** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

**FORM 10-Q**

| x      |   | **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                         |
|   |   | **For  the quarterly period ended October 31, 2007**                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                         |
| **or** |
|   |   |                                                                                                                                                                                                                                                                                         |
| o      |   | **TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                |
|   |   | ** **                                                                                                                                                                                                                                                                                   |
|   |   | **For  the transition period  from                   to                      ** |
|   |   |                                                                                                                                                                                                                                                                                         |

 

**CommissionFile Number:  1-4488**

**MESABI TRUST**

(Exactname of registrant as specified in its charter)

| **New  York**                                   | **13-6022277**                        |
|-------------------------------------------------|---------------------------------------|
| (State or other  jurisdiction of                | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)                 | ** **                            |
|                                            |                                  |
| **c/o  Deutsche Bank Trust Company Americas**   | **10005**                             |
| **Trust  & Securities Services — GDS** | (Zip code)                            |
| **60 Wall  Street**                             | ** **                            |
| **27th  Floor**                                 | ** **                            |
| **New  York, New York**                         | ** **                            |
| (Address of principal  executive offices)       | ** **                            |

 

| **(615)  835-2749**                                        |
|------------------------------------------------------------|
| (Registrant’s telephone  number, including area code) |

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.      Yes  x  No  o

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act:

Largeaccelerated filer o           Acceleratedfiler x           Non-acceleratedfiler o

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act).        Yes  o  No  x

 

 

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**PART I -****FINANCIAL****INFORMATION**

** **

**Item 1.****                    ****FinancialStatements.  (Note 1)**

 

**Mesabi Trust****Condensed Statements of Income****Three and Nine Months Ended October 31, 2007 and2006**

 

 
| ** ** | ** **                                | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------|-------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** ** | ** **                                | ** ** | **October 31,**        | ** ** | **October 31,**       | ** ** |
| ** ** | ** **                                | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** ** | ** **                                | ** ** | **(unaudited)**        | ** ** | **(unaudited)**       | ** ** | **(unaudited)** | ** ** | **(unaudited)** | ** ** |
| **A.**     | **Condensed Statements of Income**        | ** ** | ** **             | ** ** | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** |
|       |                                      |       |                   |       |                  |       |   |   |   |   |
|       | Revenues                                  |       |                   |       |                  |       |   |   |   |   |
|       | Royalty income                            |       | $                      | 6,690,125  |                  | $          | 7,159,704 |   | $ | 12,896,302 |   | $ | 15,106,855 |   |
|       | Interest income                           |       | 12,930                 |       | 20,388                |       | 27,293 |   | 45,322 |   |
|       |                                      |       | 6,703,055              |       | 7,180,092             |       | 12,923,595 |   | 15,152,177 |   |
|       |                                      |       |                   |       |                  |       |   |   |   |   |
|       | Expenses                                  |       | 109,924                |       | 134,465               |       | 456,707 |   | 443,341 |   |
|       |                                      |       |                   |       |                  |       |   |   |   |   |
|       | Net income                                |       | $                      | 6,593,131  |                  | $          | 7,045,627 |   | $ | 12,466,888 |   | $ | 14,708,836 |   |
|       |                                      |       |                   |       |                  |       |   |   |   |   |
|       | Number of units  outstanding              |       | 13,120,010             |       | 13,120,010            |       | 13,120,010 |   | 13,120,010 |   |
|       |                                      |       |                   |       |                  |       |   |   |   |   |
|       | Net income per unit  (Note 2)             |       | $                      | 0.5025     |                  | $          | 0.5370 |   | $ | 0.9502 |   | $ | 1.1211 |   |
|       |                                      |       |                   |       |                  |       |   |   |   |   |
|       | Distributions declared  per unit (Note 3) |       | $                      | 0.4800     |                  | $          | 0.5850 |   | $ | 0.8350 |   | $ | 1.2850 |   |

 

 

See Notes to Condensed Financial Statements.

