Exhibit 13

**Annual Report to Certificate Holders**





GREAT NORTHERN IRON
ORE PROPERTIES

















_______________



















ONE HUNDRED THIRD
ANNUAL REPORT OF THE TRUSTEES
TO CERTIFICATE HOLDERS



















FOR
YEAR ENDED DECEMBER 31, 2009



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GREAT NORTHERN IRON ORE PROPERTIES



W-1290 First National Bank Building
332 Minnesota Street
Saint Paul, Minnesota 55101-1361



(651) 224-2385
Fax (651) 224-2387



www.gniop.com



_______________



TRUSTEES
     
     OFFICERSJOSEPH S. MICALLEF
     
     JOSEPH S. MICALLEFPresident of the Trustees
     
     Chief Executive OfficerROGER W. STAEHLE*
     
     THOMAS A. JANOCHOSKIChief Financial OfficerROBERT A. STEIN*
     
     Vice President & SecretaryJAMES E. SWEARINGEN*
     
     ROGER P. JOHNSONChief Engineer*Audit Committee
     
     Manager of Mines


_______________



SHAREHOLDER RELATIONS DEPARTMENT, TRANSFER OFFICE
AND REGISTRAR



Wells Fargo Bank, N.A.
P.O. Box 64854
Saint Paul, Minnesota 55164-0854



Toll-free: 1-800-468-9716



MESABI IRON RANGE OFFICE



801 East Howard Street
Hibbing, Minnesota 55746-0429



(218) 262-3886
Fax (218) 262-4295





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GREAT NORTHERN IRON ORE PROPERTIES



SUMMARY OF OPERATIONS



Year Ended December 312009
     
     2008
     
     2007
     
     2006
     
     2005Shipments from our mines (pellet tons)
     
     
     5,833,828
     
     
     7,415,480
     
     
     8,136,429
     
     
     8,851,919
     
     
     8,673,198Royalties
     
     $
     14,565,946
     
     $
     20,058,791
     
     $
     16,586,881
     
     $
     17,045,244
     
     $
     17,998,451Other income
     
     $
     260,997
     
     $
     716,617
     
     $
     609,738
     
     $
     509,437
     
     $
     362,761Net income
     
     $
     11,448,504
     
     $
     17,632,148
     
     $
     14,452,437
     
     $
     14,773,035
     
     $
     15,720,620Total assets
     
     $
     16,697,897
     
     $
     19,943,203
     
     $
     17,525,876
     
     $
     18,510,076
     
     $
     19,455,519Liability for pension benefits(see Note E to the Financial Statements)
     
     $
     1,463,719
     
     $
     1,889,417
     
     $
     979,064
     
     $
     1,237,412
     
     $
     Average shares outstanding
     
     
     1,500,000
     
     
     1,500,000
     
     
     1,500,000
     
     
     1,500,000
     
     
     1,500,000Earnings per share, based on weighted-average shares outstanding during the year
     
     $
     7.63
     
     $
     11.75
     
     $
     9.63
     
     $
     9.85
     
     $
     10.48Declared distributions per share
     
     $
     8.00
     (1)
     $
     11.70
     (2)
     $
     10.00
     (3)
     $
     10.30
     (4)
     $
     10.40
     (5)


____________________________



(1) $1.80 pd 4/30/09; $1.80 pd 7/31/09; $1.80 pd 10/30/09; $2.60 pd 1/29/10

(2) $2.00 pd 4/30/08; $2.10 pd 7/31/08; $3.10 pd 10/31/08; $4.50 pd 1/30/09

(3) $2.00 pd 4/30/07; $2.30 pd 7/31/07; $2.80 pd 10/31/07; $2.90 pd 1/31/08

(4) $2.00 pd 4/28/06; $2.20 pd 7/31/06; $2.80 pd 10/31/06; $3.30 pd 1/31/07

(5) $2.20 pd 4/29/05; $2.40 pd 7/29/05; $2.80 pd 10/31/05; $3.00 pd 1/31/06





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Trustees & Managements Discussion and Analysis of Financial Condition
and Results of Operations



Overview:Great Northern Iron Ore Properties (the Trust) is a conventional nonvoting trust organized under the laws of the State of Michigan pursuant to a Trust Agreement dated December 7, 1906. The Trust owns interests in fee, both mineral and nonmineral lands, on the Mesabi Iron Range in northeastern Minnesota. Many of these properties are leased to steel and mining companies that mine the mineral lands for taconite iron ore. The Trust has no subsidiaries. With the properties and offices all located in Minnesota, the Trust and matters affecting the Trust are under the jurisdiction of the Ramsey County District Court in Saint Paul, Minnesota.



The Trust maintains a Web site, which can be found at:www.gniop.com. Information about the Trust posted on the Web site includes: General Trust information, Securities and Exchange Commission filings (Forms 10-K, Forms 10-Q, Forms 8-K), Annual Reports, Tax Return Guides, Quarterly Distribution Releases, Quarterly Earnings Releases, Court Hearings, Audit Committee Charter, Code of Ethics, Contact and other information. We will, upon request, be pleased to furnish to any certificate holder or investor, free of charge, a paper copy of any of the above documents for any recent year.



During 2009, the major source of income to the Trust was royalty income derived from taconite production and minimum royalties. Certain leases provide the steel and mining companies the ability to offset excess royalties (over the minimum royalty requirements) due on future taconite production, if any and when mined, against minimum royalties paid in prior periods. A Summary of Shipments is tabulated on the last page of this report.



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 survivor of eighteen persons named in the Trust Agreement. The last survivor of these eighteen persons died on April 6, 1995. Accordingly, the Trust terminates twenty years from April 6, 1995, that being April 6, 2015.



At the end of the Trust on 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 (see Note D to the Financial Statements). All other Trust property (most notably the Trusts mineral properties and the active leases) 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.



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





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values as of December 31, 2009, the net monies were approximately $7,867,000 and the Principal Charges account balance was approximately $4,931,000, resulting in a final distribution payable of approximately $12,798,000, or about $8.53 per share. After payment of this final distribution, the certificates of beneficial interest (shares) would be cancelled and 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. The Trust offers this example to further inform investors about the conceptual nature of the final distribution and does not imply or guarantee a specific known final distribution amount.



