Exhibit 13  Annual Report to Certificate Holders   GREAT NORTHERN IRON
ORE PROPERTIES      __________________       One Hundred Fourth
Annual Report of the Trustees
to Certificate Holders      for
Year Ended December 31, 2010   For information about the termination of the Trust in the year 2015,
please refer to pages 3 & 4 of this annual report.


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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 312010
     
     2009
     
     2008
     
     2007
     
     2006Shipments from our mines (pellet tons)
     
     
     7,301,034
     
     
     5,833,828
     
     
     7,415,480
     
     
     8,136,429
     
     
     8,851,919Royalties
     
     $
     20,633,285
     
     $
     14,565,946
     
     $
     20,058,791
     
     $
     16,586,881
     
     $
     17,045,244Other income
     
     $
     232,521
     
     $
     260,997
     
     $
     716,617
     
     $
     609,738
     
     $
     509,437Net income
     
     $
     17,468,842
     
     $
     11,448,504
     
     $
     17,632,148
     
     $
     14,452,437
     
     $
     14,773,035Total assets
     
     $
     17,383,092
     
     $
     16,697,897
     
     $
     19,943,203
     
     $
     17,525,876
     
     $
     18,510,076Liability for pension benefits(see Note E to theFinancial Statements)
     
     $
     1,349,314
     
     $
     1,463,719
     
     $
     1,889,417
     
     $
     979,064
     
     $
     1,237,412Average 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
     
     $
     11.65
     
     $
     7.63
     
     $
     11.75
     
     $
     9.63
     
     $
     9.85Declared distributions per share
     
     $
     12.25
     (1)
     $
     8.00
     (2)
     $
     11.70
     (3)
     $
     10.00
     (4)
     $
     10.30
     (5)
  __________________  (1)  $2.00 pd 4/30/10; $2.75 pd 7/30/10; $3.75 pd 10/29/10; $3.75 pd 1/31/11 (2)  $1.80 pd 4/30/09; $1.80 pd 7/31/09; $1.80 pd 10/30/09; $2.60 pd 1/29/10 (3)  $2.00 pd 4/30/08; $2.10 pd 7/31/08; $3.10 pd 10/31/08; $4.50 pd 1/30/09 (4)  $2.00 pd 4/30/07; $2.30 pd 7/31/07; $2.80 pd 10/31/07; $2.90 pd 1/31/08 (5)  $2.00 pd 4/28/06; $2.20 pd 7/31/06; $2.80 pd 10/31/06; $3.30 pd 1/31/07     2


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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 (including information about the termination of the Trust), 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 2010, 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 royalties, over the minimum royalty requirements, due on future taconite production, if any and when mined, against unabsorbed 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 Company) 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   3


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values as of December 31, 2010, the net monies were approximately $7,486,000 and the Principal Charges account balance was approximately $4,840,000, resulting in a final distribution payable of approximately $12,326,000, or about $8.22 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 2011 to registered certificate holders of record with holdings on any of the four quarterly record dates during 2010.  This information included the following:  Substitute Form 1099-MISC This form reported the registered certificate holders 2010 allocable share of income from the Trust, distributions declared and any taxes withheld. (Foreign registered certificate holders received a Form 1042-S.)  Trust Supplemental Statement This statement reported the number of units (shares) held by the registered certificate holder on any of the four quarterly record dates in 2010.  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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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 1,053 registered certificate holders of record on December 31, 2010.  The high and low prices for the quarterly periods commencing January 1, 2009, through December 31, 2010, inclusive, were as follows:  2010
     