 

2

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**MesabiTrust****CondensedBalance Sheets****October31, 2007 and January 31, 2007**

 

 
| ** ** | ** **                                                                 | ** ** | **October 31, 2007** | ** ** | **January 31, 2007** | ** ** |
|------------|----------------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
| ** ** | ** **                                                                 | ** ** | **(unaudited)**      | ** ** | ** **           | ** ** |
| **B.**     | **Condensed Balance Sheets**                                               | ** ** | ** **           | ** ** | ** **           | ** ** |
|       |                                                                       |       |                 |       |                 |       |
| ** ** | **Assets**                                                                 | ** ** | ** **           | ** ** | ** **           | ** ** |
|       |                                                                       |       |                 |       |                 |       |
|       | Cash and cash equivalents                                                  |       | $                    | 6,520,101  |                 | $          | 4,258,201 |   |
|       |                                                                       |       |                 |       |                 |       |
|       | U.S. Government securities, at amortized cost (which  approximates market) |       | 494,663              |       | 727,883              |       |
|       |                                                                       |       |                 |       |                 |       |
|       | Accrued income receivable                                                  |       | 1,958,783            |       | 409,764              |       |
|       | Prepaid expenses                                                           |       | 34,732               |       | 18,701               |       |
| ** ** | ** **                                                                 |       | 9,008,279            |       | 5,414,549            |       |
|       |                                                                       |       |                 |       |                 |       |
|       | Fixed property, including intangibles, at nominal  values                  |       |                 |       |                 |       |
|       |                                                                       |       |                 |       |                 |       |
|       | Amended Assignment of Peters Lease                                         |       | 1                    |       | 1                    |       |
|       |                                                                       |       |                 |       |                 |       |
|       | Assignment of Cloquet Lease                                                |       | 1                    |       | 1                    |       |
|       |                                                                       |       |                 |       |                 |       |
|       | Certificate of beneficial interest for 13,120,010  units of land trust     |       | 1                    |       | 1                    |       |
| ** ** | ** **                                                                 |       | 3                    |       | 3                    |       |
|       |                                                                       |       |                 |       |                 |       |
| ** ** | ** **                                                                 |       | $                    | 9,008,282  |                 | $          | 5,414,552 |   |
|       |                                                                       |       |                 |       |                 |       |
| ** ** | **Liabilities, Unallocated Reserve and Trust  Corpus**                     | ** ** | ** **           | ** ** | ** **           | ** ** |
|       |                                                                       |       |                 |       |                 |       |
|       | Liabilities                                                                |       |                 |       |                 |       |
|       | Distribution payable                                                       |       | $                    | 6,297,605  |                 | $          | 4,132,803 |   |
|       | Accrued expenses                                                           |       | 59,321               |       | 142,072              |       |
| ** ** | ** **                                                                 |       | 6,356,926            |       | 4,274,875            |       |
|       |                                                                       |       |                 |       |                 |       |
|       | Unallocated Reserve (Note 4)                                               |       | 2,651,353            |       | 1,139,674            |       |
|       | Trust Corpus                                                               |       | 3                    |       | 3                    |       |
|       |                                                                       |       |                 |       |                 |       |
| ** ** | ** **                                                                 |       | $                    | 9,008,282  |                 | $          | 5,414,552 |   |

 

 

See Notes to CondensedFinancial Statements.

 

3

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**MesabiTrust****CondensedStatements of Cash Flows****NineMonths Ended October 31, 2007 and 2006**

 