The Trust is primarily involved with the leasing and care of its properties. The management of the Trust is vested in the Trustees. The Trustees have no duty to sell property unless required to do so to serve both the term beneficiaries and the reversionary beneficiary impartially; and, if the need arises, the Trustees may petition the Court for further instructions defining what is required in a particular case to balance the interests of the certificate holders and reversioner. The major source of income to the Trust is earned royalties derived from taconite production from the Trusts properties by the Trusts lessees (customers) and minimum royalties, pursuant to mineral leases. Earned royalties are based on the taconite tonnage extracted (also referred to as produced or shipped) from the Trusts lands applied to a royalty rate as defined in the various specific and confidential operating agreements (also referred to as leases) with the Trusts lessees. Certain leases have minimum royalty provisions that require the lessee to remit to the Trust current year rental or minimum royalty income for holding the leasehold interest. The leases are generally very long-term in nature and, while they periodically are amended at the request of a lessee, the Trust is bound by the lease provisions throughout the term of the lease.



Pursuant to a Court Order in 1988, the Trustees filed an election under Section 646 of the Tax Reform Act of 1986, as amended, of the Internal Revenue Code with the Internal Revenue Service that allowed the Trust to be taxed as a grantor trust versus a corporation. Accordingly, certificate holders (shareholders) are taxed on their allocable share of the Trusts income whether or not the income is distributed.



The Trustees provided annual income tax information in January 2010 to certificate holders of record with holdings on any of the four quarterly record dates during 2009. This information included the following:



Substitute Form 1099-MISC This form reported the certificate holders 2009 allocable share of income from the Trust, distributions declared and any taxes withheld. (Foreign certificate holders received a Form 1042-S.)



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 2009.



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.



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Shares of beneficial interest in the Trust are traded on the New York Stock Exchange under the ticker symbol GNI (CUSIP No. 391064102). There were 1,147 certificate holders of record on December 31, 2009. The high and low prices for the quarterly periods commencing January 1, 2008, through December 31, 2009, inclusive, were as follows:



2009
     
     2008Quarter
     
     High
     
     Low
     
     High
     
     LowFirst
     
     $
     93.50
     
     $
     60.40
     
     $
     145.91
     
     $
     108.00Second
     
     
     94.98
     
     
     75.01
     
     
     132.01
     
     
     105.35Third
     
     
     96.00
     
     
     75.25
     
     
     116.38
     
     
     65.00Fourth
     
     
     95.47
     
     
     89.00
     
     
     94.25
     
     
     39.91




Results of Operations:Royalties for 2009 were less than those of 2008 primarily due to reduced taconite mining on our lands and an overall lower average earned royalty rate caused by de-escalation of producer price indices, offset in part by higher net minimum royalties. Royalties for 2008 were greater than those of 2007 primarily due to an overall higher average earned royalty rate caused by escalation of producer price indices, offset in part by reduced taconite mining on our lands. Other income for 2009 was less than that of 2008 primarily due to the receipt of fees in 2008 associated with an agreement pertaining to the new Essar Steel Minnesota, LLC taconite mining and steelmaking facility to be constructed on the Mesabi Iron Range. Other income for 2008 was greater than that of 2007 primarily due to the aforementioned receipt of fees associated with an agreement pertaining to the Essar Steel Minnesota, LLC taconite mining and steelmaking facility. Expenses for 2009 were greater than those of 2008 primarily due to higher pension expense (see Note E to the Financial Statements). Expenses for 2008 were greater than those of 2007 primarily due to the Trusts implementation of mineral land amortization (see Note B to the Financial Statements). Net income for 2009 was less than that of 2008 primarily due to decreased Royalties (as explained above). Net income for 2008 was the highest in the history of the Trust, greater than that of 2007 primarily due to increased Royalties (as explained above). The liability for pension benefits as of December 31, 2009, was less than that as of December 31, 2008, primarily due to a favorable return in 2009 on pension plan assets. The liability for pension benefits as of December 31, 2008, was greater than that as of December 31, 2007, primarily due to a loss incurred in 2008 on pension plan assets. Please refer to Note E to the Financial Statements for additional pension plan information.



The Trustees declared four quarterly distributions in 2009 totaling $8.00 per share. The first, in the amount of $1.80 per share, was paid on April 30, 2009, to certificate holders of record on March 31, 2009; the second, in the amount of $1.80 per share, was paid on July 31, 2009, to certificate holders of record on June 30, 2009; the third, in the amount of $1.80 per share, was paid on October 30, 2009, to certificate holders of record on September 30, 2009; and the fourth, in the amount of $2.60 per share, was paid on January 29, 2010, to certificate holders of record on December 31, 2009.



The Trustees declared four quarterly distributions in 2008 totaling $11.70 per share. The first, in the amount of $2.00 per share, was paid on April 30, 2008, to certificate holders of record on March 31, 2008; the second, in the amount of $2.10 per share, was paid on July 31, 2008, to certificate holders of record on June 30, 2008; the third, in the amount of $3.10 per share, was paid on October 31, 2008, to certificate holders of record on September 30, 2008;



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and the fourth, in the amount of $4.50 per share, was paid on January 30, 2009, to certificate holders of record on December 31, 2008.



The Trustees intend to continue quarterly distributions and set the record date as of the last business day of each quarter. The next distribution will be paid in late April 2010 to certificate holders of record on March 31, 2010.



Liquidity:In the interest of preservation of principal of Court-approved reserves and guided by the restrictive provisions of Section 646 of the Tax Reform Act of 1986, as amended, monies are invested primarily in United States Treasury securities with maturity dates not to exceed three years and, along with cash flows from operations, are deemed adequate to meet currently foreseeable liquidity needs. The following is a table of the Trusts contractual obligations as of December 31, 2009:



Payments Due by PeriodTotal
     
     Less than
1 year
     
     1  3
years
     
     3  5
years
     
     More than
5 yearsMinimum Pension Contributions(see Note E to the Financial Statements)
     
     $
     1,463,719
     
     $
     120,961
     
     $
     241,922
     
     $
     241,922
     
     $
     858,914Deferred Compensation
     
     
     150,000
     
     
     
     
     
     
     
     
     
     
     
     150,000St. Paul Office Leases(see Note G to the Financial Statements)
     
     
     30,912
     
     
     30,912
     
     
     
     
     
     
     
     
     




The Minimum Pension Contributions in the above table represent the current year minimum contribution required to fund the pension plan pursuant to ERISA regulations, which is extended to future years until the pension liability on the balance sheet is funded.



Critical Accounting Policies:Royaltiesfrom the Trusts mineral leases are taken into income as earned. Tonnage extracted is agreed upon between Trust and lessee engineers based on various engineering methods, which include truck counts, volumetric surveys and blast pattern estimates. Many of the leases provide for escalation or de-escalation that, for the most part, is based on independent producer price indices as published by the U.S. Department of Labor  Bureau of Labor Statistics. In addition, a number of the Trusts leases have minimum royalty provisions that require the lessee to remit to the Trust current year rental or minimum royalty income for holding the leasehold interest, regardless of production. These minimum royalties can accumulate and do allow the steel and mining companies the ability to offset excess royalties (over the minimum royalty requirements) on future taconite production. Minimum royalties, if not recovered before the termination of the lease, are forfeitable and are not refundable under any circumstance.



