# EXHIBIT 13  ANNUAL REPORT TO CERTIFICATE HOLDERS

# GREAT NORTHERN IRON
ORE PROPERTIES

# __________________________

# NINETY-EIGHTH ANNUAL
REPORT OF THE TRUSTEES TO CERTIFICATE HOLDERS

# FOR YEAR ENDED DECEMBER 31, 2004



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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

__________________

TRUSTEES
     OFFICERSJOSEPH S. MICALLEF
     JOSEPH S. MICALLEFPresident of the Trustees
     Chief Executive OfficerROGER W. STAEHLE*
     THOMAS A. JANOCHOSKIAdjunct Professor
     Vice President and SecretaryUniversity of Minnesota
     Chief Financial OfficerROBERT A. STEIN*
     ROGER P. JOHNSONExecutive Director
     Manager of MinesAmerican Bar Association
     Chief EngineerJOHN H. ROE, III*Chairman of the BoardBemis Company, Inc.


*Audit Committee

_________________

# 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 31 |  
|------------------------------------------------------------------------------------ |  | ---------------------- | -
|                                                                                     |  | 2004                   |  
|Shipments from our mines (tons)                                                      |  |                        |  
|Royalty income                                                                       |  |                        | $
|Other income                                                                         |  |                        | $
|Net income                                                                           |  |                        | $
|Total assets                                                                         |  |                        | $
|Average shares outstanding                                                           |  |                        |  
|Earnings per share, based on weighted-average     shares outstanding during the year |  |                        | $
|Declared distributions per share                                                     |  |                        | $

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(1)   $1.80 pd 4/30/04; $1.90 pd 7/30/04; $2.10 pd 10/29/04; $2.40 pd 1/31/05
(2)   $1.50 pd 4/30/03; $1.60 pd 7/31/03; $1.70 pd 10/31/03; $1.70 pd 1/30/04
(3)   $1.10 pd 4/30/02; $1.40 pd 7/31/02; $1.40 pd 10/31/02; $1.50 pd 1/31/03
(4)   $1.40 pd 4/30/01; $1.50 pd 7/31/01; $1.50 pd 10/31/01; $1.60 pd 1/31/02
(5)   $1.10 pd 4/28/00; $1.50 pd 7/31/00; $1.80 pd 10/31/00; $2.40 pd 1/31/01

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

Overview:   Great Northern Iron Ore Properties (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 northern
Minnesota. With the properties and offices all located in Minnesota, the Trust is under the jurisdiction of the Ramsey County
District Court in St. Paul, Minnesota.

The terms of the Great Northern Iron Ore Properties Trust Agreement state that the Trust shall continue
for twenty years after the death of the last surviving of eighteen persons named therein. The last survivor of these eighteen
named in the Trust Agreement died April 6, 1995. Accordingly, the Trust now terminates twenty years from April 6, 1995,
that being April 6, 2015. The termination of the Trust on April 6, 2015, means that there will be no trading of the
Trusts 1,500,000 certificates of beneficial interest (shares) on the New York Stock Exchange beyond that date.

At the end of the Trust, all monies remaining in the hands of the Trustees (after paying and providing
for all expenses and obligations of the Trust) shall be distributed ratably among the certificate holders (term beneficiaries),
while all property other than monies shall be conveyed and transferred to the reversionary beneficiary (formerly Lake Superior
Company, Limited) or its successors or assigns (currently Glacier Park Company, a wholly owned subsidiary of Burlington Resources,
Inc.). In addition, by the terms of a District Court Order dated November 29, 1982, the reversioner, in effect, is required
to pay the balance in the Principal Charges account (as explained in Note D of the Financial Statements) which primarily
represents the costs of acquiring homes and surface lands on the iron formation that are necessary for the orderly mine
development by United States Steel Corporation under its 1959 lease with the Trustees. 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.

The Trust is solely 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 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

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leases have minimum royalty provisions that require payment to the Trust 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 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. A Tax Return Guide is prepared by the Trust and mailed annually to investors, which is intended to assist
them in their preparation of their income tax returns with respect to income allocated from the Trust.

