Mesabi Trust

Item 1A. Risk Factors

The following Risk Factor supplements re have been no material changes in the Trusts Rrisk Ffactors as described in Risk Factors as sset forth ion pages 4 tohrough 17 of Mesabi Trusts Annual Report on Form 10-K for the fiscal year ended January 31, 2024 (filed April 24, 2024).

The limited or lack of arms-length third-party sales of iron ore products (processed at Northshore using Mesabi Trust iron ore) by Cliffs could lead to uncertainty under the Royalty Agreement with respect to the calculation of royalties, which could in turn result in potential disputes regarding the amount of royalties owed to the Trust.

In order to calculate the royalties owed by Northshore to the 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 Mesa and on page 19 of 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 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. s For the twelve month period ended December 31, 2023, Cliffs reported to the Trust two low volume shipments of iron ore pellets (produced with iron ore principally mined from Mesabi Trust Lands) to a single third-party customer, which shipments together were much less than one typical boatload of iron ore normally shipped from Silver Bay in arms-length third-party sale transactions. Cliffs quarterly royalty reports have 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, subject to any newly reported arms-length third-party customer sale transaction thereafter.

In Cliffs most recent quarterly royalty report of iron ore shipments out of Silver Bay, Minnesota during the quarter ended June 30, 2024 received by the Trust on Jum 10-Q for the fiscal quarter ended July 301, 2024, Cliffs reported two new low volume shipments of iron ore pellets to a single third-party customer, one in May 2024 and one in June 2024. These two shipments are the only reported third-party pellet sales transactions since Cliffs July 28, 2023 quarterly royalty report in which Cliffs reported two low volume sales transactions to the same single third-party customer in June 2023.

On May 20 (filed September 5, 2024, Cliffs chief executive officer publicly commented during The Ryan Report, a news talk show hosted on an Upper Michigan regional news outlet, that while selling iron ore pellets is no longer core to Cliffs business, Cliffs is selling pellets to one customer currently, that there are other potential customers and that Cliffs will eventually sell iron ore pellets to additional third parties.

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 that 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.).