Annual Report on Form 10-K



Great Northern Iron Ore Properties



December 31, 2006

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K

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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year endedDecember 31, 2006
        Commission File Number1-701




GREAT NORTHERN IRON ORE PROPERTIES

(Exact name of registrant as specified in its charter)



Minnesota
        41-0788355(State or Other Jurisdiction of
Incorporation or Organization)
        (I.R.S. Employer
Identification No.)W-1290 First National Bank Building332 Minnesota StreetSaint Paul, Minnesota
        55101-1361(Address of Principal Executive Offices)
        (Zip Code)




Registrants Telephone Number, Including Area Code651 / 224-2385



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

Title of Each Class
        
        Name of Each Exchange onWhich RegisteredTrustees Certificates of Beneficial Interest
        
        New York Stock Exchange




Securities registered pursuant to Section 12(g) of the Exchange ActNone



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Indicate by check mark if the registrant is a well-known seasoned issuer (as defined
in Rule 405 of the Securities Act). Yes oNo x



Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes oNo x



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
twelve months and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.x



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Act).

Large accelerated filero
        Accelerated filerx
        Non-accelerated filero




Indicate
 by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).  Yes oNo x



As of the last business day of the registrants most recently completed second
fiscal quarter, that being June 30, 2006, the aggregate market value of the registrants certificates
(shares) of beneficial interest held by non-affiliates of the registrant was $166,665,000 based on the closing sale price as reported on the New York Stock Exchange  Composite Inter-Market Trading System.



The number of certificates (shares) of beneficial interest outstanding as of the close of the period covered by this report:



Trustees Certificates of Beneficial Interest  1,500,000



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the Annual Report to Certificate
Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, are incorporated by reference into Part II.







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PART I



Item 1.
        BUSINESS




The Registrant (Trust or we or our or GNIOP) owns interests in fee, both mineral and nonmineral lands, on the Mesabi Iron Range in northeastern Minnesota. The Registrant is a conventional trust organized under the laws of the State of Michigan pursuant to a Trust Agreement dated December 7, 1906. Because the Trust properties and offices are all located in Minnesota, the Trust is under the jurisdiction of the Ramsey County District Court in Saint Paul, Minnesota. Income is primarily derived from royalties on iron ore minerals (taconite) mined by our lessees from these properties and minimum royalties. The Registrant is presently involved solely with the leasing and care of these properties. There have been no significant changes in these functions since the beginning of the fiscal year.



The terms of the Great Northern Iron Ore Properties Trust Agreement, created December 7, 1906, state that the Trust shall continue for twenty years after the death of the last surviving of eighteen persons named in the Trust Agreement. The last survivor of these eighteen named in the Trust Agreement died April 6, 1995. Accordingly, the Trust terminates twenty years from April 6, 1995.



At the end of the Trust, that being April 6, 2015, the certificates of beneficial interest (shares) in the Trust will cease to trade on the New York Stock Exchange and thereafter will represent only the right to receive certain distributions payable to the certificate holders of record at the time of the termination of the Trust. Upon termination, the Trust is obligated to distribute ratably to these certificate holders the net monies remaining in the hands of the Trustees (after paying and providing for all expenses and obligations of the Trust), plus the balance in the Principal Charges account (this account is explained in the Trusts Annual Report sent to all certificate holders every year). All other Trust property (most notably the Trusts mineral properties) must be conveyed and transferred to the reversioner (currently Glacier Park Company, a wholly owned subsidiary of
ConocoPhillips) under the terms of the Trust Agreement.



1

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Item 1.
        BUSINESS  Continued




We have previously provided information in our various Securities and Exchange Commission filings, including our Annual Report, about the final distribution payable to the certificate holders upon the Trusts termination. The exact final distribution, though not determinable at this time, will generally consist of the sum of the Trusts net monies (essentially, total assets less liabilities and properties) and the balance in the Principal Charges account, less any and all expenses and obligations of the Trust upon termination. To offer a hypothetical example, without factoring in any expenses and obligations of the Trust upon its termination, and using the financial statement values as of December 31, 2006, the net monies were approximately $8.0 million and the Principal Charges account balance was approximately $5.2 million, resulting in a final distribution payable of
approximately $13.2 million, or about $8.80 per share. After payment of this final distribution, the certificates of beneficial interest (shares) would be cancelled and will have no further value. It is important to note, however, that the actual net monies on hand and the Principal Charges account balance will most likely fluctuate during the ensuing years and will not be final until after the termination and wind-down of the Trust. We offer this example to further inform investors about the conceptual nature of the final distribution and do not imply or guarantee a specific known final distribution amount.



The raw materials essential to the business of the Registrant are the minerals contained in properties owned and leased by the Registrant. Because we lease our properties to mining interests that control the amount of ore production, we do not have direct control over the tonnage mined from our properties; we are solely involved with administering the leases on the properties. Since operating companies insist on freedom to move from property to property as mining requirements dictate, such changes in production cannot be precisely reduced to financial forecasts.