     2009Quarter
     
     
     High
     
     Low
     
     High
     
     LowFirst
     
     $
     104.00
     
     $
     83.00
     
     $
     93.50
     
     $
     60.40Second
     
     
     99.94
     
     
     83.75
     
     
     94.98
     
     
     75.01Third
     
     
     120.00
     
     
     90.00
     
     
     96.00
     
     
     75.25Fourth
     
     
     156.98
     
     
     114.98
     
     
     95.47
     
     
     89.00
  Results of Operations:  Royalties for 2010 were greater than those of 2009 primarily due to increased taconite mining on our lands and an overall higher average earned royalty rate caused by escalation of producer price indices.  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.  Other income for 2010 was less than that of 2009 primarily due to reduced yields on our investments.  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.  Expenses for 2010 were comparable to those of 2009, while Expenses for 2009 were greater than those of 2008 primarily due to a higher pension expense (see Note E to the Financial Statements).  Net income for 2010 was greater than that of 2009 primarily due to increased Royalties (as explained above).  Net income for 2009 was less than that of 2008 primarily due to decreased Royalties (as explained above).  The Liability for pension benefits as of December 31, 2010, was less than that as of December 31, 2009, which was less than that as of December 31, 2008, primarily due to improved returns 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 2010 totaling $12.25 per share.  The first, in the amount of $2.00 per share, was paid on April 30, 2010, to certificate holders of record on March 31, 2010; the second, in the amount of $2.75 per share, was paid on July 30, 2010, to certificate holders of record on June 30, 2010; the third, in the amount of $3.75 per share, was paid on October 29, 2010, to certificate holders of record on September 30, 2010; and the fourth, in the amount of $3.75 per share, was paid on January 31, 2011, to certificate holders of record on December 31, 2010.  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.   5


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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 2011 to certificate holders of record on March 31, 2011.  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, 2010:  Payments Due by PeriodTotal
     
     Less than 
1 year
     
     1  3
years
     
     3  5
years
     
     More than 
5 yearsFuture Pension Contributions(see Note E to the Financial Statements)
     
     $
     1,349,314
     
     $
     
     
     $
     
     
     $
     1,349,314
     
     $
     Deferred Compensation
     
     
     181,500
     
     
     
     
     
     
     
     
     181,500
     
     
     St. Paul Office Leases(see Note G to the Financial Statements)
     
     
     30,912
     
     
     30,912
     
     
     
     
     
     
     
     
     
  Critical Accounting Policies:  Royalties from 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 royalties, over the minimum royalty requirements, due 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.  ThePrincipal Charges accountrepresents 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   6


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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: Fair Value Measurements: In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements.  This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurements as set forth in Accounting Standards Codification (ASC) Subtopic 820-10.  The FASBs objective is to improve these disclosures and, thus, increase the transparency in financial reporting.  The Trust adopted the provisions of ASU No. 2010-06, effective January 1, 2010; however, the adoption of this ASU had no impact on the Trusts financial statements.  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 Keetac (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.   7


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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 2011 is dependent, in part, upon the economys continued overall recovery.  Barring any unexpected production cutbacks from our lessees mining plans in 2011, we currently anticipate the results for the year 2011 to be comparable to those of 2010.  Respectfully submitted,  Joseph S. Micallef,President of the Trusteesand Chief Executive Officer
     Roger W. Staehle, Trustee
Robert A. Stein, Trustee
James E. Swearingen, TrusteeThomas A. Janochoski,Vice President & Secretaryand Chief Financial Officer
     Saint Paul, Minnesota 
February 18, 2011
     8


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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, 2010.  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, 2010, 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 23 and 24.  Respectfully submitted,Joseph S. Micallef,Chief Executive Officer andPresident of the TrusteesThomas A. Janochoski,Chief Financial Officer andVice President & Secretary
      9


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GREAT NORTHERN IRON ORE PROPERTIES  BALANCE SHEETS  ASSETSDecember 312010
     
     2009Current AssetsCash and cash equivalents
     
     $
     668,310
     
     $
     924,234United States Treasury securities (Note B)
     
     
     5,013,272
     
     
     3,970,025Royalties receivable
     
     
     6,041,224
     
     
     3,575,737Prepaid expenses
     
     
     4,519
     
     
     4,519Total Current Assets
     
     
     11,727,325
     
     
     8,474,515Noncurrent AssetsUnited States Treasury securities (Note B)
     
     
     3,025,924
     
     
     5,018,513PropertiesMineral and surface lands (Notes B and C)
     
     
     39,127,058
     
     
     39,127,058Accumulated depletion and amortization
     
     
     (36,614,977
     )
     
     (36,029,377
     )2,512,081
     
     
     3,097,681Building and equipment
     
     
     313,831
     
     
     302,264Accumulated depreciation
     
     
     (196,069
     )
     
     (195,076
     )117,762
     
     
     107,188Total Properties
     
     
     2,629,843
     
     
     3,204,869Total Assets
     
     $
     17,383,092
     
     $
     16,697,897LIABILITIES AND BENEFICIARIES EQUITYCurrent LiabilitiesAccounts payable and accrued expenses
     
     $
     111,556
     
     $
     112,156Distributions
     
     
     5,625,000
     
     
     3,900,000Total Current Liabilities
     
     
     5,736,556
     
     
     4,012,156Noncurrent LiabilitiesDeferred compensation
     
     
     181,500
     
     
     150,000Liability for pension benefits (Note E)
     