** **
| ** ** | ** **                                                                     | ** ** | **Nine Months Ended** | ** ** |
|------------|--------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** ** | ** **                                                                     | ** ** | **October 31,**       | ** ** |
| ** ** | ** **                                                                     | ** ** | **2007**              | ** ** | **2006** | ** ** |
| ** ** | ** **                                                                     | ** ** | **(unaudited)**       | ** ** | **(unaudited)** | ** ** |
| **C.**     | **Condensed Statements of Cash  Flows**                                        | ** ** | ** **            | ** ** | ** ** | ** ** |
|       |                                                                           |       |                  |       |   |   |
|       | Cash flows from  operating activities                                          |       |                  |       |   |   |
|       | Royalties received                                                             |       | $                     | 11,341,053 |   | $ | 17,448,612 |   |
|       | Interest received                                                              |       | 33,523                |       | 47,544 |   |
|       | Expenses paid                                                                  |       | (555,489              | )          | (572,707 | ) |
|       |                                                                           |       |                  |       |   |   |
|       | Net cash provided by operating activities                                      |       | 10,819,087            |       | 16,923,449 |   |
|       |                                                                           |       |                  |       |   |   |
|       | Cash flows from  investing activities                                          |       |                  |       |   |   |
|       | Maturities of U.S. Government Securities                                       |       | 9,464,477             |       | 16,110,338 |   |
|       | Purchases of U.S. Government Securities                                        |       | (9,231,258            | )          | (16,190,028 | ) |
|       |                                                                           |       |                  |       |   |   |
|       | Net cash provided by (used for) investing activities                           |       | 233,219               |       | (79,690 | ) |
|       |                                                                           |       |                  |       |   |   |
|       | Cash flow used for  financing activity                                         |       |                  |       |   |   |
|       | Distributions to Unitholders                                                   |       | (8,790,406            | )          | (15,350,412 | ) |
|       |                                                                           |       |                  |       |   |   |
|       | Net change in cash and  cash equivalents                                       |       | 2,261,900             |       | 1,493,347 |   |
|       |                                                                           |       |                  |       |   |   |
|       | Cash and cash  equivalents, beginning of year                                  |       | 4,258,201             |       | 6,377,990 |   |
|       |                                                                           |       |                  |       |   |   |
|       | Cash and cash equivalents,  end of quarter                                     |       | $                     | 6,520,101  |   | $ | 7,871,337 |   |
|       |                                                                           |       |                  |       |   |   |
|       |                                                                           |       |                  |       |   |   |
|       |                                                                           |       |                  |       |   |   |
| ** ** | **Reconciliation of net income to net cash  provided by operating activities** | ** ** | ** **            | ** ** | ** ** | ** ** |
|       |                                                                           |       |                  |       |   |   |
|       | Net income                                                                     |       | $                     | 12,466,888 |   | $ | 14,708,836 |   |
|       | (Increase) decrease in  accrued income receivable                              |       | (1,549,019            | )          | 2,343,978 |   |
|       | Increase in prepaid  expenses                                                  |       | (16,031               | )          | (15,295 | ) |
|       | Decrease in accrued  expenses                                                  |       | (82,751               | )          | (114,070 | ) |
|       |                                                                           |       |                  |       |   |   |
|       | Net cash provided by operating activities                                      |       | $                     | 10,819,087 |   | $ | 16,923,449 |   |

 

 

See Notes to Condensed Financial Statements.

 

4

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**MESABI TRUST**

 

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

 

**October 31, 2007 (Unaudited)**

 
| Note  1. | The  financial statements included herein have been prepared without audit (except  for the balance sheet at January 31, 2007) in accordance with the  instructions to Form 10-Q pursuant to the rules and regulations of the  Securities and Exchange Commission. Certain information and footnote  disclosures normally included in financial statements prepared in accordance  with generally accepted accounting principles have been condensed or omitted  pursuant to such rules and regulations. In the opinion of the Trustees, all  adjustments, consisting only of normal recurring adjustments, necessary for a  fair statement of (a) the results of operations for the three months and nine  months ended October 31, 2007 and 2006, (b) the financial positions at  October 31, 2007 and January 31, 2007, and (c) the cash flows for the nine  months ended October 31, 2007 and 2006, have been made.                                                                                                                                           |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Note  2. | Net  income per unit is based on weighted average number of units outstanding  during the period (13,120,010 units).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Note  3. | Distributions  are required to be declared each year in April, July, October and January  after receiving notification from Northshore Mining Company as to the amount  of royalty income that is expected to be received by the Trust. The Trust  receives notification of the expected royalty amounts as of the close of each  calendar quarter, while the financial statements included herein are prepared  on an accrual basis and present the Trust’s results of operations for the  three and nine month periods ended October 31, 2007 and 2006. The Trustees  determine the amount of distributions to be made to Unitholders after  considering any known or anticipated expenses, liabilities and obligations of  the Trust. Accordingly, distributions declared may not completely reflect the  Trust’s current results of operations.                                                                                                                                                                                                     |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Note  4. | The  Trustees have determined that the unallocated cash and U.S. Government  securities portion of the Unallocated Reserve should be maintained at a  prudent level, usually within the range of $500,000 to $1,000,000, to meet  present or future liabilities of the Trust. Accordingly, although the actual  amount of the Unallocated Reserve will fluctuate from time to time, and may  increase or decrease from its current level, it is currently intended that  future distributions will be highly dependent upon royalty income as it is  received quarterly and the level of Trust expenses that the Trustees  anticipate occurring in subsequent quarters. At October 31, 2007, the  Unallocated Reserve consisted of $692,570 in unallocated cash and U.S.  Government securities, and $1,958,783 of accrued revenue primarily  representing royalties not yet received by the Trust but anticipated to be  received from Northshore Mining Company in January 2008 based upon reported  lessee shipping activity during the month of October 2007. |