Although the Registrant owns in excess of 67,000 acres in varied fee (surface and/or mineral) and ownership percentage interests in northeastern Minnesota, our mineral interests on the Mesabi Iron Formation represent 12,033 acres, including approximately 7,443 acres which are wholly owned, 1,080 acres in which the Registrant is a tenant in common with a 91% interest, 3,350 acres in tenancy in common with a 50% interest and 160 acres in tenancy in common with other fractional interests. Of said mineral interest total, 9,215 acres are under lease and 2,818 acres are unleased.



None of the Registrants leases provide for any right of renewal by the lessees upon expiration, even though unmined minerals might remain. Any extension of any such terminating lease would have to be negotiated in the same manner as unleased properties.



2

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Item 1.
        BUSINESS  Continued




The Registrant cannot estimate at this time any tonnage for nonmagnetic taconite because of lack of drilling, testing and any established large-scale commercial treatment method for Mesabi Iron Range nonmagnetic taconite. To give a better perspective on magnetic taconite, our engineers estimate that the proven and probable ore reserves of magnetic taconite under lease as of December 31, 2006, were equivalent to approximately 374,358,000 tons of pellets. These ore reserves are developed from exploration drilling (diamond drilling) analyses performed by our lessees (steel and mining companies), with our interaction and assistance, though they have never been audited by any external party as this is not a customary practice. Although the ore reserves generally are adjusted downward each year for taconite pellet shipments, they also may increase due to new leases entered into and/or
amendments to existing leases. In addition, reserve adjustments (positive or negative) are made from time to time when additional diamond drilling results in adjustments to the estimates. (See table of current leases within this Item 1. Business section for additional reserve information.)



Present leases provide for minimum royalties aggregating approximately $3,835,000 for the year 2007 even if no taconite is mined. This entire amount is attributable to long-term taconite leases.



All leases granted by the Registrant, except some covering remnants of natural ore, have provisions for escalation of royalty rates. Most of the taconite royalty rates are escalated on the basis of the price of pellets, the iron content, the Producers Price Index (PPI) (All Commodities), the PPI (Iron and Steel subgroup) or certain combinations of the above.



There are other landowners on the Mesabi Iron Range, including mining companies and numerous other private fee owners. Accordingly, firm data on competitive conditions in the iron ore industry is not available. Iron ore is also available from a number of other sources. However, the generally close proximity of our lands to the mining facilities tends to provide a competitive advantage to the Trust. In addition, other typical competitive factors include royalty rates, quality and geological characteristics of the ore bodies available, production guarantees granted to the fee owners, minimum royalty provisions and other matters. The Registrants non-taconite shipments have presently ceased as a source of income. The mining of taconite by lessees is the most important part of our present business. Future development depends, to a large part, on the demand for taconite from our
properties by steel and mining companies.



3

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Item 1.
        BUSINESS  Continued




The Registrants royalty income is dependent on the number of tons of taconite shipped from its properties by the lessees, royalty rates, minimum royalties collected and liquidation of minimum royalties collected. Following is a summary of shipments by lessee (operating facility) during 2006, 2005 and 2004:



Tons Shipped2006
        
        2005
        
        2004U.S. Steel Corporation  Minntac
        
        4,700,864
        
        5,335,518
        
        4,958,405Hibbing Taconite Company
        
        3,293,199
        
        2,715,470
        
        3,782,956U.S. Steel Corporation  Keetac
        
        857,856
        
        622,210
        
        425,8398,851,919
        
        8,673,198
        
        9,167,200




As previously reported, Section 646 of the Tax Reform Act of 1986, as amended, provided a special elective provision under which the Trust was allowed to convert from taxation as a corporation to that of a grantor trust. Pursuant to an Order of the Ramsey County District Court, the Trustees filed the Section 646 election with the Internal Revenue Service on December 30, 1988. On January 1, 1989, the Trust became exempt from federal and Minnesota corporate income taxes. For years 1989 and thereafter, certificate holders are taxed on their allocable share of the Trusts income whether or not the income is distributed. For certificate holder tax purposes, the Trusts income is determined on an annual basis, one-fourth then being allocated to each quarterly record date.



The Trustees provided annual income tax information in January 2007 to certificate holders of record with holdings on any of the four quarterly record dates during 2006. This information included the following:




        Substitute Form 1099-MISC  This form reported the certificate holders 2006 allocable share of income from the Trust, distributions declared and any taxes withheld. (Foreign certificate holders received a Form 1042S.)





        Trust Supplemental Statement  This statement reported the number of units (shares) held by the certificate holder on any of the four quarterly record dates in 2006.





        Tax Return Guide  This guide instructed the certificate holders as to the preparation of their income tax returns with respect to income allocated from the Trust and various deductions allowable.




4

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Item 1.
        BUSINESS  Continued




At December 31, 2006, the Registrant employed ten persons. We have been engaged in only one line of business, namely the leasing and maintenance of our mineral properties. Our business is not seasonal, but income primarily depends upon production by the steel and mining companies which lease our properties. We have no operations in foreign countries and have no customers or lessees in foreign countries.