Results of Operations:   Royalty income for 2004 was greater than that
of 2003 primarily due to increases in our royalty rates due to escalation of producer price indices. Royalty income
for 2003 was greater than that of 2002 primarily due to increased tonnage mined from Trust lands. Other income for
2004 was less than that of 2003, which was less than that of 2002, mainly due to reduced yields on our funds held for investment.
Net income for 2004 was the highest in the history of the Trust, greater than that of 2003 primarily due to increased
Royalty income (as explained above). Net income for 2003 was greater than that of 2002 primarily due to increased
Royalty income, offset in part by an increase in expenses caused mainly by additional pension costs, Trustee compensation and
shareholder relations expenditures.

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 only contractual obligations are operating
leases for office facilities (see Note G of the Financial Statements) and deferred compensation listed as Noncurrent Liabilities
in the Balance Sheet, both deemed to have a minimal effect on future liquidity.

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. Many of the leases provide for escalation or de-escalation which, 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 pay the Trust a payment for holding the
leasehold interest, regardless of production. These minimum royalties can accumulate and do provide the mining companies the
ability to offset excess royalties (over the minimum royalty requirements) on future taconite production. Minimum

4

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royalties, if not recovered before the termination of the lease, are forfeitable. In that event, no
minimum royalties will be returned to the lessee.

Pension Plan Valuations are based on a number of assumptions used to determine the benefit
obligation and asset valuation. These assumptions are evaluated annually by the Trustees and management in conjunction with
outside actuaries. Assumptions affecting the pension plan valuations, which include the discount rate, compensation increase level
and expected long-term rate of return, among other items, are not expected to have a significant impact on the Trusts
financial costs and cash flow. Please refer to Note E of the Financial Statements for additional pension plan information.

The Principal Charges account 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 which 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 of the Financial Statements, primarily represents the costs of
acquiring homes and surface lands in accordance with provisions of a lease with United States 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.

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 change and adversely affect the Trusts operations and financial results.

Lessees (customers) of the Trust primarily include the Minntac and Keewatin Taconite plants,
owned and operated by United States Steel Corporation, and the Hibbing Taconite plant, owned by International Steel Group,
Cleveland Cliffs Inc. and Stelco, and operated by Cleveland Cliffs Inc. Because the Trusts revenues are primarily dependent
upon a limited number of customers, there are associated inherent risks resulting therefrom. While the steel and taconite
industries are currently flourishing, 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.

Market demand for steel, and correspondingly taconite, could also affect the Trusts
financial results. However, other related factors include our lessees operating levels, ore body quality, metallurgical and
geological characteristics, proximity of Trust lands, extreme weather conditions and labor contracts at the mines. Though

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the Trust is not a party to these labor contracts, all pertinent labor contracts affecting production
from Trust lands have been ratified by the steelworkers and extend until mid-2008.

Income tax provision compliance with Section 646, as explained in Note F of 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 as distributions.
It is the Trustees opinion that the Trust has remained in compliance with the provisions of Section 646 since its
election.

The outlook for 2005 is expected to be a continuation of the positive trend from 2004. Barring
decreases in the producer price indices, which are used in the calculation of royalty rates that are applied to taconite
production, 2005 should be another good year for the Trust.

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#### MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Great Northern Iron Ore Properties (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, 2004. In making this assessment, it used the criteria set forth in a report by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) on Internal Control  Integrated
Framework. Based on our assessment, we believe that, as of December 31, 2004, 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 our assessment of the Trusts internal control over financial reporting. Their report appears on pages 21
and 22.

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


7

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Letter to Certificate Holders:

The Trustees of Great Northern Iron Ore Properties
(Trust) own fee title to certain mineral and nonmineral lands situated on the Mesabi Iron Range of Minnesota. Many of
these properties are leased to companies that mine the ores. The Trust has no subsidiaries.

During 2004, the major source of income to the Trust was
royalty derived from taconite production and minimum royalties. Certain leases provide the mining companies the ability to offset
excess royalties due on future production, if any and when mined, against minimum royalties paid in prior periods. Accumulated
minimum royalties amounted to $2,496,209 on December 31, 2004. A Summary of Shipments is tabulated on the last page of this
report.