 

5

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**Item 2.  Trustees’Discussion and Analysis of Financial Condition and Results of Operations.**

 

**Forward-Looking Statements**

Certain information included in this Quarterly Report on Form 10-Qcontains “forward-looking statements” within the meaning of Section 21E of theSecurities Exchange Act of 1934 and Section 27A of the Securities Act of1933.  All such forward-lookingstatements, including those statements estimating iron ore pellet production orshipments, are based on information from the lessee/operator (and its parentcorporation) of the mine located on the lands owned and held in trust for thebenefit of the holders of units of beneficial interest of Mesabi Trust.  These statements may be identified by the useof forward-looking words, such as “may,” “will,” “could,” “project,” “predict,”“intend,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,”“plan,” “should,” “assume,” “forecast” and other similar words.  Such forward-looking statements areinherently subject to known and unknown risks and uncertainties.  Actual results and future developments coulddiffer materially from the results or developments expressed in or implied bythese forward-looking statements.  Theserisks and uncertainties include volatility of iron ore and steel prices,product supply and demand, competition, regulation or government action,litigation and uncertainties about estimates of reserves.  Further, substantial portions of royalties earned by Mesabi Trust arebased on estimated prices that are subject to interim and final adjustmentswhich can be positive or negative and are dependent in part on multiple priceand inflation index factors under agreements to which Mesabi Trust is not aparty and that are not known until after the end of a contract year.  Fora discussion of the factors, including, without limitation, those that couldmaterially and adversely affect Mesabi Trust’s actual results and performance,see “Risk Factors” in Part I — Item 1A of Mesabi Trust’s Annual Report on Form10-K for the year-ended January 31, 2007. Mesabi Trust undertakes no obligation, other than that imposed by law,to make any revisions to the forward-looking statements contained in thisfiling or to update them to reflect circumstances occurring after the date ofthis filing.

**Background**

Mesabi Trust (“Mesabi Trust” or the “Trust”), formed pursuant to anAgreement of Trust dated July 18, 1961 (the “Agreement of Trust”), is a trustorganized under the laws of the State of New York.  Mesabi Trust holds all of the interestsformerly owned by Mesabi Iron Company (“MIC”), including all right, title andinterest in the Amendment of Assignment, Assumption and Further Assignment ofPeters Lease (the “Amended Assignment of Peters Lease”), the Amendment ofAssignment, Assumption and Further Assignment of Cloquet Lease (the “AmendedAssignment of Cloquet Lease” and together with the Amended Assignment of PetersLease, the “Amended Assignment Agreements”), the beneficial interest in theMesabi Land Trust (as such term is defined below) and all other assets andproperty identified in the Agreement of Trust. The Amended Assignment of PetersLease relates to an Indenture made as of April 30, 1915 among East Mesaba IronCompany (“East Mesaba”), Dunka River Iron Company (“Dunka River”) and Claude W.Peters (the “Peters Lease”) and the Amended Assignment of Cloquet Lease relatesto an Indenture made May 1, 1916 between Cloquet Lumber Company and Claude W.Peters (the “Cloquet Lease”).