     
     1,349,314
     
     
     1,463,719Total Noncurrent Liabilities
     
     
     1,530,814
     
     
     1,613,719Total Liabilities
     
     
     7,267,370
     
     
     5,625,875Beneficiaries EquityCertificate holders equity, represented by 1,500,000 certificates (shares or units) of beneficial interest authorizedand outstanding, and the reversionary interest (Notes A and D)
     
     
     12,204,529
     
     
     13,110,687Accumulated other comprehensive loss (Note E)
     
     
     (2,088,807
     )
     
     (2,038,665
     )Total Beneficiaries Equity
     
     
     10,115,722
     
     
     11,072,022Total Liabilities and Beneficiaries Equity
     
     $
     17,383,092
     
     $
     16,697,897
  See accompanying notes.   10


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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, 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
     )
     
     11,072,022Comprehensive income:Net income for 2010
     
     
     17,468,842
     
     
     
     
     
     17,468,842Other comprehensive (loss) income:Defined Benefit Pension Plan(Note E):Net loss arising during period
     
     
     
     
     
     (285,325
     )
     
     (285,325
     )Amortization of prior service cost
     
     
     
     
     
     17,469
     
     
     17,469Amortization of net loss
     
     
     
     
     
     217,714
     
     
     217,714Total other comprehensive loss
     
     
     
     
     
     
     
     
     (50,142
     )Total comprehensive income
     
     
     
     
     
     
     
     
     17,418,700Distributions declared for 2010($12.25 per share)
     
     
     (18,375,000
     )
     
     
     
     
     (18,375,000
     )Balance at December 31, 2010
     
     $
     12,204,529
     
     $
     (2,088,807
     )
     $
     10,115,722
  See accompanying notes.   11


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GREAT NORTHERN IRON ORE PROPERTIES  STATEMENTS OF INCOME  Year Ended December 312010
     
     2009
     
     2008RevenuesRoyalties
     
     $
     20,633,285
     
     $
     14,565,946
     
     $
     20,058,791Interest earned
     
     
     74,734
     
     
     158,020
     
     
     340,404Rent and other income
     
     
     157,787
     
     
     102,977
     
     
     376,213Total Revenues
     
     
     20,865,806
     
     
     14,826,943
     
     
     20,775,408ExpensesRoyalty costs
     
     
     4,623
     
     
     4,623
     
     
     4,623Real estate and payroll taxes
     
     
     169,792
     
     
     166,572
     
     
     161,570Inspection and care of properties
     
     
     590,463
     
     
     556,910
     
     
     586,463Administrative and general
     
     
     2,018,365
     
     
     2,048,565
     
     
     1,847,801Depreciation and amortization
     
     
     613,721
     
     
     601,769
     
     
     542,803Total Expenses
     
     
     3,396,964
     
     
     3,378,439
     
     
     3,143,260Net Income
     
     $
     17,468,842
     
     $
     11,448,504
     
     $
     17,632,148Basic and Diluted Earnings per Share
     
     $
     11.65
     
     $
     7.63
     
     $
     11.75Weighted-average Shares Outstanding
     
     
     1,500,000
     
     
     1,500,000
     
     
     1,500,000
  See accompanying notes.   12


---



GREAT NORTHERN IRON ORE PROPERTIES  STATEMENTS OF CASH FLOWS  Year Ended December 312010
     
     2009
     
     2008Operating ActivitiesCash received from royalties and rents
     
     $
     18,325,585
     
     $
     18,038,369
     
     $
     15,978,987Cash paid to suppliers and employees
     
     
     (2,916,890
     )
     
     (2,620,480
     )
     
     (2,665,278
     )Interest received
     
     
     74,076
     
     
     230,606
     
     
     281,853Net Cash Provided by OperatingActivities
     
     
     15,482,771
     
     
     15,648,495
     
     
     13,595,562Investing ActivitiesUnited States Treasury securities purchased
     
     
     (3,575,000
     )
     
     (10,000,000
     )
     
     (3,125,000
     )United States Treasury securities matured
     
     
     4,525,000
     
     
     8,900,000
     
     
     4,975,000Expenditures for building and equipment
     
     
     (38,695
     )
     
     (17,200
     )
     
     (31,798
     )Net Cash Provided by (Used in)Investing Activities
     
     
     911,305
     
     
     (1,117,200
     )
     
     1,818,202Financing ActivitiesDistributions paid
     
     
     (16,650,000
     )
     
     (14,850,000
     )
     
