royalty Income for the Three and Nine Months Ended October 31, 2025 and October 31, 2024

As reflected in the table below, the Trust’s total royalty income for the three months ended October 31, 2025 decreased by $3,957,757 to $3,390,609 as compared to the three months ended October 31, 2024. The decrease in total royalty income is attributable to a decrease in both pricing and shipments of iron ore during the three months ended October 31, 2025 as compared to the three months ended October 31, 2024.

The table below shows that the base overriding royalties decreased $1,886,191 and the bonus royalties decreased by $2,125,658 for the three months ended October 31, 2025, as compared to the three months ended October 31, 2024. Fee royalties increased by $54,092 over the same period. The decrease in the base overriding royalties is attributable to a decrease in both pricing and shipments of iron ore during the three months ended October 31, 2025 as compared to the three months ended October 31, 2024. The decrease in the bonus royalty is attributable to a decrease in the prices of products shipped over the threshold price per ton which resulted in a lower bonus royalty rate during the three months ended October 31, 2025 as compared to the three months ended October 31, 2024. The increase in the fee royalties is attributable to an increase in the royalty rate paid during the three months ended October 31, 2025 as compared to the three months ended October 31, 2024.

The table below summarizes the components of Mesabi Trust’s total royalty income for the three months ended October 31, 2025 and October 31, 2024, respectively:


	Three Months Ended October 31,
	2025		2024
Base overriding royalties	$	2,263,892	$	4,150,083
Bonus royalties		902,047		3,027,705
Fee royalties		224,670		170,578
Total royalty income	$	3,390,609	$	7,348,366

As reflected in the table below, the Trust’s total royalty income for the nine months ended October 31, 2025 decreased by $6,456,708 to $13,156,985 as compared to the nine months ended October 31, 2024. The decrease in royalty income is attributable to Northshore being in an extended maintenance shut down in February 2025 along with a decrease in both pricing and shipments of iron ore during the nine months ended October 31, 2025, as compared to the nine months ended October 31, 2024.

The table below shows that the base overriding royalties decreased $3,226,781 and the bonus royalties decreased by $3,320,181 for the nine months ended October 31, 2025, as compared to the nine months ended October 31, 2024. Fee royalties increased by $90,254 over the same period. The decrease in the base overriding royalties is attributable to an extended maintenance shut down at Northshore in February 2025 along with a decrease in both pricing and shipments of iron ore during the nine months ended October 31, 2025, as compared to the nine months ended October 31, 2024. The decrease in the bonus royalty is attributable to a decrease in the prices of products shipped over the threshold price per ton which resulted in a lower bonus royalty rate during the nine months ended October 31, 2025 as compared to the nine months ended October 31, 2024. The increase in the fee royalties is attributable to an increase in the royalty rate paid during the nine months ended October 31, 2025, as compared to the nine months ended October 31, 2024.

The table below summarizes the components of Mesabi Trust’s total royalty income for the nine months ended October 31, 2025 and October 31, 2024, respectively:


	Nine Months Ended October 31,
	2025		2024
Base overriding royalties	$	7,905,014	$	11,131,795
Bonus royalties		4,704,321		8,024,502
Fee royalties		547,650		457,396
Total royalty income	$	13,156,985	$	19,613,693

Comparison of Net Income, Expenses and Distributions for the Three and Nine Months Ended October 31, 2025 and October 31, 2024

Net income for the three months ended October 31, 2025 was $2,767,463, a decrease of $75,558,062 as compared to the three months ended October 31, 2024. The decrease in net income for the three months ended October 31, 2025 is primarily attributable to the recognition of revenue related to the AAA arbitration award in the prior period and a decrease in royalty income due to a decrease in both pricing and shipments, as well as a reduction in the bonus royalty rate of iron ore during the three months ended October 31, 2025 as compared to the three months ended October 31, 2024. The Trust’s expenses for the three months ended October 31, 2025 were $822,987, an increase of $146,672 compared to the expenses for the three months ended October 31, 2024. The increase in

Table of Contents

expenses was primarily attributable to an increase in legal fees for the three months ended October 31, 2025, as compared to the prior comparable period. The table below summarizes the Trust’s income and expenses for the three months ended October 31, 2025 and October 31, 2024, respectively.