The Registrant does not maintain a website and therefore we do not make available through a website the annual, quarterly and other reports that we file with the Securities and Exchange Commission. We will furnish to investors free of charge, upon request, a paper copy of the reports that we file with the Securities and Exchange Commission. We will also furnish to investors free of charge, upon request, a paper copy of the Trusts Code of Ethics, which has been signed and affirmed by all employees, Trustees and officers of the Trust. To request any of these documents, please contact the Trust office.



The table on the following page is a listing of the Registrants current leases, all located on the Mesabi Iron Range in northeastern Minnesota near the cities of Hibbing and Virginia. The following footnotes pertain to said table:



(a)
        Operator of lease is as follows: (1) U.S. Steel Corporation  Minntac; (2) U.S. Steel Corporation  Keetac; (3) Hibbing Taconite Company; (4) Minnesota Steel Industries LLC.




(b)
        Represents leased mineral acres on iron formation.




(c)
        Represents other leased surface acres on or off iron formation and/or mineral acres off iron formation.




(d)
        Represents proven and probable magnetic taconite reserves in pellet tons (rounded to the nearest thousand) remaining as of the end of the fiscal year.




(e)
        Lessee termination provision is as follows: (1) 1 year; (2) 6 months.




5

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Item 1.
        BUSINESS  Continued




Table of Registrants current leases:



Lease (a)
        
        Mineral Acres (b)
        
        Other
Acres (c)
        
        Total Numberof Leased Acres
        
        Magnetic Ore Reserves in Pellet Tons (000) (d)
        
        GNIOP Interest
        
        
        County Location
        
        Term (e)Bennett Annex (2)
        
        237
        
        
        
        237
        
        
        
        100
        %
        
        St. Louis
        
        1/1/1965 to 12/31/2039
        (1)Carmi-Campbell (2)
        
        1,417
        
        180
        
        1,597
        
        22,549
        
        100
        
        
        St. Louis
        
        7/1/1959 to 12/31/2010
        (1)Enterprise-Mississippi (incl. Miss. #3 & Section 18)(2)
        
        696
        
        80
        
        776
        
        15,677
        
        100
        
        
        St. Louis and Itasca
        
        1/1/1961 to 12/31/2010
        (2)Hanna Taconite #1 (2)
        
        40
        
        
        
        40
        
        
        
        100
        
        
        Itasca
        
        4/1/1962 to 12/31/2010
        (2)Gray Annex (3)
        
        40
        
        
        
        40
        
        
        
        50
        
        
        St. Louis
        
        1/1/1974 to 1/1/2049
        (1)Ontario 50% (3)
        
        1,317
        
        80
        
        1,397
        
        23,139
        
        50
        
        
        St. Louis and Itasca
        
        7/1/1978 to 12/31/2016
        (1)Ontario 100% (incl.Stevenson Townsite) (3)
        
        280
        
        120
        
        400
        
        15,625
        
        100
        
        
        St. Louis and Itasca
        
        7/1/1978 to 12/31/2016
        (1)Ontario #3 (3)
        
        40
        
        40
        
        80
        
        457
        
        25
        
        
        St. Louis
        
        1/2/1993 to 12/31/2016
        (1)Mahoning (3)
        
        940
        
        40
        
        980
        
        38,449
        
        100
        
        
        St. Louis and Itasca
        
        1/1/1979 to 12/31/2026
        (1)Russell Annex/Theodore (2)
        
        200
        
        
        
        200
        
        1,106
        
        50
        
        
        Itasca
        
        1/1/1966 to 12/31/2040
        (1)L&W/Leetonia (3)
        
        80
        
        
        
        80
        
        3,554
        
        50/~51
        
        
        St. Louis
        
        1/1/2005 to 12/31/2014
        (1)South Stevenson (2)
        
        180
        
        
        
        180
        
        17,637
        
        100
        
        
        St. Louis
        
        4/1/1966 to 4/1/2041
        (1)Minntac (1)
        
        1,525
        
        200
        
        1,725
        
        171,149
        
        100
        
        
        St. Louis
        
        1/1/1959 to 12/31/2057
        (2)Atkins (1)
        
        160
        
        
        
        160
        
        15,296
        
        ~91
        
        
        St. Louis
        
        8/1/1984 to 7/31/2009
        (2)MSI 100% (4)
        
        990
        
        877
        
        1,867
        
        20,466
        
        100
        
        
        Itasca
        
        11/29/2006 to 12/31/2036
        (2)MSI BLGN (4)
        
        1,073
        
        
        
        1,073
        
        29,254
        
        50
        
        
        Itasca
        
        11/29/2006 to 12/31/2036
        (2)MSI 50% (4)
        
        
        
        80
        
        80
        
        
        
        50
        
        
        Itasca
        
        11/29/2006 to 12/31/2036
        (2)Totals:
        
        9,215
        
        1,697
        
        10,912
        
        374,358






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Item 1A.
        RISK FACTORS




Certain expectations and projections regarding future performance of the Registrant referenced in this report are forward-looking statements. These expectations and projections are based on currently available industry and financial data and may be subject to certain events and uncertainties beyond our control. We caution readers that in addition to factors described elsewhere in this report, the following factors and comments, among others, could cause our operations and financial results to differ materially from the expectations and projections contained in the forward-looking statements.