The Agreement of Trustspecifically prohibits the Trustees from entering into or engaging in anybusiness.  This prohibition applies evento business activities the Trustees may deem necessary or proper for thepreservation and protection of the Trust Estate.  Accordingly, the Trustees’ activities inconnection with the administration of Trust assets are limited to collectingincome, paying expenses and liabilities, distributing net income to the holdersof Certificates of Beneficial Interest in Mesabi Trust (“Unitholders”) afterthe payment of, or provision for, such expenses and liabilities, and protectingand conserving the assets held.

 

6

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The Trustees do not intend to expand their responsibilities beyondthose permitted or required by the Agreement of Trust, the Amendment to theAgreement of Trust dated October 25, 1982 (the “Amendment”), and those requiredunder applicable law.  Mesabi Trust hasno employees, but it engages independent consultants to assist the Trustees in,among other things, monitoring the volume and sales prices of iron ore productsshipped from Silver Bay, Minnesota, based on information supplied to theTrustees by Northshore Mining Company (“Northshore”), the lessee/operator ofthe Mesabi Trust lands, and its parent company Cleveland-Cliffs Inc (“CCI”).  References to Northshore in this quarterlyreport, unless the context requires otherwise, are applicable to CCI as well.

Leasehold royalty income constitutes the principal source of MesabiTrust’s revenue.  Royalty rates aredetermined in accordance with the terms of Mesabi Trust’s leases andassignments of leases.  Three types ofroyalties, as well as royalty bonuses, comprise the Trust’s leasehold royaltyincome:

•                                          Base overridingroyalties.  Baseoverriding royalties have historically constituted the majority of Mesabi Trust’sroyalty income.  Base overriding royaltiesare determined by both the volume and selling price of iron ore productsshipped.  Northshore is obligated to payMesabi Trust base overriding royalties in varying amounts, based on the volumeof iron ore products shipped.  Baseoverriding royalties are calculated as a percentage of the gross proceeds ofiron ore products produced at Mesabi Trust lands (and to a limited extent otherlands) and shipped from Silver Bay, Minnesota. The percentage ranges from 2-1/2% of the gross proceeds for the first onemillion tons of iron ore products so shipped annually to 6% of the grossproceeds for all iron ore products in excess of 4 million tons so shippedannually.  Base overriding royalties aresubject to price adjustments under the CCI Pellet Agreements and, as describedelsewhere in this report, such adjustments may be positive or negative.

•                                          Royalty bonuses.  Mesabi Trust earns royalty bonuses when ironore products shipped from Silver Bay are sold at prices above a thresholdprice.  The royalty bonus is based on apercentage of the gross proceeds of product shipped from Silver Bay and sold atprices above a threshold price.  Thethreshold price is adjusted (but not below $30.00 per ton) on an annual basisfor inflation and deflation (the “Adjusted Threshold Price”).  The Adjusted Threshold Price was $44.60 perton for calendar year 2006 and is $45.98 for calendar year 2007.  The royalty bonus percentage ranges from 1/2of 1% of the gross proceeds (on all tonnage shipped for sale at prices betweenthe Adjusted Threshold Price and $2.00 above the Adjusted Threshold Price) to3% of the gross proceeds (on all tonnage shipped for sale at prices $10.00 ormore above the Adjusted Threshold Price). Royalty bonuses are subject to price adjustments under the CCI PelletAgreements and, as described elsewhere in this report, such adjustments may bepositive or negative.

•                                          Fee royalties.  Fee royalties have historically constituted asmaller component of the Trust’s total royalty income.  Fee royalties are payable to the Mesabi LandTrust, a Minnesota land trust, which holds a 20% interest as fee owner in theAmended Assignment of Peters Lease. Mesabi Trust holds the entire beneficial interest in the Mesabi LandTrust for which U.S. Bank N.A. acts as the corporate trustee.  Mesabi Trust receives the net income of theMesabi Land Trust, which is generated from royalties on the amount of crude oremined after the payment of expenses to U.S. Bank N.A. for its services ascorporate trustee.  Crude ore is thesource of iron oxides used to make iron ore pellets and other products.  The fee royalty on crude ore is based on anagreed price per ton, subject to certain indexing.