     (15,150,000
     )Net Cash Used in FinancingActivities
     
     
     (16,650,000
     )
     
     (14,850,000
     )
     
     (15,150,000
     )Net (Decrease) Increase in Cash and Cash Equivalents
     
     
     (255,924
     )
     
     (318,705
     )
     
     263,764Cash and Cash Equivalents atBeginning of Year
     
     
     924,234
     
     
     1,242,939
     
     
     979,175Cash and Cash Equivalents atEnd of Year
     
     $
     668,310
     
     $
     924,234
     
     $
     1,242,939Reconciliation of Net Income to NetCash Provided by Operating ActivitiesNet income
     
     $
     17,468,842
     
     $
     11,448,504
     
     $
     17,632,148Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation and amortization
     
     
     613,721
     
     
     601,769
     
     
     542,803Net pension (loss) gain (Note E)
     
     
     (50,142
     )
     
     548,888
     
     
     (1,006,574
     )Net (increase) decrease in assets:Accrued interest
     
     
     (658
     )
     
     72,586
     
     
     (58,551
     )Royalties receivable
     
     
     (2,465,487
     )
     
     3,429,446
     
     
     (4,080,666
     )Mineral and surface lands
     
     
     
     
     
     (60,000
     )
     
     (375,351
     )Net (decrease) increase in liabilities:Accounts payable andaccrued expenses
     
     
     (600
     )
     
     7,800
     
     
     9,000Deferred compensation
     
     
     31,500
     
     
     25,200
     
     
     22,400Liability for pension benefits
     
     
     (114,405
     )
     
     (425,698
     )
     
     910,353Net Cash Provided by Operating Activities
     
     $
     15,482,771
     
     $
     15,648,495
     
     $
     13,595,562
  See accompanying notes.   13


---



GREAT NORTHERN IRON ORE PROPERTIES  NOTES TO FINANCIAL STATEMENTS
December 31, 2010  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: 2010  $10,073,000 and $9,167,000; 2009  $7,677,000 and $6,569,000; and 2008  $11,384,000 and $8,443,000.  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 Company) 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 values as of December 31, 2010, the net monies were approximately $7,486,000 and the Principal Charges account balance was approximately $4,840,000, resulting in a final distribution payable of approximately $12,326,000, or about $8.22 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.  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   14


---



NOTE A  Business and Termination of the Trust and Legal Proceedings (continued)  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, Saint Paul, 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.  By a letter dated March 24, 2010, certificate holders of record as of December 31, 2009, and the reversioner were notified of a hearing on May 5, 2010, in Ramsey County District Court, Saint Paul, Minnesota, for the purpose of settling and allowing the Trust accounts for the year 2009.  By Court Order signed and dated May 5, 2010, the 2009 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.  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: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 2012.  Following is an analysis of the securities as of December 31:  Current
     
     Noncurrent2010
     
     2009
     
     2010
     
     2009Aggregate fair value
     
     $
     5,017,250
     
     $
     3,960,453
     
     $
     3,014,093
     
     $
     5,009,195Gross unrealized  holding gains
     
     
     (13,938
     )
     
     (17,051
     )
     
     (3,358
     )
     
     (5,941
     )Gross unrealized holding losses
     
     
     
     
     
     11
     
     
     4,732
     
     
     5,299Amortized cost basis
     
     
     5,003,312
     
     
     3,943,413
     
     
     3,015,467
     
     
     5,008,553Accrued interest
     
     
     9,960
     
     
     26,612
     
     
     10,457
     
     
     9,960Amounts shown on balance sheets
     
     $
     5,013,272
     
     $
     3,970,025
     
     $
     3,025,924
     
     $
     5,018,513
    15


---



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 2010, 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 $1,533,635, $1,754,327 and $1,598,627 as of January 1, 2010, 2009 and 2008, respectively.  Surface land amortization amounted to $291,600, $280,692 and $220,500 for the years 2010, 2009 and 2008, 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 royalties, over the minimum royalty requirements, due on future taconite production, if any and when mined, against unabsorbed minimum royalties paid in prior periods.  Accumulated minimum royalties in excess of tons extracted to date amounted to $5,070,772 on December 31, 2010, and $3,356,736 on December 31, 2009.  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, 2010, 2009 and 2008.    16


---



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 $0, $60,000 and $376,200 for the years 2010, 2009 and 2008, 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:  2010
     
     2009Attorneys fees and expenses
     
     $
     1,024,834
     
     $
     1,024,834Costs of surface lands
     
     
     6,254,165
     
     
     6,254,165Cumulative shipment credits
     
     
     (2,067,127
     )
     