The Registrant is dependent on a limited number of customers.

Our lessees (customers) primarily include Minntac (Minntac) and Keewatin Taconite Company (Keetac), owned and operated by United States Steel Corporation; Hibbing Taconite Company (Hibtac), owned by Mittal Steel USA, Cleveland Cliffs Inc. and Stelco, and operated by Cleveland Cliffs Inc.; and Minnesota Steel Industries LLC (MSI), owned by JML Heirs, LLC and R.M. Bennett Heirs Limited Partnership, with a new taconite mining and steelmaking facility anticipated to be constructed by MSI over the next few years, subject to permitting and financing. Because our revenues are primarily dependent upon a limited number of customers, there are associated inherent risks resulting therefrom. Any significant adverse event at any of our primary lessees, or the loss of any of our primary lessees, could materially adversely affect our future financial results.



The Registrant is subject to market forces beyond its control.

A decline in market demand for steel, and correspondingly taconite, could adversely affect our financial results. However, other related and sometimes compensating factors include our lessees operating levels, minimum royalties, ore body quality, metallurgical and geological characteristics, proximity of our lands, extreme weather conditions and labor contracts at the mines. Though we are not a party to the labor contracts, all pertinent labor contracts affecting production from our lands run through mid-2008. Additionally, over the past few years, the domestic steel and taconite industries have also been influenced by the global markets. As a result, the future demand for domestic steel and taconite, which is now part of the global markets, is uncertain.



The Registrants royalty rates are typically tied to producer price indices.

Royalty rates can fluctuate due to the escalation and de-escalation of producer price indices as a result of provisions present in many of our leases. To the extent these indices decline (All Commodities or the Iron and Steel subgroup), royalty rates, and correspondingly royalty income, could be adversely affected. Conversely, higher producer price indices may increase royalty rates and royalty income.



7

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Item 1A.
        RISK FACTORS  Continued




The loss of grantor trust status would have adverse tax consequences.

Compliance with Section 646 of the Internal Revenue Code is integral to the level of distributions paid to the certificate holders. Should it be determined that we have violated the requirements of Section 646, the Trust would be taxed as a corporation versus a grantor trust. This would mean our income would be taxable upon our receipt and again upon receipt by the certificate holders. It is the Trustees opinion that, based on independent tax firm reviews, the Trust has remained in compliance with the provisions of Section 646 since its election in 1988.



Item 1B.
        UNRESOLVED STAFF COMMENTS




None.



Item 2.
        PROPERTIES




The Registrant owns interests in fee, both mineral and nonmineral lands, on the Mesabi Iron Range in northeastern Minnesota, many of which are leased to the steel and mining companies that mine the mineral lands for taconite ore. A list of the leased properties is shown in table format in Item 1. Business above. The leases provide the lessees exclusive mining rights during the term of such leases. Taconite deposits are substantial and our ore reserves are deemed proven and probable. The properties have a reversionary interest as explained in Item 1. Business above.



Item 3.
        LEGAL PROCEEDINGS




In proceedings commenced in 1972, the Minnesota Supreme Court determined that while by the terms of the Trust, the Trustees are given discretionary powers to convert Trust assets to cash and to distribute the proceeds to certificate holders, they are limited in their exercise of those powers by the legal duty imposed by well-established law of trusts to serve the interests of both term beneficiaries and the reversionary beneficiary with impartiality. Thus, the Trustees have no duty to exercise the powers of sale and distribution unless required to do so to serve both term and reversionary interests; and, if the need arises, the Trustees may petition the District Court of Ramsey County, Minnesota, for further instructions defining what is required in a particular case to balance the interests of certificate holders and reversioner. Also, the Court, in effect, held that the Trust is a
conventional trust, rather than a business trust, and must operate within the framework of well-established trust law.



8

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Item 3.
        LEGAL PROCEEDINGS  Continued




By a letter dated March 15, 2006, certificate holders of record as of December 30, 2005, and the reversioner were notified of a hearing on May 3, 2006, in Ramsey County Courthouse, Saint Paul, Minnesota, for the purpose of settling and allowing the Trust accounts for the year 2005. By Court Order signed and dated May 3, 2006, the 2005 accounts were settled and allowed in all respects. By previous Orders, the Court settled and allowed the accounts of the Trustees for preceding years of the Trust.



Item 4.
        SUBMISSION OF MATTERS TO A VOTE OF CERTIFICATE HOLDERS




None.



PART II



Item 5.
        MARKET FOR REGISTRANTS SHARES OF BENEFICIAL INTEREST, RELATED SECURITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES




Shares of Beneficial Interest, Market Prices and Distributions on page 5 of the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, are incorporated herein by reference. There are no issuer purchases of equity securities. No performance graph is required, as the Registrant is a nonvoting trust and total return is not linked to Trustee or executive compensation; therefore, the performance graph has been omitted.