Pension Plan Valuationsare based on a number of assumptions used to determine the benefit obligation and net periodic pension cost. These assumptions are evaluated annually by the Trustees and management in conjunction with outside actuaries. Assumptions affecting the pension plan valuations include the discount rate, compensation increase level and expected long-term rate of return on plan assets. These assumptions reflect and incorporate the expected cash flow payouts of the pension plan given the determinate time frame to the termination of the Trust. Please refer to Note E to the Financial Statements for additional pension plan information.



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The Principal Chargesaccount represents a first and prior lien of certificate holders on any property transferable to the reversioner at the end of the Trust and reflects an allocation of beneficiaries equity between the certificate holders and the reversioner. This Court-ordered account is neither an asset nor a liability of the Trust. Rather, this account maintains and represents a balance that will be payable to the certificate holders of record from the reversioner at the end of the Trust. The account balance, as stated in Note D to the Financial Statements, primarily represents the costs of acquiring homes and surface lands in accordance with provisions of a lease with U.S. Steel Corporation. This account balance, which may increase or decrease, will be added to the cash distributable to the certificate holders of record at the termination of the Trust.



Recently Adopted Accounting Standards:

Codification:In July 2009, the Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) became the single official source of authoritative, nongovernmental generally accepted accounting principles (GAAP) in the United States. This guidance is contained in ASC Topic 105, Generally Accepted Accounting Principles. The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the Securities and Exchange Commission. This guidance is effective for interim and annual periods ending after September 15, 2009. The Trust adopted the provisions of this guidance as of September 30, 2009. The Trusts accounting policies were not affected by the conversion to the ASC. However, references to specific accounting standards have been changed to refer to the appropriate section of the ASC.



Fair Value Measurements:In September 2006, the FASB issued guidance that defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This guidance is contained in ASC Topic 820, Fair Value Measurements and Disclosures. This guidance does not require any new fair value measurements, but applies under other accounting pronouncements that require or permit fair value measurements. The effective date of this guidance for financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis was January 1, 2008, and the Trust did adopt the provisions of this guidance at that time as it related to financial assets and liabilities recognized or disclosed at fair value on a recurring basis. Effective January 1, 2009, pursuant to this guidance, the Trust adopted the provisions of this guidance as it relates to non-financial assets and liabilities that are not recognized or disclosed at fair value on a recurring basis. The adoption of this guidance had no impact on the Trusts financial statements as the Trust does not have any non-financial assets or liabilities required to be recognized or disclosed at fair value at the date of adoption.



In April 2009, the FASB issued guidance that extends the disclosure requirements regarding the fair value of financial instruments to interim financial statements of publicly traded companies. This guidance is primarily contained in ASC Topic 825, Financial Instruments, and ASC Topic 270, Interim Reporting. This guidance is effective for interim periods ending after June 15, 2009. The Trust adopted the provisions of this guidance as of June 30, 2009, and has included the required disclosures in the applicable footnotes within the Forms 10-Q as necessary.



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Subsequent Events:In May 2009, the FASB issued guidance that is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or are available to be issued. This guidance is contained in ASC Topic 855, Subsequent Events. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This guidance is effective for interim and annual periods ending after June 15, 2009. The Trust adopted the provisions of this guidance as of June 30, 2009. Management has evaluated events and transactions as of the date and time the financial statements were issued and filed with the Securities and Exchange Commission, that being February 18, 2010. No events or transactions have occurred subsequent to December 31, 2009, through the date and time of the filing on February 18, 2010, that would have a material impact on the financial statements as of December 31, 2009.



Forward-Looking and Cautionary Statements:Certain expectations and projections regarding future performance of the Trust 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 the Trusts control. We caution readers that in addition to factors described elsewhere in this report, the following factors and comments, among others, could cause the Trusts operations and financial results to differ materially from the expectations and projections contained in the forward-looking statements.



The Trustslessees (customers)primarily include Minntac (Minntac) and Keewatin Taconite Company (Keetac), both owned and operated by U.S. Steel Corporation; Hibbing Taconite Company (Hibtac), owned by Arcelor-Mittal, Cliffs Natural Resources Inc. and U.S. Steel Corporation, and operated by Cliffs Mining Company; and Essar Steel Minnesota, LLC (ESM or MSI), owned by Essar Steel Holdings Ltd., a subsidiary of Essar Global Ltd., with a new taconite mining and steelmaking facility to be constructed by ESM over the next few years. Because the Trusts revenues are primarily dependent upon a limited number of customers, any significant adverse event at any of the Trusts primary lessees, or the loss of any of the Trusts primary lessees, could materially adversely affect the Trusts future financial results.



A decline inmarket demandfor steel, and correspondingly taconite, could adversely affect the Trusts financial results. However, other related and sometimes compensating factors include the Trusts lessees operating levels, minimum royalties, ore body quality, metallurgical and geological characteristics, and proximity of Trust lands. Also sometimes affecting taconite production from Trust lands are extreme weather conditions and labor contracts at the mines. Though the Trust is not a party to the labor contracts, all pertinent labor contracts affecting production from Trust lands run through August 31, 2012. Additionally, over the past few years, the domestic steel and taconite industries have also been influenced by the global markets. As a result, future demand for domestic steel and taconite, which is now part of the global markets, is uncertain. While any cut in production by any of our lessees can adversely affect the Trust, continued receipt of minimum royalties do mitigate this effect, in part.



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Royalty ratescan fluctuate due to the escalation and de-escalation of producer price indices as a result of provisions present in many of the Trusts 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.



Compliance with Section 646 of the Internal Revenue Code,as explained in Note F to the Financial Statements, is integral to the level of distributions paid to the certificate holders. Should it be determined that the Trust violated the requirements of Section 646, it would be taxed as a corporation versus a grantor trust. This would mean the Trusts income would be taxable upon receipt by the Trust and again upon receipt by the certificate holders. It is the Trustees opinion that the Trust has remained in compliance with the provisions of Section 646 since its election in 1988.



Theoutlookfor 2010 is dependent, in part, upon the overall demand for steel production, which impacts overall taconite production. There are signs of improvement as many of the taconite facilities on the Mesabi Iron Range in northeastern Minnesota are again operating in 2010, albeit not necessarily at capacity. The taconite facility operators continue to adjust their operating rates to match supply with demand. Hence, while we do currently expect the year 2010 to be a better year than 2009, it is difficult to predict with any certainty the outcome of 2010, which is dependent, in part, upon the economys overall recovery.