The Trustees declared four quarterly distributions in
2004 totaling $8.20 per share. The first, in the amount of $1.80 per share, was paid on April 30, 2004, to certificate
holders of record on March 31, 2004; the second, in the amount of $1.90 per share, was paid on July 30, 2004, to
certificate holders of record on June 30, 2004; the third, in the amount of $2.10 per share, was paid on October 29,
2004, to certificate holders of record on September 30, 2004; and the fourth, in the amount of $2.40 per share, was paid on
January 31, 2005, to certificate holders of record on December 31, 2004.

The Trustees declared four quarterly distributions in
2003 totaling $6.50 per share. The first, in the amount of $1.50 per share, was paid on April 30, 2003, to certificate
holders of record on March 31, 2003; the second, in the amount of $1.60 per share, was paid on July 31, 2003, to
certificate holders of record on June 30, 2003; the third, in the amount of $1.70 per share, was paid on October 31,
2003, to certificate holders of record on September 30, 2003; and the fourth, in the amount of $1.70 per share, was paid on
January 30, 2004, to certificate holders of record on December 31, 2003.

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 2005 to
certificate holders of record on March 31, 2005.

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 1,596 certificate holders of
record on December 31, 2004. The high and low prices for the quarterly periods commencing January 1, 2003 through
December 31, 2004 were as follows:

2004

2003Quarter

High

Low

High

LowFirst


$
98.50

$
84.00

$
72.50

$
62.60Second



101.00


88.26


80.75


68.25Third



120.00


96.03


87.25


76.80Fourth



127.75


96.30


97.67


77.25


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The following is a summary of quarterly results of
operations (unaudited) for the years ended December 31, 2004 and 2003 (in thousands of dollars, except per share
amounts):

|                          |  | Quarter Ended |  
|------------------------- |  | ------------- | -
|                          |  | March 31      |  
|2004                      | 
|Royalty income            |  |               | $
|Interest and other income |  |               |  
|                          |  |               |  
|Gross income              |  |               |  
|Expenses                  |  |               |  
|                          |  |               |  
|Net income                |  |               | $
|                          |  |               |  
|Earnings per share        |  |               | $
|                          |  |               |  
|                         
|2003                      |  |              
|Royalty income            |  |               | $
|Interest and other income |  |               |  
|                          |  |               |  
|Gross income              |  |               |  
|Expenses                  |  |               |  
|                          |  |               |  
|Net income                |  |               | $
|                          |  |               |  
|Earnings per share        |  |               | $
|                          |  |               |  

As previously reported, Section 646 of the Tax Reform
Act of 1986, as amended, provided a special elective provision under which the Trust was allowed to convert from taxation as a
corporation to that of a grantor trust. Pursuant to an Order of the Ramsey County District Court, the Trustees filed the Section
646 election with the Internal Revenue Service on December 30, 1988. 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.

A Tax Return Guide was mailed in January 2005 to all
record date certificate holders shown on our stock transfer agents records during 2004. This guide was intended
to assist the investor in addressing many of the issues that arise in reporting the Trust operations for federal and state income
tax purposes due to Section 646.

We will, upon request, be happy to furnish certificate
holders an Annual Report on Form 10-K and a Tax Return Guide for any recent year.

| | Respectfully submitted,
| | -----------------------

| | Joseph S. Micallef
Robert A. Stein | Roger W. Staehle
John H. Roe, III
| | ---------------------------------- | ---------------------------------

Saint Paul, MinnesotaJanuary 28, 2005

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#### GREAT NORTHERN IRON ORE PROPERTIES
 