Item 6.
        SELECTED FINANCIAL DATA




Selected Financial Data (Summary of Operations) on page 2 of the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, is incorporated herein by reference.



Item 7.
        MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




Trustees & Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 3 through 9, inclusive, of the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, are incorporated herein by reference.



Item 7A.
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




None.



9

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Item 8.
        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




The following financial statements of the Registrant are included in the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, and are incorporated herein by reference:



Balance Sheets  December 31, 2006 and 2005.



Statements of Beneficiaries Equity  Years ended December 31, 2006, 2005 and 2004.



Statements of Income  Years ended December 31, 2006, 2005 and 2004.



Statements of Cash Flows  Years ended December 31, 2006, 2005 and 2004.



Notes to Financial Statements  December 31, 2006.



Quarterly Results of Operations (unaudited), as shown in Note H of the Notes to the Financial Statements contained in the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, are incorporated herein by reference.



Item 9.
        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE




None.



Item 9A.
        CONTROLS AND PROCEDURES




As of the end of the period covered by this report, the Trust conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the Trusts disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Trusts disclosure controls and procedures are effective to ensure that information required to be disclosed by the Trust in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



Managements Report On Internal Control Over Financial Reporting on page 10 of the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, is incorporated herein by reference.



10

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Item 9A.
        CONTROLS AND PROCEDURES  Continued




The Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on Managements Report On Internal Control Over Financial Reporting on pages 25 and 26 of the Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, is incorporated herein by reference.



There was no change in the Trusts internal control over financial reporting during the Trusts most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Trusts internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).



Item 9B.
        OTHER INFORMATION




None.



PART III



Item 10.
        DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE  GOVERNANCE




The Registrant, being a trust, has no directors as such. The management of the Trust is vested in the following Trustees and officers whose terms of office are not fixed for a specified time:



Name and Position
        
        Age
        
        Years of Service in PositionJoseph S. Micallef
        
        as Trustee
        
        73
        
        30as President of the Trustees and Chief Executive Officer
        
        
        
        8Roger W. Staehle (1)
        
        as Independent Trustee
        
        73
        
        25Robert A. Stein (2)
        
        as Independent Trustee
        
        68
        
        25John H. Roe, III (3)
        
        as Independent Trustee
        
        67
        
        5Thomas A. Janochoski
        
        as Vice President & Secretary and Chief Financial Officer
        
        48
        
        15




_________________________

(1)Roger W. Staehle is an independent member, pursuant to NYSE standards, of the Trusts Audit Committee.

(2)Robert A. Stein is an independent
member, pursuant to NYSE standards, and the chairman of the Trusts Audit Committee. He is deemed, for purposes thereto, to
be a financial expert. He also presides at all non-management executive sessions.

(3)John H. Roe, III is an independent member, pursuant to NYSE standards, of the Trusts Audit  Committee. He is deemed, for purposes thereto, to be a financial expert.



11

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Item 10.
        DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Continued




The Board of Trustees meets quarterly throughout the year. The principal occupations of the Trustees and officers during the last five years were as follows:



JOSEPH S. MICALLEF

President of the Trustees and
Chief Executive Officer, Great Northern Iron Ore Properties.



ROGER W. STAEHLE

Adjunct Professor, Institute of
Technology, University of Minnesota;Industrial Consultant.



ROBERT A. STEIN

Everett Fraser Professor of Law, University of Minnesota as of September 1, 2006;

Executive Director and Chief Operating Officer, American Bar Association, until October 15, 2006.



JOHN H. ROE, III

Retired Chairman of the Board, Bemis Company, Inc., Minneapolis, Minnesota as of May 5, 2005.



THOMAS A. JANOCHOSKI

Vice President & Secretary, Chief Financial Officer, Great Northern Iron Ore Properties.



Executive employees in addition to those listed above include Roger P. Johnson, Manager of Mines and Chief Engineer.



There are no family relationships among any of the above persons.



12

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Item 11.
        EXECUTIVE COMPENSATION




Summary Compensation Table(a)



Name and Principal Position
        
        Year
        
        Salary
        
        Bonus
        
        Pension Values(b)
        
        TotalJoseph S. Micallef
        
        2006
        
        $
        160,000
        
        $
        60,000
        
        $
        
        
        $
        220,000Chief Executive Officer and President of the TrusteesThomas A. Janochoski
        
        2006
        
        
        134,500
        
        
        6,000
        
        
        70,775
        
        
        211,275Chief Financial Officer and Vice President & Secretary




Notes: (a) There are no Stock Awards, Option Awards, Non-equity Incentive Plan Compensation or All Other Compensation, and accordingly, such columns in the table and any corresponding supplemental tables have been omitted. (b) Pension Values represent Change in Pension Value and Nonqualified Deferred Compensation Earnings, if applicable.



Compensation Discussion and Analysis



The Trust has only two executive officers, the Chief Executive Officer and President of the Trustees (CEO) and the Chief Financial Officer and Vice President & Secretary (CFO), as shown above. No other Trust personnel receive compensation in excess of these named executives. The compensation for the Trusts other directors (Trustees other than the CEO) is discussed and shown below under a separate table.