__________________



On a closing note, the Trustees wish to recognize the contributions made by fellow Trustee John H. Roe III, who passed away on July 13, 2009, following a brief illness. Mr. Roe served as a Trustee of Great Northern Iron Ore Properties for approximately eight years, beginning on September 1, 2001. His business acumen, extensive executive experience, practical approach to decision making and pleasant manner all greatly helped the Trust in its business operations during his tenure. He will be missed by his fellow Trustees and the employees of the Trust.



In a press release dated October 19, 2009, the Trustees announced the appointment of James E. Swearingen to the Board of Trustees, effective December 1, 2009, to fill the vacancy created by the death of Trustee John H. Roe III. By Court Order dated October 19, 2009, the appointment of Mr. Swearingen was confirmed by the Ramsey County District Court, Saint Paul, Minnesota, with an effective date of December 1, 2009. Mr. Swearingen is currently a director with PolyMet Mining Corporation, a non-ferrous operation in northeastern Minnesota primarily mining for nickel and copper. He also serves as an advisory director on the University of Minnesotas Natural Resource Research Institute. Mr. Swearingen resigned and retired in March 2003 as the General Manager of U.S. Steels Minntac taconite facility in northeastern Minnesota on the Mesabi Iron Range, the largest mining operation in North America. He has also previously served as the co-chair on the Governors Committee on Minnesotas Mining Future, as a director of the Iron Mining Association of Minnesota, as a director of the American Iron Ore Association, and as a consultant in the mining industry. He is a graduate of Winona State University, majoring in Business, and also attended the University of Minnesota for post-graduate studies in Accounting. In the opinion of the other Trustees, Mr. Swearingens considerable business



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experience and mining background will be of great benefit to both the certificate holders and the reversioner.



Respectfully submitted,



Joseph S. Micallef,
     Roger W. Staehle, TrusteePresident of the Trustees
and Chief Executive Officer
     Robert A. Stein, Trustee
James E. Swearingen, TrusteeThomas A. Janochoski,Vice President & Secretary
and Chief Financial Officer
     Saint Paul, Minnesota
February 18, 2010




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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING



The management of Great Northern Iron Ore Properties (the Trust) is responsible for establishing and maintaining adequate internal control over financial reporting. The Trusts internal control system was designed to provide reasonable assurance to the Trusts management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.



The Trusts management assessed the effectiveness of the Trusts internal control over financial reporting as of December 31, 2009. In making this assessment, it used the criteria set forth in a report by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) titledInternal Control  Integrated Framework.Based on our assessment, we believe that, as of December 31, 2009, the Trusts internal control over financial reporting is effective based on the COSO criteria.



The Trusts Independent Registered Public Accounting Firm, Ernst & Young LLP, has issued an audit report on the Trusts internal control over financial reporting. Their report appears on pages 25 and 26.



Respectfully submitted,Joseph S. Micallef,Chief Executive Officer and
President of the TrusteesThomas A. Janochoski,Chief Financial Officer and
Vice President & Secretary








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GREAT NORTHERN IRON ORE PROPERTIES



BALANCE SHEETS



ASSETSDecember 312009
     
     2008CURRENT ASSETSCash and cash equivalents
     
     $
     924,234
     
     $
     1,242,939United States Treasury securities(Note B)
     
     
     3,970,025
     
     
     4,755,035Royalties receivable
     
     
     3,575,737
     
     
     7,005,183Prepaid expenses
     
     
     4,519
     
     
     4,519TOTAL CURRENT ASSETS
     
     
     8,474,515
     
     
     13,007,676NONCURRENT ASSETSUnited States Treasury securities(Note B)
     
     
     5,018,513
     
     
     3,206,089PROPERTIESMineral and surface lands(Notes B and C)
     
     
     39,127,058
     
     
     39,067,058Accumulated depletion and amortization
     
     
     (36,029,377
     )
     
     (35,454,685
     )3,097,681
     
     
     3,612,373Building and equipment
     
     
     302,264
     
     
     307,435Accumulated depreciation
     
     
     (195,076
     )
     
     (190,370
     )107,188
     
     
     117,065TOTAL PROPERTIES
     
     
     3,204,869
     
     
     3,729,438TOTAL ASSETS
     
     $
     16,697,897
     
     $
     19,943,203LIABILITIES AND BENEFICIARIES EQUITYCURRENT LIABILITIESAccounts payable and accrued expenses
     
     $
     112,156
     
     $
     104,356Distributions
     
     
     3,900,000
     
     
     6,750,000TOTAL CURRENT LIABILITIES
     
     
     4,012,156
     
     
     6,854,356NONCURRENT LIABILITIESDeferred compensation
     
     
     150,000
     
     
     124,800Liability for pension benefits(Note E)
     
     
     1,463,719
     
     
     1,889,417TOTAL NONCURRENT LIABILITIES
     
     
     1,613,719
     
     
     2,014,217TOTAL LIABILITIES
     
     
     5,625,875
     
     
     8,868,573BENEFICIARIES EQUITYCertificate holders equity, represented by 1,500,000 certificates (shares or units) of beneficial interest authorized and outstanding, and the reversionary interest(Notes A and D)
     
     
     13,110,687
     
     
     13,662,183Accumulated other comprehensive loss(Note E)
     
     
     (2,038,665
     )
     
     (2,587,553
     )TOTAL BENEFICIARIES EQUITY
     
     
     11,072,022
     
     
     11,074,630TOTAL LIABILITIES AND BENEFICIARIES EQUITY
     
     $
     16,697,897
     
     $
     19,943,203




See accompanying notes.