STATEMENTS OF INCOME

|                                                                                                                                  |  | Year Ended December 31 |                       
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----------------------
|                                                                                                                                  |  | 2004                   |                       
|REVENUES                                                                                                                          |  |                       
|Royalties                                                                                                                         |  |                        | $                     
|Interest earned                                                                                                                   |  |                        |                       
|Rent and other                                                                                                                    |  |                        |                       
|                                                                                                                                  |  |                        |                       
|                                                                                                                                  |  |                        |                       
|EXPENSES                                                                                                                          |  |                       
|Royalties                                                                                                                         |  |                        |                       
|Real estate and payroll taxes                                                                                                     |  |                        |                       
|Inspection and care of property                                                                                                   |  |                        |                       
|Administrative and general                                                                                                        |  |                        |                       
|Provision for depreciation and amortization                                                                                       |  |                        |                       
|                                                                                                                                  |  |                        |                       
|                                                                                                                                  |  |                        |                       
|                                                                                                                                  |  |                        |                       
|NET INCOME                                                                                                                        |  |                        | $                     
|                                                                                                                                  |  |                        |                       
|EARNINGS PER SHARE                                                                                                                |  |                        | $                     
|                                                                                                                                  |  |                        |                       
|                                                                                                                                 
|                                                                                                                                 
|STATEMENTS OF BENEFICIARIES EQUITY                                                                                               |  |                       
|                                                                                                                                 
|                                                                                                                                  |  |                        | Year Ended December 31
|                                                                                                                                  |  |                        |                       
|                                                                                                                                  |  |                        |                       
|                                                                                                                                  |  |                        |                       
|Balance at beginning of year                                                                                                      |  |                        | $                     
|Net income for the year                                                                                                           |  |                        |                       
|                                                                                                                                  |  |                        |                       
|                                                                                                                                  |  |                        |                       
|Deduct declaration of distributions on shares of
    beneficial interest, per share: 2004  $8.20;
    2003  $6.50; 2002  $5.40 |  |                        |                       
|                                                                                                                                  |  |                        |                       
|Balance at end of year                                                                                                            |  |                        | $                     
|                                                                                                                                  |  |                        |                       

See accompanying notes.

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#### GREAT NORTHERN IRON ORE PROPERTIES
 
BALANCE SHEETS
 
ASSETS

|                                                                                                                                                                                                    |  | December 31 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | -
|                                                                                                                                                                                                    |  | 2004        |  
|CURRENT ASSETS                                                                                                                                                                                      |  |            
|Cash and cash equivalents                                                                                                                                                                           |  |             | $
|United States Treasury securities (Note B)                                                                                                                                                          |  |             |  
|Royalties receivable                                                                                                                                                                                |  |             |  
|Prepaid expenses                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             |  
|TOTAL CURRENT ASSETS                                                                                                                                                                                |  |             |  
|                                                                                                                                                                                                    |  |            
|NONCURRENT ASSETS                                                                                                                                                                                   |  |            
|United States Treasury securities (Note B)                                                                                                                                                          |  |             |  
|Prepaid pension expense (Note E)                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                   
|PROPERTIES                                                                                                                                                                                          |  |            
|Mineral lands (Notes B and C)                                                                                                                                                                       |  |             |  
|Less allowances for depletion and amortization                                                                                                                                                      |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             |  
|Building and equipment  at cost, less
       allowances for accumulated depreciation
       (2004  $214,287; 2003  $193,279)                                                                     |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             | $
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                   
|LIABILITIES AND BENEFICIARIES EQUITY                                                                                                                                                              
|                                                                                                                                                                                                   
|CURRENT LIABILITIES                                                                                                                                                                                 |  |            
|Accounts payable and accrued expenses                                                                                                                                                               |  |             | $
|Distributions                                                                                                                                                                                       |  |             |  
|                                                                                                                                                                                                    |  |             |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                                           |  |             |  
|                                                                                                                                                                                                   
|NONCURRENT LIABILITIES                                                                                                                                                                              |  |             |  
|                                                                                                                                                                                                   
|BENEFICIARIES EQUITY, including certificate
   holders equity, represented by 1,500,000 shares of
   beneficial interest authorized and outstanding, and
   reversionary interest (Notes A and D) |  |             |  
|                                                                                                                                                                                                    |  |             |  
|                                                                                                                                                                                                    |  |             | $
|                                                                                                                                                                                                    |  |             |  

See accompanying notes.