The compensation of the Trustees and CEO is established by the Trust Agreement (as modified by Court Orders). In addition, the Board of Trustees, as a whole, approves all compensation of all officers and other employees of the Trust, except that the CEO does not participate in setting his own compensation.



Compensation Committee Report & Interlocks and Insider Participation



The Board of Trustees, as a whole, has reviewed and discussed this Compensation Discussion and Analysis (CD&A) with management and, based on such review and discussion, has recommended that the CD&A be included in the Registrants annual report. The Board of Trustees has not designated a separate compensation committee, and the Trustees take all actions with respect to compensation themselves due to their trustee fiduciary obligations pursuant to the Trust Agreement. This report is respectfully submitted by Joseph S. Micallef, Roger W. Staehle, Robert A. Stein and John H. Roe, III, collectively as the Board of Trustees of Great Northern Iron Ore Properties.



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Item 11.
        EXECUTIVE COMPENSATION  Continued




Chief Executive Officer/President of the Trustees (CEO) Compensation



The Trust Agreement (as modified by Court Orders, the last being effective July 1, 2005) provides for current annual compensation (salary) to the CEO of $160,000. The Trust Agreement (as modified by Court Orders, the last being effective July 1, 2005) also provides for current additional compensation (bonus) to the CEO equal to one percent (1%) of the excess of annual gross income of the Trust over $5,000,000, with a maximum bonus of $60,000.



The original 1906 Trust Agreement provided for compensation to the CEO of $25,000, plus a maximum bonus equal to one percent (1%) of the excess of annual gross income of the Trust over $5,000,000, with a maximum bonus of $25,000. Between 1906 and 1982, the compensation of the CEO had never been adjusted. Because of the time-consuming court proceedings that occurred in the 1970s and 1980s, and the fact that there had not been an increase in compensation since the inception of the Trust, the Trustees petitioned the Court for an increase in compensation to reflect, in part, their increased time commitments and inflation over the years. By Court Order effective January 1, 1983, the CEOs compensation was adjusted to $40,000, and the maximum bonus was adjusted to $35,000. Thereafter, because of increased duties under todays regulatory environment and further inflation, the Trustees
have, from time to time, petitioned the Court for additional compensation increases, essentially based on the increases in the Consumer Price Index since 1983. This petition process includes notification to all certificate holders of record and the reversioner, followed by a formal Court hearing and opportunity by certificate holders and reversioner to comment. The Court, taking into consideration any and all testimony and other materials filed, has approved of increases to the CEOs compensation on five different occasions since 1906, the last being July 1, 2005.



Because the compensation of the
CEO is set forth by the Trust Agreement (as modified by Court Orders), there are no stock awards, option awards, non-equity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings or all other compensation. Accordingly, such columns in the table and the corresponding supplemental tables have been omitted.



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Item 11.
        EXECUTIVE COMPENSATION  Continued




Chief Financial Officer/Vice President & Secretary (CFO) Compensation



The Board of Trustees, as a whole, determines the compensation of all employees of the Trust, including that of the CFO. The objective for determining the compensation of the CFO is to provide a competitive salary based on market data obtained from time to time, as deemed necessary, representative of other chief financial officers responsibilities and pay scales within other similar-sized companies. To determine reasonable and competitive salary ranges for all employees of the Trust, including the CFO, the Trustees retained independent market research firms to obtain market data reflective of each specific position. Studies were performed and obtained in 1990 and updated again in 2001. With respect to the CFOs salary, the market salary averages and ranges obtained in the 2001 study reflected compensation paid to various chief financial officers in 47 different, similar-sized
organizations. Since 2001, the Trustees have extrapolated the historical salary percentage increase that occurred between 1990 and 2001 forward to current year dollars. The CFO salary in the Summary Compensation Table falls within the range of this 2001 study, as extrapolated to current year dollars.



The CFOs bonus compensation was established in 2001 to reward the CFO for any productive year by the Trust that effectively results in gross revenues in excess of $5,000,000, the same threshold used for the bonus calculation of the CEO. The CFOs bonus compensation is equal to ten percent (10%) of the CEOs bonus compensation, resulting in a current maximum annual bonus of $6,000.



The increase in the actuarial present value of accumulated benefits for the CFO within the Trusts defined benefit pension plan (as discussed and shown below under a separate table) amounted to $70,775 for the year 2006. The CFO participates in the pension plan, along with all other employees, on a nondiscriminatory basis.



The CFO does not receive any stock awards, option awards or non-equity incentive plan compensation. Accordingly, such columns in the table and the corresponding supplemental tables have been omitted. In addition, the CFO did not receive any other compensation that would require disclosure under the column heading All Other Compensation, nor did the CFO receive any above-market earnings from the nonqualified deferred compensation plan.