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GREAT NORTHERN IRON ORE PROPERTIES



STATEMENTS OF BENEFICIARIES EQUITY



Certificate Holders Equity
     
     Accumulated
Other
Comprehensive
(Loss) Income
     
     Total
Beneficiaries
EquityBALANCE AT DECEMBER 31, 2006
     
     $
     14,127,598
     
     $
     (1,966,352
     )
     $
     12,161,246Comprehensive income:Net income for 2007
     
     
     14,452,437
     
     
     
     
     
     14,452,437Other comprehensive income:Defined Benefit Pension Plan(Note E):Net gain arising during period
     
     
     
     
     
     212,342
     
     
     212,342Amortization of prior service cost
     
     
     
     
     
     17,469
     
     
     17,469Amortization of net loss
     
     
     
     
     
     155,562
     
     
     155,562Total other comprehensive income
     
     
     
     
     
     
     
     
     385,373Total comprehensive income
     
     
     
     
     
     
     
     
     14,837,810Distributions declared for 2007 ($10.00 per share)
     
     
     (15,000,000
     )
     
     
     
     
     (15,000,000
     )BALANCE AT DECEMBER 31, 2007
     
     
     13,580,035
     
     
     (1,580,979
     )
     
     11,999,056Comprehensive income:Net income for 2008
     
     
     17,632,148
     
     
     
     
     
     17,632,148Other comprehensive (loss)income:Defined Benefit Pension Plan(Note E):Net loss arising during period
     
     
     
     
     
     (1,133,246
     )
     
     (1,133,246
     )Amortization of prior service cost
     
     
     
     
     
     17,469
     
     
     17,469Amortization of net loss
     
     
     
     
     
     109,203
     
     
     109,203Total other comprehensive loss
     
     
     
     
     
     
     
     
     (1,006,574
     )Total comprehensive income
     
     
     
     
     
     
     
     
     16,625,574Distributions declared for 2008 ($11.70 per share)
     
     
     (17,550,000
     )
     
     
     
     
     (17,550,000
     )BALANCE AT DECEMBER 31, 2008
     
     
     13,662,183
     
     
     (2,587,553
     )
     
     11,074,630Comprehensive income:Net income for 2009
     
     
     11,448,504
     
     
     
     
     
     11,448,504Other comprehensive income:Defined Benefit Pension Plan(Note E):Net gain arising during period
     
     
     
     
     
     265,095
     
     
     265,095Amortization of prior service cost
     
     
     
     
     
     17,469
     
     
     17,469Amortization of net loss
     
     
     
     
     
     266,324
     
     
     266,324Total other comprehensive income
     
     
     
     
     
     
     
     
     548,888Total comprehensive income
     
     
     
     
     
     
     
     
     11,997,392Distributions declared for 2009 ($8.00 per share)
     
     
     (12,000,000
     )
     
     
     
     
     (12,000,000
     )BALANCE AT DECEMBER 31, 2009
     
     $
     13,110,687
     
     $
     (2,038,665
     )
     $
     11,072,022




See accompanying notes.



13

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GREAT NORTHERN IRON ORE PROPERTIES



STATEMENTS OF INCOME



Year Ended December 312009
     
     2008
     
     2007REVENUESRoyalties
     
     $
     14,565,946
     
     $
     20,058,791
     
     $
     16,586,881Interest earned
     
     
     158,020
     
     
     340,404
     
     
     450,928Rent and other income
     
     
     102,977
     
     
     376,213
     
     
     158,810TOTAL REVENUES
     
     
     14,826,943
     
     
     20,775,408
     
     
     17,196,619EXPENSESRoyalty disbursements
     
     
     4,623
     
     
     4,623
     
     
     4,623Real estate and payroll taxes
     
     
     166,572
     
     
     161,570
     
     
     149,219Inspection and care of properties
     
     
     556,910
     
     
     586,463
     
     
     548,865Administrative and general
     
     
     2,048,565
     
     
     1,847,801
     
     
     1,784,819Depreciation and amortization
     
     
     601,769
     
     
     542,803
     
     
     256,656TOTAL EXPENSES
     
     
     3,378,439
     
     
     3,143,260
     
     
     2,744,182NET INCOME
     
     $
     11,448,504
     
     $
     17,632,148
     
     $
     14,452,437BASIC AND DILUTED EARNINGS PER SHARE
     
     $
     7.63
     
     $
     11.75
     
     $
     9.63




See accompanying notes.







14

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GREAT NORTHERN IRON ORE PROPERTIES



STATEMENTS OF CASH FLOWS



Year Ended December 312009
     
     2008
     
     2007OPERATING ACTIVITIESCash received from royalties and rents
     
     $
     18,038,369
     
     $
     15,978,987
     
     $
     18,265,620Cash paid to suppliers and employees
     
     
     (2,620,480
     )
     
     (2,665,278
     )
     
     (2,324,163
     )Interest received
     
     
     230,606
     
     
     281,853
     
     
     506,214NET CASH PROVIDED BY OPERATING ACTIVITIES
     
     
     15,648,495
     
     
     13,595,562
     
     
     16,447,671INVESTING ACTIVITIESUnited States Treasury securities purchased
     
     
     (10,000,000
     )
     
     (3,125,000
     )
     
     (6,000,000
     )United States Treasury securities matured
     
     
     8,900,000
     
     
     4,975,000
     
     
     5,000,000Expenditures for building and equipment
     
     
     (17,200
     )
     
     (31,798
     )
     
     NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
     
     
     (1,117,200
     )
     
     1,818,202
     
     
     (1,000,000
     )FINANCING ACTIVITIESDistributions paid
     
     
     (14,850,000
     )
     
     (15,150,000
     )
     
     (15,600,000
     )NET CASH USED IN FINANCING ACTIVITIES
     
     
     (14,850,000
     )
     
     (15,150,000
     )
     
     (15,600,000
     )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
     
     
     (318,705
     )
     
     263,764
     
     
     (152,329
     )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
     
     
     1,242,939
     
     
     979,175
     
     
     1,131,504CASH AND CASH EQUIVALENTS AT END OF YEAR
     
     $
     924,234
     
     $
     1,242,939
     
     $
     979,175RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIESNet income
     
     $
     11,448,504
     
     $
     17,632,148
     
     $
     14,452,437Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
     
     
     601,769
     
     
     542,803
     
     
     256,656Net pension gain (loss)(Note E)
     
     
     548,888
     
     
     (1,006,574
     )
     
     385,373Net decrease (increase) in assets:Accrued interest
     
     
     72,586
     
     
     (58,551
     )
     
     55,286Royalties receivable
     
     
     3,429,446
     
     
     (4,080,666
     )
     
     1,519,929Mineral and surface lands
     
     
     (60,000
     )
     
     (375,351
     )
     
     Net increase (decrease) in liabilities:Accounts payable and accrued expenses
     
     
     7,800
     
     
     9,000
     
     
     10,938Deferred compensation
     
     
     25,200
     
     
     22,400
     
     
     25,400Liability for pension benefits
     
     
     (425,698
     )
     
     910,353
     
     
     (258,348
     )NET CASH PROVIDED BY OPERATING ACTIVITIES
     
     $
     15,648,495
     
     $
     13,595,562
     
     $
     16,447,671




See accompanying notes.