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#### GREAT NORTHERN IRON ORE PROPERTIES
 
STATEMENTS OF CASH FLOWS

|                                                                                        |  | Year Ended December 31 |  
|--------------------------------------------------------------------------------------- |  | ---------------------- | -
|                                                                                        |  | 2004                   |  
|OPERATING ACTIVITIES                                                                    |  |                       
|Cash received from royalties and rents                                                  |  |                        | $
|Cash paid to suppliers and employees                                                    |  |                        |  
|Interest received                                                                       |  |                        |  
|                                                                                        |  |                        |  
|NET CASH PROVIDED BY
          OPERATING ACTIVITIES                                     |  |                        |  
|                                                                                       
|INVESTING ACTIVITIES                                                                    |  |                       
|United States Treasury securities purchased                                             |  |                        |  
|United States Treasury securities matured                                               |  |                        |  
|Net expenditures for equipment                                                          |  |                        |  
|                                                                                        |  |                        |  
|NET CASH (USED IN) PROVIDED BY
          INVESTING ACTIVITIES                           |  |                        |  
|                                                                                       
|FINANCING ACTIVITIES                                                                    |  |                       
|Distributions paid                                                                      |  |                        |  
|                                                                                        |  |                        |  
|NET CASH USED IN
          FINANCING ACTIVITIES                                         |  |                        |  
|                                                                                        |  |                        |  
|NET (DECREASE) INCREASE IN CASH
      AND CASH EQUIVALENTS                              |  |                        |  
|                                                                                       
|CASH AND CASH EQUIVALENTS
      AT BEGINNING OF YEAR                                    |  |                        |  
|                                                                                        |  |                        |  
|CASH AND CASH EQUIVALENTS
      AT END OF YEAR                                          |  |                        | $
|                                                                                        |  |                        |  
|RECONCILIATION OF NET INCOME TO NET
  CASH PROVIDED BY OPERATING ACTIVITIES             |  |                       
|Net income                                                                              |  |                        | $
|Adjustments to reconcile net income to net
      cash provided by operating activities: |  |                       
|Depreciation and amortization                                                           |  |                        |  
|Net decrease (increase) in assets:                                                      |  |                       
|Accrued interest                                                                        |  |                        |  
|Royalties receivable                                                                    |  |                        |  
|Prepaid expenses                                                                        |  |                        |  
|Surface lands                                                                           |  |                        |  
|Net increase in liabilities:                                                            |  |                       
|Accrued liabilities                                                                     |  |                        |  
|                                                                                        |  |                        |  
|NET CASH PROVIDED BY
                  OPERATING ACTIVITIES                             |  |                        | $
|                                                                                        |  |                        |  

See accompanying notes.

12

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#### GREAT NORTHERN IRON ORE PROPERTIES
 
NOTES TO FINANCIAL STATEMENTS
 
December 31, 2004

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

Great Northern Iron Ore Properties (Trust)
is presently involved solely with the leasing and maintenance of mineral lands owned by the Trust on the Mesabi Iron Range of
Minnesota. Royalty income is derived from taconite production and minimums. Royalty income (which is not in direct ratio to
tonnage shipped) from two significant operating lessees was as follows: 2004  $8,942,000 and $5,197,000; 2003 
$9,048,000 and $2,714,000; and 2002  $5,614,000 and $3,398,000.

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
surviving of eighteen named in the Trust Agreement. The last survivor of these eighteen named in the Trust Agreement died
April 6, 1995. Accordingly, the Trust now terminates twenty years from April 6, 1995, that being April 6, 2015. The
termination of the Trust on April 6, 2015, means that there will be no trading of the Trusts 1,500,000 certificates of
beneficial interest (shares) on the New York Stock Exchange beyond that date.

At the end of the Trust, all monies remaining in the
hands of the Trustees (after paying and providing for all expenses and obligations of the Trust) shall be distributed ratably
among the certificate holders (term beneficiaries), while all property other than monies shall be conveyed and transferred to the
reversionary beneficiary (formerly Lake Superior Company, Limited) or its successors or assigns (currently Glacier Park Company, a
wholly owned subsidiary of Burlington Resources, Inc.). In addition, by the terms of a District Court Order dated
November 29, 1982, the reversioner, in effect, is required to pay the balance in the Principal Charges account (see Note D)
which primarily represents the costs of acquiring homes and surface lands on the iron formation that are necessary for the orderly
mine development by United States Steel Corporation under its 1959 lease with the Trustees. 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.