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Item 11.
        EXECUTIVE COMPENSATION  Continued




Post-Employment Compensation



Pension Benefits Table



Name
        
        Plan Name
        
        Number of Years Credited Service
        
        Present Value of Accumulated Benefit
        
        Payments During Last Fiscal YearThomas A. Janochoski (CFO)
        
        Defined Benefit Pension Plan
        
        17
        
        $
        447,281
        
        $
        




Only employees of the Trust (not Trustees) are eligible to participate in the Trusts pension plan, and as such, post-employment compensation disclosure is not applicable for the CEO or the other Trustees. The CFO, as an employee and officer of the Trust, does participate in the Trusts defined benefit pension plan on a nondiscriminatory basis with the other employees of the Trust.



The Number of Years Credited Service reflects the years of credited service currently vested as of December 31, 2006. The normal retirement benefit is a straight life annuity as of the end of the Trust and is based on the highest sixty (60) consecutive months average salary (annualized), the years of credited service and three percent (3%) per year of credited service, as defined in the pension plan. The pension plan also provides for a $500/month supplemental bridge payment (a nondiscriminatory benefit) that begins as of the end of the Trust (due to an involuntary early retirement resulting from Trust termination) and continues until the earlier of the participants death or attainment of age 65. The early retirement age, as defined in the pension plan, is the earliest date that the participant could elect early retirement based on the participants years of credited service
and the participants age, the sum of which must equal or exceed 65. The CFO is currently eligible to elect an early retirement benefit. The early retirement benefit is calculated similar to the normal retirement benefit, except the percentage used for years of credited service equals two and one-quarter percent (2 1/4%), and the benefit is reduced by 1/15 for each of the first five years preceding age 65 and by 1/30 for each year before that until the early retirement age is reached, and the $500/month supplemental bridge payment is not applicable. However, if an employee is eligible for early retirement as of the end of the Trust, the employees benefit will be unreduced, similar to the calculation of the normal retirement benefit. Actuarial equivalent (reduced) annuity options are also available to all participants in the pension plan in lieu of a straight life annuity.



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Item 11.
        EXECUTIVE COMPENSATION  Continued




Nonqualified Deferred Compensation Table



Name
        
        Executive Contributions in the Last Fiscal Year
        
        Registrant Contributions in the Last Fiscal Year
        
        Aggregate Earnings in the Last Fiscal Year
        
        Aggregate Withdrawals/ Distributions
        
        Aggregate Balance at Last Fiscal Year-EndThomas A. Janochoski (CFO)
        
        $
        
        
        $
        5,100
        
        $
        1,800
        
        $
        
        
        $
        36,100




The Trustees established a
nonqualified deferred compensation plan for the CFO in 2001. The Registrants contributions to the deferred compensation plan
for the CFO represent the difference between (i) what the CFO is limited to contributing to his account within a 401(k)
Supplemental Retirement Plan (a plan provided on a nondiscriminatory basis to all employees, without company match or profit
sharing) because of his highly compensated employee status as defined by IRS regulations, and (ii) the maximum amount
other employees, subject to IRS thresholds, are permitted to contribute to their accounts. Aggregate Earnings represent interest
earned on the Aggregate Balance within the deferred compensation plan. The interest percentage used to determine interest earned
is the greater of five percent or the actual one-year current return achieved within the Trusts defined benefit pension
plan. The Aggregate Balance is distributable at the earliest of (i) the CFOs termination of employment, (ii) the termination
of the Trust (expected to be April 6, 2015), (iii) the CFOs termination of employment due to disability, or (iv) the
CFOs death.



Compensation of Directors/Trustees (Other Than the CEO)



Directors Compensation Table



Name
        
        Fees Earned
or Paid in CashRoger W. Staehle, Trustee
        
        $
        60,000Robert A. Stein, Trustee
        
        
        60,000John H. Roe, III, Trustee
        
        
        60,000




The Trust Agreement (as modified by Court Orders, the last being effective July 1, 2005) provides for current annual compensation (fees) to each Trustee (other than the CEO) of $60,000.



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Item 11.
        EXECUTIVE COMPENSATION  Continued




The original 1906 Trust Agreement provided for compensation of $10,000 to each of the other Trustees (other than the CEO). Between 1906 and 1982, the compensation of the Trustees (other than the CEO) had never been adjusted. Because of the time-consuming court proceedings that occurred in the 1970s and 1980s, and the fact that there had not been an increase in compensation since the inception of the Trust, the Trustees petitioned the Court for an increase in compensation to reflect, in part, their increased time commitments and inflation over the years. By Court Order effective January 1, 1983, the Trustees (other than the CEO) compensation was adjusted to $20,000. Thereafter, because of increased duties under todays regulatory environment and further inflation, the Trustees have, from time to time, petitioned the Court for additional compensation increases, essentially based
on the increases in the Consumer Price Index since 1983. This petition process includes notification to all certificate holders of record and the reversioner, followed by a formal Court hearing and opportunity by certificate holders and reversioner to comment. The Court, taking into consideration any and all testimony and other materials filed, has approved of increases to the Trustees (other than the CEO) on four different occasions since 1906, the last being July 1, 2005.



Because the compensation of the Trustees (other than the CEO) is set forth by the Trust Agreement (as modified by Court Orders), there are no stock awards, option awards, non-equity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings or all other compensation. Accordingly, such columns in the table and the corresponding supplemental tables have been omitted.