15

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GREAT NORTHERN IRON ORE PROPERTIES



NOTES TO FINANCIAL STATEMENTS
December 31, 2009



NOTE A  BUSINESS AND TERMINATION OF THE TRUST AND LEGAL PROCEEDINGS



Great Northern Iron Ore Properties (the Trust) is presently involved solely with the leasing and maintenance of mineral and nonmineral lands owned by the Trust on the Mesabi Iron Range in northeastern Minnesota. Royalties are derived from taconite production and minimums. Royalties (which are not in direct ratio to tonnage shipped) from two significant operating lessees were as follows: 2009  $7,677,000 and $6,569,000; 2008  $11,384,000 and $8,443,000; and 2007  $11,993,000 and $4,363,000.



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 survivor of eighteen persons named in the Trust Agreement. The last survivor of these eighteen persons died on April 6, 1995. Accordingly, the Trust terminates twenty years from April 6, 1995, that being April 6, 2015.



At the end of the Trust on 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 (see Note D). All other Trust property (most notably the Trusts mineral properties and the active leases) 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.



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 the 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.



16

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NOTE A  BUSINESS AND TERMINATION OF THE TRUST AND LEGAL PROCEEDINGS (continued)



By a letter dated March 24, 2009, certificate holders of record as of December 31, 2008, and the reversioner were notified of a hearing on May 6, 2009, in Ramsey County District Court, Saint Paul, Minnesota, for the purpose of settling and allowing the Trust accounts for the year 2008. By Court Order signed and dated May 6, 2009, the 2008 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.



Pursuant to a Petition before a Judge of the Ramsey County District Court, Saint Paul, Minnesota, a Court Order was granted, signed and dated October 19, 2009, confirming the appointment of successor Trustee James E. Swearingen, effective December 1, 2009, which vacancy was created by the passing of Trustee John H. Roe III on July 13, 2009.



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.



NOTE B  SIGNIFICANT ACCOUNTING POLICIES



Cash and Cash Equivalents:For purposes of the statements of cash flows, the Trust considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.



Securities:United States Treasury securities are classified as held-to-maturity securities and are carried at cost, adjusted for accrued interest and amortization of premium or discount. The aggregate fair values listed in the table below are based on quoted prices in active markets for identical assets (Level 1). Securities recognized as noncurrent assets will mature in 2011. Following is an analysis of the securities as of December 31:



Current
     
     Noncurrent2009
     
     2008
     
     2009
     
     2008Aggregate fair value
     
     $
     3,960,453
     
     $
     4,782,617
     
     $
     5,009,195
     
     $
     3,221,953Gross unrealized holding gains
     
     
     (17,051
     )
     
     (80,220
     )
     
     (5,941
     )
     
     (42,476
     )Gross unrealized holding losses
     
     
     11
     
     
     
     
     
     5,299
     
     
     Amortized cost basis
     
     
     3,943,413
     
     
     4,702,397
     
     
     5,008,553
     
     
     3,179,477Accrued interest
     
     
     26,612
     
     
     52,638
     
     
     9,960
     
     
     26,612Amounts shown on balance sheets
     
     $
     3,970,025
     
     $
     4,755,035
     
     $
     5,018,513
     
     $
     3,206,089






17

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NOTE B  SIGNIFICANT ACCOUNTING POLICIES (continued)



Mineral and Surface Lands:Mineral and surface lands are carried at amounts that represent, principally, either costs at acquisition or values on March 1, 1913, net of accumulated amortization. The value of the merchantable ore deposits was established on March 1, 1913, for federal income tax purposes. No value has been estimated or recorded for taconite deposits held on March 1, 1913, since they were not then thought to be merchantable; however, they presently represent all the mining activity on the Trusts properties. There presently is no cost depletion, as no natural ore mining from mineral lands is occurring. Given that the focus of the mining industry is essentially now taconite mining versus natural ore mining, the asset class Mineral and surface lands was reevaluated and, beginning in 2008, the cost of the mineral lands is being amortized on a straight-line basis over the remaining term of the Trust. The straight-line method of amortization bears close resemblance to the units-of-production method over the remaining term of the Trust and, accordingly, is deemed a reasonable, systematic and rational method to associate expense with the revenues generated from taconite mining. Mineral land amortization amounted to $294,000 in each of the years 2009 and 2008. Nonmineral lands are also included in this category; however, they represent negligible amounts.



In addition, surface lands are acquired from time to time to facilitate mining operations (see Note C). These surface lands are being amortized on a straight-line basis over the remaining term of the Trust based on the values as of the beginning of each fiscal year. Surface lands remaining to be amortized amounted to 1,754,327, $1,598,627 and $1,819,127 as of January 1, 2009, 2008 and 2007, respectively. Surface land amortization amounted to $280,692, $220,500 and $220,500 for the years 2009, 2008 and 2007, respectively.



Royalties:Royalties from mineral leases (with cancellation terms varying from six months to one year) are taken into income as earned. Earned royalties are based on the taconite tonnage extracted (also referred to as produced or shipped) from the Trusts lands applied to a royalty rate as defined in the various specific and confidential operating agreements (also referred to as leases). Minimum royalties, if required, are current years rental or minimum royalty income from the lessees to the Trust for holding the leasehold interest. Certain leases provide the steel and mining companies the ability to offset excess royalties (over the minimum royalty requirements) due on future taconite production, if any and when mined, against minimum royalties paid in prior periods. Accumulated minimum royalties in excess of tons extracted to date amounted to $3,356,736 on December 31, 2009, and $2,288,174 on December 31, 2008.



Use of Estimates:The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Earnings per Share:Earnings per share are determined by dividing net income for the period by the number of weighted-average shares of beneficial interest outstanding. Basic and diluted weighted-average shares outstanding were 1,500,000 as of December 31, 2009, 2008 and 2007.



18

---





NOTE B  SIGNIFICANT ACCOUNTING POLICIES (continued)



Subsequent Events:Management has evaluated events and transactions as of the date and time the financial statements were issued and filed with the Securities and Exchange Commission, that being February 18, 2010. No events or transactions have occurred subsequent to December 31, 2009, through the date and time of the filing on February 18, 2010, that would have a material impact on the financial statements as of December 31, 2009.



NOTE C  LAND ACQUISITION



A mining agreement dated January 1, 1959, with U.S. Steel Corporation provides that one-half of annual earned royalties, after satisfaction of minimum royalty payments, shall be applied, in exchange for royalty payments, to reimburse the lessee for a portion of its cost of acquisition of surface lands overlying the leased mineral deposits, which surface lands are then conveyed to the Trustees (see Note B). The costs of surface lands acquired to facilitate the mining operations amounted to $60,000, $376,200 and $0 for the years 2009, 2008 and 2007, respectively. There are surface lands yet to be purchased, the costs of which are yet unknown and will not be known until the actual purchases are made.