In proceedings commenced in 1972, the Minnesota Supreme
Court determined that while by the terms of the Trust, the Trustees are given discretionary powers to convert Trust assets to cash
and to distribute the proceeds to certificate holders, they are limited in their exercise of those powers by the legal duty
imposed by well-established law of trusts to serve the interests of both term beneficiaries and the reversionary beneficiary with
impartiality. Thus, the Trustees have no duty to exercise the powers of sale and distribution unless required to do so to serve
both term and reversionary interests; and, if the need arises, the Trustees may petition

13

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

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.

By a letter dated March 9, 2004, certificate
holders of record as of December 31, 2003, and the reversioner were notified of a Hearing on May 26, 2004, in Ramsey
County Courthouse, Saint Paul, Minnesota, for the purpose of settling and allowing the Trust accounts for the year 2003. By Court
Order signed and dated May 26, 2004, the 2003 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.

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

The Trustees provided annual income tax information in
January 2005 to certificate holders of record with holdings on any of the four quarterly record dates during 2004. This
information included a:

Substitute Form 1099-MISC This form reported ones 2004 allocable
share of income from the Trust, distributions declared and any taxes withheld. (Foreign certificate holders received a Form
1042S.)

Trust Supplemental Statement This statement reported the number of
units (shares) held on any of the four quarterly record dates in 2004.

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.

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.

14

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NOTE B  SIGNIFICANT ACCOUNTING POLICIES (continued)

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. Securities listed as noncurrent assets will mature in 2006. Following is an
analysis of the securities as of December 31:

|                                |  | Current |   | Noncurrent |  
|------------------------------- |  | ------- | - | ---------- | -
|                                |  | 2004    |   | 2003       |  
|Aggregate fair value            |  |         | $ | 4,754,254  |  
|Gross unrealized holding gains  |  |         |   | (1,882     | )
|Gross unrealized holding losses |  |         |   | 20,872     |  
|                                |  |         |   |            |  
|Amortized cost basis            |  |         |   | 4,773,244  |  
|Accrued interest                |  |         |   | 15,119     |  
|                                |  |         |   |            |  
|                                |  |         | $ | 4,788,363  |  
|                                |  |         |   |            |  

Mineral Lands:   Mineral lands,
including surface lands, are carried at amounts which represent, principally, either cost at acquisition or values on
March 1, 1913. 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. The cost of surface lands acquired to facilitate mining operations was amortized (noncash expense) in
the amount of $208,200 for each of the years 2004, 2003 and 2002 (see Note C).

Royalty Income:   Royalties from
mineral leases (with cancellation terms varying from six months to one year) are taken into income as earned. Certain leases
provide the mining companies the ability to offset excess royalties due on future production, if any and when mined, against
minimum royalties paid in prior periods. Accumulated minimum royalties amounted to $2,496,209 on December 31, 2004, and
$3,874,635 on December 31, 2003.

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, 2004, 2003 and 2002.

15

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NOTE C  LAND ACQUISITION

A mining agreement dated January 1, 1959, with
United States Steel Corporation provides that one-half of annual earned royalty income, after satisfaction of minimum royalty
payments, shall be applied 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). 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 which 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 United States 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:

|                             |  | 2004 |   | 2003       |  
|---------------------------- |  | ---- | - | ---------- | -
|Attorneys fees and expenses |  |      | $ | 1,024,834  |  
|Cost of surface lands        |  |      |   | 5,713,565  |  
|Cumulative shipment credits  |  |      |   | (1,304,692 | )
|Asset disposition credits    |  |      |   | (57,950    | )
|                             |  |      |   |            |  
|Principal Charges account    |  |      | $ | 5,375,757  |  
|                             |  |      |   |            |  

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.