 

7

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•                                          Minimum advanceroyalties.  Northshore’sobligation to pay base overriding royalties and royalty bonuses with respect tothe sale of iron ore products generally accrues upon the shipment of thoseproducts from Silver Bay.  However,regardless of whether any shipment has occurred, under the terms of the AmendedAssignment Agreements, Northshore is obligated to pay to Mesabi Trust a minimumadvance royalty.  Each year, the amountof the minimum advance royalty is adjusted (but not below $500,000 per annum)for inflation and deflation in accordance with the Amended AssignmentAgreements.  The minimum advance royaltywas $743,420 for calendar year 2006 and is $766,510 for calendar year2007.  Until overriding royalties (androyalty bonuses, if any) for a particular year equal or exceed the minimumadvance royalty for the year, Northshore must make quarterly payments of up to25% of the minimum advance royalty for the year.  Because minimum advance royalties areessentially prepayments of base overriding royalties and royalty bonuses earnedeach year, any minimum advance royalties paid in a fiscal quarter are recoupedby credits against base overriding royalties and royalty bonuses earned inlater fiscal quarters during the year.

Northshore is obligated to make royalty payments in January, April,July and October of each year based on shipments of iron ore products fromSilver Bay during each calendar quarter. In the case of base overriding royalties and royalty bonuses, thesequarterly royalty payments are to be made whether or not the related proceedsof sale have been received by Northshore by the time such payments become due.

Under the relevant agreements, Northshore has the right to mine andship iron ore products from lands other than Mesabi Trust lands.  Based on its current mining and engineeringplan, Northshore alone determines whether to conduct mining operations on Trustand/or such other lands.  The Trustees donot exert any influence over mining operational decisions.  To encourage the use of iron ore productsfrom Mesabi Trust lands, Mesabi Trust receives royalties on stated percentagesof iron ore shipped from Silver Bay, whether or not the iron ore products arefrom Mesabi Trust lands.  Mesabi Trustreceives royalties at the greater of (i) the aggregate quantity of iron oreproducts shipped that were mined from Mesabi Trust lands, and (ii) a portion ofthe aggregate quantity of all iron ore products shipped from Silver Bay thatwere mined from any lands, such portion being 90% of the first four milliontons shipped from Silver Bay during such year, 85% of the next two million tonsshipped during such year, and 25% of all tonnage shipped during such year inexcess of six million tons.

As noted above, the information regarding amounts and sales prices ofshipped iron ore products is used to compute the royalties payable to MesabiTrust by Northshore.  Deutsche Bank TrustCompany Americas, the Corporate Trustee, also performs certain administrativefunctions for Mesabi Trust.

**Results of Operations**

**Comparison of Iron Ore Pellet Production and Shipments for the Threeand Nine Months Ended October 31, 2007 and October 31, 2006**

As shown in the table below,production of iron ore pellets at Northshore from Mesabi Trust lands during thefiscal quarter ended October 31, 2007 totaled approximately 1.33 million tons andshipments over the same period totaled approximately 1.36 million tons.  By comparison, pellet production during thesame period in 2006 totaled approximately 0.95 million tons, and shipmentsapproximated 1.28 million tons.

 

8

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| ** **             | ** ** | **Pellets Produced from** | ** ** | **Shipments of Pellets from** | ** ** |
|------------------------|------------|---------------------------|------------|-------------------------------|------------|
| **Three Months Ended** | ** ** | **Trust Lands**           | ** ** | **Trust Lands**               | ** ** |
| ** **             | ** ** | **(Tons)**                | ** ** | **(Tons)**                    | ** ** |
| October 31, 2007       |       | 1,330,789                 |       | 1,357,247                     |       |
| October 31, 2006       |       | 952,916                   |       | 1,275,436                     |       |

 

The 39.7% increase in production and 6.4% increase in shipments fromTrust lands are attributable to the fact that Northshore produced and shippedmore iron ore products from lands owned by Mesabi Trust during the three monthsended October 31, 2007 as compared to the three months ended October 31, 2006.