Item 12.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY HOLDER MATTERS




(a)
        The only authorized securities of the Registrant are Trustees Certificates of Beneficial Interest. These securities are traded on the New York Stock Exchange under the ticker symbol GNI (CUSIP No. 391064102). The holders of these securities do not have voting rights. The Trust is not aware of any entities holding more than 5% of the Certificates of Beneficial Interest outstanding, of record and/or beneficially, as of December 31, 2006.




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Item 12.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY HOLDER MATTERS  Continued




(b)
        Joseph S. Micallef, President of the Trustees and Chief Executive Officer of Great Northern Iron Ore Properties, is a trustee of a Revocable Trust of Carole R. Conlee, which owned 167 Certificates of Beneficial Interest of the Trust as of December 31, 2006. Although Mr. Micallef may be deemed a beneficial owner of the Certificates of Beneficial Interest of Great Northern Iron Ore Properties held by the Revocable Trust of Carole R. Conlee, he disclaims any beneficial interest in such Certificates. There were no other Certificates of Beneficial Interest of Great Northern Iron Ore Properties owned or pledged by the Trustees or officers of the Trust as of December 31, 2006.




Item 13.
        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE




There are no certain relationships or related transactions requiring disclosure under this section. Director independence is set forth in Item 10. Directors, Executive Officers and Corporate Governance of this report.



Item 14.
        PRINCIPAL ACCOUNTANT FEES AND SERVICES




All audit and non-audit services (printing and reproduction services) were preapproved by the Audit Committee. Estimated fees in 2006 for the annual audit services are $75,750, for audited-related services are $1,300, for tax services are $0 and for all other services are $2,750. Fees paid in 2005 for the annual audit services were $67,700, for audit-related services were $1,300, for tax services were $0 and for all other services were $2,750.



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PART IV



Item 15.
        EXHIBITS, FINANCIAL STATEMENT SCHEDULES




(a)
        (1)
        The following financial statements of Great Northern Iron Ore Properties are included in the Registrants Annual Report to Certificate Holders for the year ended December 31, 2006, attached hereto as Exhibit 13, and are incorporated by reference in Item 8:




Balance Sheets  December 31, 2006 and 2005.



Statements of Beneficiaries Equity  Years ended December 31, 2006, 2005 and 2004.



Statements of Income  Years ended December 31, 2006, 2005 and 2004.



Statements of Cash Flows  Years ended December 31, 2006, 2005 and 2004.



Notes to Financial Statements  December 31, 2006.



(2)
        All Item 15(c) schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.




(3)
        Listing of Exhibits  See the Exhibit Index immediately following the signature page.




(b)
        Exhibits  The response to this portion of Item 15 is set forth above in Item 15(a)(3) of this report.




(c)
        Financial Statement Schedules  The response to this portion of Item 15 is set forth above in Item 15(a)(2) of this report.




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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



GREAT NORTHERN IRON ORE PROPERTIES(Registrant)/s/ Joseph S. Micallef
        
        February 14, 2007Joseph S. Micallef, Chief Executive Officer,Trustee and President of the Trustees
        
        Date




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



/s/ Roger W. Staehle
        
        February 14, 2007Roger W. Staehle, Trustee
        
        Date






/s/ Robert A. Stein
        
        February 14, 2007Robert A. Stein, Trustee
        
        Date






/s/ John H. Roe, III
        
        February 14, 2007John H. Roe, III, Trustee
        
        Date






/s/ Thomas A. Janochoski
        
        February 14, 2007Thomas A. Janochoski, Vice President & Secretary, Chief Financial Officer
        
        Date






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ANNUAL REPORT ON FORM 10-K



EXHIBIT INDEX



YEAR ENDED DECEMBER 31, 2006



GREAT NORTHERN IRON ORE PROPERTIES



W-1290 First National Bank Building

332 Minnesota Street

Saint Paul, Minnesota 55101-1361



Exhibit 3  Copy of Trust Agreement and Rules and Regulations for Management of the Trust (filed as Exhibit A to Form 11 of Great Northern Iron Ore Properties filed on May 6, 1935, as published under date of March 30, 1935, and incorporated by reference)



Exhibit 4  Specimen of Securities Registered Hereunder (filed as Exhibit E to Form 11 of Great Northern Iron Ore Properties filed on May 6, 1935, as published under date of March 30, 1935, and incorporated by reference)



Exhibit 10  Court Order on Trustee Compensation dated October 20, 2005 (filed as Exhibit 10 to Form 10-K of Great Northern Iron Ore Properties filed on February 25, 2006, and incorporated by reference)



Exhibit 13  Annual Report to Certificate Holders



Exhibit 23  Consent of Independent Registered Public Accounting Firm



Exhibit 31.1  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



Exhibit 31.2  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



Exhibit 32  Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished but not filed)



Exhibit 99(a)  Tax Return Guide



Exhibit 99(b)  Audit Committee Charter



Exhibit 99(c)  Report of Audit Committee

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