NOTE E  PENSION PLAN

The Trust has a noncontributory defined benefit plan
which covers all employees. The Trustees are not eligible for pension benefits under the plan based on services as Trustees. A
summary of the components of net periodic pension cost (benefit), a noncash item, for 2004, 2003 and 2002 is as follows:

16

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NOTE E  PENSION PLAN (continued)

|                           |  | 2004 |   | 2003     |   | 2002 |         
|-------------------------- |  | ---- | - | -------- | - | ---- | --------
|Service cost               |  |      | $ | 117,426  |   | $    | 92,219  
|Interest cost              |  |      |   | 210,396  |   |      | 214,006 
|Expected return on assets  |  |      |   | (303,219 | ) |      | (260,583
|Net amortization           |  |      |   | 5,764    |   |      | 38,648  
|                           |  |      |   |          |   |      |         
|Net pension cost (benefit) |  |      | $ | 30,367   |   | $    | 84,290  
|                           |  |      |   |          |   |      |         

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

|                                            |  | 2004 |  | 2003 |  
|------------------------------------------- |  | ---- |  | ---- | -
|Discount rate for benefit obligation        |  |      |  | 5.75 | %
|Discount rate for net periodic pension cost |  |      |  | 6.25 | %
|Rate of compensation increase               |  |      |  | 3.50 | %
|Expected long-term return on plan assets    |  |      |  | 7.50 | %

The determination of the expected long-term return on
plan assets is based on historical returns and a consideration of the Trusts termination date.

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

|                                            |  | 2004 |   | 2003      |  
|------------------------------------------- |  | ---- | - | --------- | -
|Projected benefit obligation at January 1   |  |      | $ | 3,487,979 |  
|Service cost                                |  |      |   | 117,426   |  
|Interest cost                               |  |      |   | 210,396   |  
|Actuarial loss                              |  |      |   | 389,145   |  
|Benefit payments                            |  |      |   | (258,513  | )
|                                            |  |      |   |           |  
|Projected benefit obligation at December 31 |  |      | $ | 3,946,433 |  
|                                            |  |      |   |           |  

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

|                                         |  | 2004 |   | 2003      |  
|---------------------------------------- |  | ---- | - | --------- | -
|Fair value of plan assets at January l   |  |      | $ | 3,818,748 |  
|Contributions                            |  |      |   | 161,511   |  
|Actual return on plan assets             |  |      |   | 279,631   |  
|Benefit payments                         |  |      |   | (258,513  | )
|                                         |  |      |   |           |  
|Fair value of plan assets at December 31 |  |      | $ | 4,001,377 |  
|                                         |  |      |   |           |  

The future benefit payments for the plan are estimated
to be $258,513 for each of the years from 2005 through 2009, inclusive, and for the period from 2010 through 2014, inclusive, are
estimated to be $1,360,122 in aggregate. The next contribution to the plan is estimated to be $161,511; however, said amount will
be recalculated upon the completion of the plans annual actuarial valuation performed as of the plans fiscal year-end,
March 31.

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NOTE E  PENSION PLAN (continued)

The following table sets forth the plans funded
status and amounts recognized in the balance sheets at December 31:

|                                            |  | 2004 |   | 2003      | 
|------------------------------------------- |  | ---- | - | --------- | 
|Accumulated benefit obligation              |  |      | $ | 2,982,757 | 
|Effect of future compensation increases     |  |      |   | 963,676   | 
|                                            |  |      |   |           | 
|Projected benefit obligation                |  |      |   | 3,946,433 | 
|Fair
value of plan assets                   |  |      |   | 4,001,377 | 
|                                            |  |      |   |           | 
|Plan assets in excess of benefit obligation |  |      |   | 54,944    | 
|Unrecognized net loss                       |  |      |   | 886,383   | 
|Unrecognized prior service cost             |  |      |   |          | 
|                                            |  |      |   |           | 
|Prepaid pension expense                     |  |      | $ | 941,327   | 
|                                            |  |      |   |           | 

The following table sets forth the plans
weighted-average asset allocations by category as of December 31:

|                                           |  | 2004 |  | 2003 |  
|------------------------------------------ |  | ---- |  | ---- | -
|Equity securities                          |  |      |  | 55   | %
|Debt securities                            |  |      |  | 39   | %
|Other (cash, money market, accrued income) |  |      |  | 6    | %
|                                           |  |      |  |      |  
|                                           |  |      |  | 100  | %
|                                           |  |      |  |      |  

The investment policy of the plan is to have up to
approximately 55% invested in an equity index fund and the remaining monies invested in fixed income (debt) securities and
cash.