     (1,976,317
     )Cumulative asset disposition credits
     
     
     (372,124
     )
     
     (372,124
     )Principal Charges account balance
     
     $
     4,839,748
     
     $
     4,930,558
  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.   17


---



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 2010, 2009 and 2008 is as follows:  Net Periodic Pension Cost
     
     2010
     
     2009
     
     2008Service cost
     
     $
     246,423
     
     $
     228,934
     
     $
     226,420Interest cost
     
     
     318,669
     
     
     347,550
     
     
     329,272Expected return on assets
     
     
     (386,983
     )
     
     (327,087
     )
     
     (366,163
     )Amortization of net loss
     
     
     217,714
     
     
     266,324
     
     
     109,203Amortization of prior service cost
     
     
     17,469
     
     
     17,469
     
     
     17,469Net periodic pension cost
     
     
     413,292
     
     
     533,190
     
     
     316,201Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive IncomeNet loss (gain) arising during the period
     
     
     285,325
     
     
     (265,095
     )
     
     1,133,246Amortization of net loss
     
     
     (217,714
     )
     
     (266,324
     )
     
     (109,203
     )Amortization of prior service cost
     
     
     (17,469
     )
     
     (17,469
     )
     
     (17,469
     )Total loss (gain) recognized in other comprehensive income
     
     
     50,142
     
     
     (548,888
     )
     
     1,006,574Total recognized in net periodic pension cost and other comprehensive income
     
     $
     463,434
     
     $
     (15,698
     )
     $
     1,322,775
  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:  2010
     
     
     2009Discount rate for benefit obligation
     4.55
     %
     
     5.05
     %Discount rate for net periodic pension cost
     5.05
     %
     
     5.07
     %Rate of compensation increase
     3.50
     %
     
     3.50
     %Expected long-term return on plan assets
     7.25
     %
     
     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.    18


---



NOTE E  Pension Plan (continued)  The following table sets forth the change in projected benefit obligation:  2010
     
     2009Projected benefit obligation at beginning of year
     
     $
     6,450,399
     
     $
     6,184,704Service cost
     
     
     246,423
     
     
     228,934Interest cost
     
     
     318,669
     
     
     347,550Actuarial loss (gain)
     
     
     439,396
     
     
     (25,454
     )Benefit payments
     
     
     (285,335
     )
     
     (285,335
     )Projected benefit obligation at end of year
     
     $
     7,169,552
     
     $
     6,450,399
  The following table sets forth the change in the fair value of plan assets:  2010
     
     2009Fair value of plan assets at beginning of year
     
     $
     4,986,680
     
     $
     4,295,287Contributions by the Trust
     
     
     577,839
     
     
     410,000Actual return on plan assets
     
     
     541,054
     
     
     566,728Benefit payments
     
     
     (285,335
     )
     
     (285,335
     )Fair value of plan assets at end of year
     
     $
     5,820,238
     
     $
     4,986,680
  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:  2010
     
     2009Accumulated benefit obligation at end of year
     
     $
     5,503,848
     
     $
     4,993,896Effect of future compensation increases
     
     
     1,665,704
     
     
     1,456,503Projected benefit obligation at end of year
     
     
     7,169,552
     
     
     6,450,399Fair value of plan assets at end of year
     
     
     5,820,238
     
     
     4,986,680Unfunded status at end of year
     
     $
     1,349,314
     
     $
     1,463,719
  The following table sets forth the amounts recognized in Accumulated other comprehensive loss as of December 31:  2010
     
     2009Net loss
     
     $
     2,018,933
     
     $
     1,951,322Prior service cost
     
     
     69,874
     
     
     87,343Accumulated other comprehensive loss
     
     $
     2,088,807
     
     $
     2,038,665
  The net loss and prior service cost amounts that will be amortized from Accumulated other comprehensive loss into net periodic pension cost in 2011 are estimated to be $306,348 and $17,469, respectively.  The future benefit payments from the plan are estimated to be $279,348 for 2011, $266,019 for 2012, $252,135 for 2013, $237,748 for 2014, and $687,722 for 2015.  The future benefit payments from the plan for the period 2016 through 2020, inclusive, are estimated to be $3,894,365, in aggregate.  The 2011 contribution to the plan is estimated to approximate $600,000, representing the maximum tax-deductible contribution that is recommended pursuant to the Trusts annual actuarial valuation.  However, the actual 2011 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.   19


---



NOTE E  Pension Plan (continued)  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:  2010
     