	Three Months Ended October 31,
	2025		2024
Total royalty income	$	3,390,609	$	7,348,366
Arbitration award		—		71,185,029
Interest income		199,841		468,445
Total revenues		3,590,450		79,001,840
Expenses		822,987		676,315
Net income	$	2,767,463	$	78,325,525

Net income for the nine months ended October 31, 2025 was $11,142,554, a decrease of $76,064,649 as compared to the nine months ended October 31, 2024. The decrease in net income for the nine months ended October 31, 2025 is primarily due to the recognition of revenue related to the AAA arbitration award in the prior period and a decrease in royalty income attributed to an extended maintenance shut down in February 2025 along with a decrease in both pricing and shipments of iron ore and a decrease in the prices of products shipped over the threshold price per ton which resulted in a lower bonus royalty rate during the nine months ended October 31, 2025, as compared to the nine months ended October 31, 2024. The Trust’s expenses for the nine months ended October 31, 2025 were $2,789,193, a decrease of $1,745,926 compared to the expenses for the nine months ended October 31, 2024. The decrease in expenses was primarily attributable to a decrease in legal fees for the nine months ended October 31, 2025 as compared to the prior comparable period during which the Trust was engaged in active arbitration. The table below summarizes the Trust’s income and expenses for the nine months ended October 31, 2025 and October 31, 2024, respectively.


	Nine Months Ended October 31,
	2025		2024
Total royalty income	$	13,156,985	$	19,613,693
Arbitration award		—		71,185,029
Interest income		774,762		943,600
Total revenues		13,931,747		91,742,322
Expenses		2,789,193		4,535,119
Net income	$	11,142,554	$	87,207,203

As presented on the “Trust’s Condensed Statements of Income” on page 3 of this quarterly report, the Trust’s net income per unit decreased $5.7590 per unit to $0.2109 per unit for the fiscal quarter ended October 31, 2025, as compared to the fiscal quarter ended October 31, 2024. On October 10, 2025, the Trust declared a distribution of $0.34 per unit payable on November 20, 2025 to Unitholders of record on October 30, 2025. Comparatively, the Trust declared a distribution of $0.39 per unit during the quarter ended October 31, 2024. During the nine months ended October 31, 2025 and October 31, 2024, the Trust declared distributions totaling $1.02 per unit to Unitholders of record and $0.98, respectively.

On a quarterly basis, the Trustees review a variety of financial and economic data and information impacting the Trust, and upon the Trustees’ determination, distributions may be declared approximately eleven weeks after the Trustees receive a quarterly royalty report from Northshore and Cliffs and the Trust receives the actual royalty payment with respect to royalty income that is payable for iron ore shipments through the end of each prior calendar quarter. Royalty payments may include pricing adjustments with respect to shipments made during prior periods. The Trust accounts for and reports accrued income receivable based on shipments during the last month of each of the Trust’s fiscal quarters (April, July, October and January) and price adjustments under Cliffs’ customer contracts (which can be positive or negative and can result in significant variations in royalties received by Mesabi Trust and cash available for distribution to Unitholders) as reported to the Trust by Northshore. The Trust accounts for these amounts by using estimated prices and reports such amounts as revenue even though accrued income receivable is not available for distribution to Unitholders until it is received by the Trust. Accordingly, 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.

Comparison of Unallocated Reserve as of October 31, 2025, October 31, 2024 and January 31, 2025

As set forth in the table below, Unallocated Reserve decreased from $95,324,736 as of October 31, 2024 to $21,087,860 as of October 31, 2025. The decrease in Unallocated Reserve as of October 31, 2025, as compared to October 31, 2024, is primarily the result of a decrease in unallocated cash and cash equivalents and a decrease in accrued income receivable. The decrease in the unallocated cash and cash equivalents portion of the Unallocated Reserve is in part attributable to AAA arbitration award being received as of October 31, 2024, which was subsequently distributed to unitholders. The decrease in the accrued income receivable portion of the Unallocated Reserve is attributable to a decrease in pricing, including a lower bonus royalty rate, in the last month of the fiscal quarter ended October 31, 2025 as compared to the prior comparable period.

Table of Contents


	October 31,				% increase
	2025		2024		(decrease)
Accrued Income Receivable	$	1,522,367	$	3,883,400	(60.8)%
Contract Asset		1,055,605		669,276	57.7%
Unallocated Cash and Cash Equivalents		18,731,120		90,793,345	(79.4)%
Accrued Expenses, net		(221,232)

SEC Form 10-Q filed by Mesabi Trust