NOTE D  PRINCIPAL CHARGES ACCOUNT



Pursuant to the Court Order of November 29, 1982, the Trustees were directed to create and maintain an account designated as Principal Charges. This account constitutes a first and prior lien of certificate holders on any property transferable to the reversioner and reflects an allocation of beneficiaries equity between the certificate holders and the reversioner. This account is neither an asset nor a liability of the Trust. Rather, this account maintains and represents a balance that will be payable to the certificate holders of record from the reversioner at the end of the Trust. The balance in this account consists of attorneys fees and expenses of counsel for adverse parties pursuant to the Court Order in connection with litigation commenced in 1972 relating to the Trustees powers and duties under the Trust Agreement and the costs of homes and surface lands acquired in accordance with provisions of a lease with U.S. Steel Corporation, net of an allowance to amortize the cost of the land based on actual shipments of taconite and net of a credit for disposition of tangible assets. Following is an analysis of this account as of December 31:



2009
     
     2008Attorneys fees and expenses
     
     $
     1,024,834
     
     $
     1,024,834Costs of surface lands
     
     
     6,254,165
     
     
     6,194,165Cumulative shipment credits
     
     
     (1,976,317
     )
     
     (1,884,823
     )Cumulative asset disposition credits
     
     
     (372,124
     )
     
     (372,124
     )Principal Charges account balance
     
     $
     4,930,558
     
     $
     4,962,052




Upon termination of the Trust, the Trustees shall either sell tangible assets or obtain a loan with tangible assets as security to provide monies for distribution to the certificate holders in the amount of the Principal Charges account balance.



19

---





NOTE E  PENSION PLAN



The Trust has a noncontributory defined benefit pension plan that covers all employees. The Trustees are not eligible for pension benefits under the plan based on their services as Trustees. The pension accounting guidance requires employers with pension plans to recognize the funded (or unfunded) status of a plan on the face of the balance sheet. The funded status is determined by comparing the pension plan assets at fair value to the projected (future) benefit obligation.



A summary of the components of net periodic pension cost and other amounts recognized in other comprehensive income for 2009, 2008 and 2007 is as follows:



Net Periodic Pension Cost
     
     2009
     
     2008
     
     2007Service cost
     
     $
     228,934
     
     $
     226,420
     
     $
     241,382Interest cost
     
     
     347,550
     
     
     329,272
     
     
     327,841Expected return on assets
     
     
     (327,087
     )
     
     (366,163
     )
     
     (345,689
     )Amortization of net loss
     
     
     266,324
     
     
     109,203
     
     
     155,562Amortization of prior service cost
     
     
     17,469
     
     
     17,469
     
     
     17,469Net periodic pension cost
     
     
     533,190
     
     
     316,201
     
     
     396,565Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive IncomeNet (gain) loss arising during the period
     
     
     (265,095
     )
     
     1,133,246
     
     
     (212,342
     )Amortization of net loss
     
     
     (266,324
     )
     
     (109,203
     )
     
     (155,562
     )Amortization of prior service cost
     
     
     (17,469
     )
     
     (17,469
     )
     
     (17,469
     )Total (gain) loss recognized in other comprehensive income
     
     
     (548,888
     )
     
     1,006,574
     
     
     (385,373
     )Total recognized in net periodic pension cost and other comprehensive income
     
     $
     (15,698
     )
     $
     1,322,775
     
     $
     11,192




Weighted-average assumptions used in the measurement of the benefit obligation as of December 31 and the net periodic pension cost for the years ended December 31 were:



2009
     
     2008Discount rate for benefit obligation
     5.05%
     
     5.07%Discount rate for net periodic pension cost
     5.07%
     
     5.10%Rate of compensation increase
     3.50%
     
     3.50%Expected long-term return on plan assets
     7.50%
     
     7.50%




The determination of the discount rate is based on a high-quality bond yield curve that approximates the expected cash flow payouts of the plan, coupled with a comparison to the Moodys Long-term Corporate Aa Bond Yield. The determination of the rate of compensation increase is based on historical salary adjustment averages and the Trustees expectations of future increases. The determination of the expected long-term return on plan assets is based on historical returns of the various asset categories included in the plans portfolio and a consideration of the Trusts termination date.



20

---







The following table sets forth the change in projected benefit obligation:



2009
     
     2008Projected benefit obligation at beginning of year
     
     $
     6,184,704
     
     $
     5,850,762Service cost
     
     
     228,934
     
     
     226,420Interest cost
     
     
     347,550
     
     
     329,272Actuarial (gain) loss
     
     
     (25,454
     )
     
     31,021Benefit payments
     
     
     (285,335
     )
     
     (252,771
     )Projected benefit obligation at end of year
     
     $
     6,450,399
     
     $
     6,184,704




The following table sets forth the change in the fair value of plan assets:



2009
     
     2008Fair value of plan assets at beginning of year
     
     $
     4,295,287
     
     $
     4,871,698Contributions by the Trust
     
     
     410,000
     
     
     412,422Actual return (loss) on plan assets
     
     
     566,728
     
     
     (736,062
     )Benefit payments
     
     
     (285,335
     )
     
     (252,771
     )Fair value of plan assets at end of year
     
     $
     4,986,680
     
     $
     4,295,287




The following table sets forth the plans funded status and amounts recognized in the balance sheets shown as liability for pension benefits as of December 31:



2009
     
     2008Accumulated benefit obligation at end of year
     
     $
     4,993,896
     
     $
     4,781,436Effect of future compensation increases
     
     
     1,456,503
     
     
     1,403,268Projected benefit obligation at end of year
     
     
     6,450,399
     
     
     6,184,704Fair value of plan assets at end of year
     
     
     4,986,680
     
     
     4,295,287Unfunded status at end of year
     
     $
     $1,463,719
     
     $
     1,889,417




The following table sets forth the amounts recognized in accumulated other comprehensive loss as of December 31:



2009
     
     2008Net loss
     
     $
     1,951,322
     
     $
     2,482,741Prior service cost
     
     
     87,343
     
     
     104,812Accumulated other comprehensive loss
     
     $
     2,038,665
     
     $
     2,587,553




The net loss and prior service cost amounts that will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2010 are estimated to be $217,714 and $17,469, respectively.



The future benefit payments from the plan are estimated to be $280,234 for 2010, $268,813 for 2011, $256,769 for 2012, $244,142 for 2013, and $230,992 for 2014. The future benefit payments from the plan for the period 2015 through 2019, inclusive, are estimated to be $3,412,674, in aggregate. The 2010 contribution to the plan is estimated to approximate $625,000, representing the maximum tax-deductible contribution that is recommended pursuant to the Trusts annual actuarial valuation. However, the actual 2010 contribution will not be determined and finalized until after the completion of the plans annual actuarial valuation which is performed as of the plans fiscal year-end, March 31.