     
     2009Fair Value
     
     %
     
     
     Fair Value
     
     %Equity securities
     
     $
     3,221,007
     
     55
     %
     
     $
     2,664,344
     
     53
     %Debt securities  U.S. government issues
     
     
     937,925
     
     16
     
     
     
     803,141
     
     16Debt securities  corporate issues
     
     
     1,490,072
     
     26
     
     
     
     1,214,817
     
     25Cash (money market, accrued income)
     
     
     171,234
     
     3
     
     
     
     304,378
     
     6Total
     
     $
     5,820,238
     
     100
     %
     
     $
     4,986,680
     
     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 2010, 2009 and 2008.   20


---



NOTE H  Quarterly Results of Operations (Unaudited)  The following is a summary of quarterly results of operations (unaudited) for the years ended December 31, 2010 and 2009 (in thousands of dollars, except per share amounts):  Quarter EndedMarch 31
     
     June 30
     
     Sept. 30
     
     Dec. 312010Royalties
     
     $
     3,088
     
     $
     5,257
     
     $
     6,000
     
     $
     6,288Interest and other income
     
     
     82
     
     
     32
     
     
     67
     
     
     52Total revenues
     
     
     3,170
     
     
     5,289
     
     
     6,067
     
     
     6,340Expenses
     
     
     849
     
     
     845
     
     
     824
     
     
     879Net income
     
     $
     2,321
     
     $
     4,444
     
     $
     5,243
     
     $
     5,461Earnings per share
     
     $
     1.55
     
     $
     2.96
     
     $
     3.50
     
     $
     3.642009Royalties
     
     $
     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
     
     $
     1.97
       21


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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, 2010 and 2009, and the related statements of beneficiaries equity, income and cash flows for each of the three years in the period ended December 31, 2010.  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, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, 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, 2010, based on criteria established inInternal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 18, 2011, expressed an unqualified opinion thereon.  /s/ Ernst & Young LLP
   Minneapolis, Minnesota 
February 18, 2011    22


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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, 2010, 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.   23


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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.  In our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria.  We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2010 financial statements of Great Northern Iron Ore Properties, and our report dated February 18, 2011, expressed an unqualified opinion thereon.  /s/ Ernst & Young LLP
   Minneapolis, Minnesota 
February 18, 2011   24


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GREAT NORTHERN IRON ORE PROPERTIES  SUMMARY OF SHIPMENTS  Full Tons ShippedNo.
     
     Mine
     
     Ownership
Interest
     
     2010
     
     2009
     
     2008
     
     Total to
January 1, 20111.
     
     Mahoning
     
     100%
     
     2,153,212
     
     1,235,568
     
     1,797,663
     
     164,358,3932.
     
     Ontario 100%/Stevenson Townsite/Stevenson Annex
     
     100%
     
     701,329
     
     1,427,927
     
     461,613
     
     14,330,9133.
     
     Ontario 50%/Ontario Annex
     
     50%
     
     276,781
     
     420,244
     
     1,197,439
     
     26,195,4684.
     
     L&W/Leetonia
     
     50%/~51%
     
     13,574
     
     
     
     48,816
     
     10,602,6085.
     
     Mississippi #3 (Ent.-Miss.)
     
     100%
     
     678,277
     
     
     
     532,620
     
     7,748,9566.
     
     Section 18 (Ent.-Miss.)
     
     100%
     
     69,144
     
     
     
     
     
     28,066,3037.
     
     Russell Annex
     
     50%
     
     189
     
     
     
     
     
     3,557,2468.
     
     Minntac
     
     100%
     
     3,408,528
     
     2,750,089
     
     3,377,329
     
     77,606,1947,301,034
     
     5,833,828
     
     7,415,480
     
     332,466,081Shipments from inactive mines and those exhausted, 
surrendered or sold prior to this year
     
     
     
     
     
     
     
     
     
     352,697,276Total
     
     
     
     7,301,034
     
     5,833,828
     
     7,415,480
     
     685,163,357
   No.
     
     Operating Interest1-4
     
     Cliffs Mining Company  Hibbing Taconite Company5-7
     
     U.S. Steel Corporation  Keetac8
     
     U.S. Steel Corporation  Minntac
     25


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NOTES                               26


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GREAT NORTHERN IRON ORE PROPERTIESW-1290 FIRST NATIONAL BANK BUILDING
332 MINNESOTA STREET
SAINT PAUL, MINNESOTA 55101-1361                        FIRST CLASS MAIL


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