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.

18

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NOTE G  LEASE COMMITMENTS

The Trust leases office facilities in Saint Paul,
Minnesota. These leases include various renewal options and exclude any contingent rental provisions. Rental expense for these
operating leases amounted to $61,823 in each of the years 2004, 2003 and 2002.

19

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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 as of December 31, 2004 and 2003, and the related statements of income, beneficiaries
equity and cash flows for each of the three years in the period ended December 31, 2004. 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 Great Northern Iron Ore Properties at December 31,
2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2004, 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), the effectiveness of Great Northern Iron Ore Properties
internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated
January 28, 2005, expressed an unqualified opinion thereon.

/s/   Ernst & Young LLP

Minneapolis, Minnesota
January 28, 2005

20

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

The Trustees
Great Northern Iron Ore Properties

We have audited managements assessment, included
in the accompanying Managements Report On Internal Control Over Financial Reporting, that Great Northern Iron Ore Properties
maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in
Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Great Northern Iron Ore Properties management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of
Great Northern Iron Ore Properties 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, evaluating managements
assessment, testing and evaluating the design and operating effectiveness of internal control 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

21

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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.

In our opinion, managements assessment that Great
Northern Iron Ore Properties maintained effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Great Northern Iron Ore Properties
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on
the COSO criteria.

We also have audited, in accordance with the standards
of the Public Company Accounting Oversight Board (United States), the 2004 financial statements of Great Northern Iron Ore
Properties, and our report dated January 28, 2005, expressed an unqualified opinion thereon.

/s/   Ernst & Young LLP

Minneapolis, Minnesota
January 28, 2005

22

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#### GREAT NORTHERN IRON ORE PROPERTIES
 
SUMMARY OF SHIPMENTS

|    |    |      |                                                                                           |                   |  | Full Tons Shipped |     
|--- | -- | ---- | ----------------------------------------------------------------------------------------- | ----------------- |  | ----------------- | ----
|No. |    | Mine |                                                                                           | OwnershipInterest |  | 2004              |     
|    | 1. |      | Mahoning                                                                                  |                   |  |                   | 100%
|    | 2. |      | Ontario 100%                                                                              |                   |  |                   | 100%
|    | 3. |      | Ontario 50%                                                                               |                   |  |                   | 50% 
|    | 4. |      | Section 18                                                                                |                   |  |                   | 100%
|    | 5. |      | Russell Annex                                                                             |                   |  |                   | 50% 
|    | 6. |      | Mississippi #3                                                                            |                   |  |                   | 100%
|    | 7. |      | Minntac                                                                                   |                   |  |                   | 100%
|    |    |      |                                                                                           |                   |  |                   |     
|    |    |      |                                                                                           |                   |  |                   |     
|   
|    |    |      | Shipments from inactive mines and those exhausted, surrendered or sold prior to this year |                   |  |                   |     
|    |    |      |                                                                                           |                   |  |                   |     
|    |    |      | TOTAL                                                                                     |                   |  |                   |     
|    |    |      |                                                                                           |                   |  |                   |     

|    |     |                    |                                                                                                |  | 
|--- | --- | ------------------ | ---------------------------------------------------------------------------------------------- |  | 
|No. |     | Operating Interest
|    | 1-3 |                    | Hibbing Taconite Company                                                                      
|    | 4-6 |                    | National Steel Corporation up until May 20, 2003; thereafter
  United States Steel Corporation
|    | 7   |                    | United States Steel Corporation                                                               

23

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#### NOTES



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|GREAT NORTHERN IRON ORE PROPERTIES W-1290 FIRST NATIONAL BANK BUILDING 332 MINNESOTA STREET SAINT PAUL, MINNESOTA 55101-1361 |  | FIRST CLASS U.S. POSTAGE PAIDPERMIT #43 MINNEAPOLIS, MN | 
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------- | 

FIRST CLASS MAIL

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