21

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The investment policy of the plan is to have up to approximately 55% invested in equity securities (via an equity index fund) and the remaining monies invested in fixed income (debt) securities and cash. The equity portfolio strategy is to generate appreciation and growth in the plans overall value over the long-term with its benchmark being the S&P 500 Index. The debt portfolio strategy is to generate income for the payment of benefits as well as investment diversification with its benchmark being the Barclays Capital Government/Credit Index. The cash portfolio strategy is to provide liquidity for the payment of benefits to current retirees. The fair value measurements are based on quoted prices in active markets for identical assets (Level 1). The following table sets forth the plans weighted-average asset allocations by category as of December 31:



2009
     
     2008Equity securities
     53
     %
     38
     %Debt securities  U.S. government issues
     16
     %
     25
     %Debt securities  corporate issues
     25
     %
     21
     %Cash (money market, accrued income)
     6
     %
     16
     %Total
     100
     %
     100
     %




NOTE F  INCOME TAXES



The Trustees filed an election under Section 646 of the Tax Reform Act of 1986, as amended. As discussed in Note A, beginning in 1989 the Trust is no longer subject to federal or Minnesota corporate income taxes, provided the requirements of Section 646 are met. The principal requirements are:




     The Trust must be exclusively engaged in the leasing of mineral properties and activities incidental thereto.
     The Trust must not acquire any additional property other than permissible acquisitions as provided by Section 646.




If these requirements are violated, the Trust will be treated as a corporation for the taxable year in which the violation occurs and for all subsequent taxable years. Since the election of Section 646, the Trust has remained in compliance with these requirements.



NOTE G  LEASE COMMITMENTS



The Trust leases office facilities in Saint Paul, Minnesota. These leases include one-­hundred-eighty-day cancellation clauses, contain various renewal options and exclude any contingent rental provisions. Rental expense for these operating leases amounted to $61,823 in each of the years 2009, 2008 and 2007.



22

---





NOTE H  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



The following is a summary of quarterly results of operations (unaudited) for the years ended December 31, 2009 and 2008 (in thousands of dollars, except per share amounts):



Quarter EndedMarch 31
     
     June 30
     
     Sept. 30
     
     Dec. 312009Royalties
     
     $
     5,208
     
     $
     3,552
     
     $
     1,996
     
     $
     3,810Interest and other income
     
     
     84
     
     
     58
     
     
     75
     
     
     44Total revenues
     
     
     5,292
     
     
     3,610
     
     
     2,071
     
     
     3,854Expenses
     
     
     861
     
     
     834
     
     
     781
     
     
     903Net income
     
     $
     4,431
     
     $
     2,776
     
     $
     1,290
     
     $
     2,951Earnings per share
     
     $
     2.95
     
     $
     1.85
     
     $
     0.86
     
     $
     1.972008Royalties
     
     $
     2,275
     
     $
     3,539
     
     $
     6,973
     
     $
     7,272Interest and other income
     
     
     145
     
     
     99
     
     
     84
     
     
     388Total revenues
     
     
     2,420
     
     
     3,638
     
     
     7,057
     
     
     7,660Expenses
     
     
     683
     
     
     663
     
     
     963
     
     
     834Net income
     
     $
     1,737
     
     $
     2,975
     
     $
     6,094
     
     $
     6,826Earnings per share
     
     $
     1.16
     
     $
     1.98
     
     $
     4.06
     
     $
     4.55




****



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REPORT OF ERNST & YOUNG LLP,
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM,
ON AUDIT OF FINANCIAL STATEMENTS



The Trustees

Great Northern Iron Ore Properties



We have audited the accompanying balance sheets of Great Northern Iron Ore Properties (the Trust) as of December 31, 2009 and 2008, and the related statements of beneficiaries equity, income and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Trusts management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Trust at December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.



We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Great Northern Iron Ore Properties internal control over financial reporting as of December 31, 2009, based on criteria established inInternal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 18, 2010, expressed an unqualified opinion thereon.



/s/ Ernst & Young LLP

Minneapolis, Minnesota
February 18, 2010



24

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REPORT OF ERNST & YOUNG LLP,
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM,
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Trustees

Great Northern Iron Ore Properties



We have audited Great Northern Iron Ore Properties (the Trust) internal control over financial reporting as of December 31, 2009, based on criteria established inInternal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Trusts management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Trusts internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.



25

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In our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.



We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2009 financial statements of Great Northern Iron Ore Properties, and our report dated February 18, 2010, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
February 18, 2010







26

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GREAT NORTHERN IRON ORE PROPERTIES



SUMMARY OF SHIPMENTS



Full Tons ShippedNo.
     
     Mine
     
     Ownership
Interest
     
     2009
     
     2008
     
     2007
     
     Total to
January 1, 20101.
     
     Mahoning
     
     100%
     
     1,235,568
     
     1,797,663
     
     1,014,294
     
     162,205,1812.
     
     Ontario 100%/Stevenson Townsite
     
     100%
     
     1,427,927
     
     461,613
     
     
     
     13,629,5843.
     
     Ontario 50%
     
     50%
     
     420,244
     
     1,197,439
     
     1,200,775
     
     25,918,6874.
     
     L&W/Leetonia
     
     50%/~51%
     
     
     
     48,816
     
     548,650
     
     10,589,0345.
     
     Mississippi #3 (Ent.-Miss.)
     
     100%
     
     
     
     532,620
     
     801,717
     
     7,070,6796.
     
     Stevenson (Ent.-Miss.)
     
     100%
     
     
     
     
     
     154,856
     
     35,246,4187.
     
     Minntac
     
     100%
     
     2,750,089
     
     3,377,329
     
     4,416,137
     
     74,197,6665,833,828
     
     7,415,480
     
     8,136,429
     
     328,857,249Shipments from inactive mines and those exhausted,
    surrendered or sold prior to this year
     
     
     
     
     
     
     
     
     
     349,005,074TOTAL
     
     
     
     5,833,828
     
     7,415,480
     
     8,136,429
     
     677,862,323






No.
     
     Operating Interest1-4
     
     Cliffs Mining Company  Hibbing Taconite Company5-6
     
     U.S. Steel Corporation  Keewatin Taconite Company7
     
     U.S. Steel Corporation  Minntac












27

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NOTES























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GREAT NORTHERN IRON ORE PROPERTIESW-1290 FIRST NATIONAL BANK BUILDING
332 MINNESOTA STREET
SAINT PAUL, MINNESOTA 55101-1361
     
     FIRST CLASSU.S. POSTAGEPAIDPERMIT #43MINNEAPOLIS, MN





























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