 

For the nine months ended October 31, 2007, production of iron orepellets at Northshore from Mesabi Trust lands totaled approximately 3.54million tons, and shipments over the same period totaled approximately 2.95million tons.  By comparison, pelletproduction during the same period in 2006 totaled approximately 3.42 milliontons, and shipments approximated 3.24 million tons.

 
| ** **            | ** ** | **Pellets Produced from** | ** ** | **Shipments of Pellets from** | ** ** |
|-----------------------|------------|---------------------------|------------|-------------------------------|------------|
| **Nine Months Ended** | ** ** | **Trust Lands**           | ** ** | **Trust Lands**               | ** ** |
| ** **            | ** ** | **(Tons)**                | ** ** | **(Tons)**                    | ** ** |
| October 31, 2007      |       | 3,539,856                 |       | 2,946,545                     |       |
| October 31, 2006      |       | 3,417,640                 |       | 3,239,764                     |       |

Production for the nine months ended October 31,2007 exceeded production during the same period ended October 31, 2006 byapproximately 3.6%.  Shipments for thenine months ended October 31, 2007 decreased 9.1% compared to the nine monthsended October 31, 2006.

**Comparison of Royalty Income for the Three and Nine Months EndedOctober 31, 2007 and October 31, 2006**

Total royalty income for the three months ended October 31, 2007 was$6,690,125. This represents a decrease of approximately 6.6% as compared to thecomparable prior period.  Base overridingroyalties decreased 7.0% to $4,059,893 and bonus royalties decreased nearly7.8% to $2,491,383.  The decrease in baseoverriding royalties received by the Trust is the result of lower contractprices for shipped iron ore products and a reduction in total shipments of ironore from Trust lands through October 31, 2007. The decrease in bonus royalties received by the Trust is primarily dueto lower contract prices for shipped iron ore products and a higher adjustedthreshold price for 2007 resulting in a smaller bonus royalty amount, which iscalculated by multiplying the applicable royalty rate by the difference betweenthe sales price per ton and the adjusted threshold price for 2007 of $45.98 perton.  Fee royalties paid to the MesabiLand Trust increased approximately 50.2% to $138,849 for the three months endedOctober 31, 2007.  The following tablesummarizes the components of the total royalty income received by Mesabi Trustduring the three months ended October 31, 2007 and October 31, 2006.
| ** **                              | ** ** | **Three Months Ended October 31,** | ** ** |
|-----------------------------------------|------------|------------------------------------|------------|
| ** **                              | ** ** | **2007**                           | ** ** | **2006** | ** ** |
| Base overriding royalties               |       | $                                  | 4,059,893  |   | $ | 4,365,932 |   |
| Bonus royalties                         |       | 2,491,383                          |       | 2,701,307 |   |
| Minimum advance royalty paid (recouped) |       | —                             |       | — |   |
| Fee royalties                           |       | 138,849                            |       | 92,465 |   |
| Total royalty income                    |       | $                                  | 6,690,125  |   | $ | 7,159,704 |   |

 

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Total royalty income for the nine months ended October 31, 2007decreased 14.6% from the prior comparable period to $12,896,302.  Base overriding royalties decreased 14.7% to$7,063,974 and bonus royalties decreased 15.9% to $5,474,730 for the ninemonths ended October 31, 2007.  Thedecrease in base overriding royalties received by the Trust is the result oflower contract prices for shipped iron ore products and a reduction in totalshipments of iron ore from Trust lands through October 31, 2007.  The decrease in bonus royalties received bythe Trust is primarily due to lower contract prices for shipped iron ore and ahigher adjusted threshold price for 2007 resulting in a smaller bonus royaltyamount, which is calculated by multiplying the applicable royalty rate by thedifference between the sales price per ton and the adjusted threshold price for2007 of $45.98 per ton.  Fee royaltiespaid to the Mesabi Land Trust increased approximately 12.6% to $357,598 for thenine months ended October 31, 2007.  Thefollowing table summarizes the components of Mesabi Trust’s total royaltyincome for the nine months ended October 31, 2007 and October 31, 2006.

 
| ** **                              | ** ** | **Nine Months Ended October 31,** | ** ** |
|-----------------------------------------|------------|-----------------------------------|------------|
| ** **                              | ** ** | **2007**                          | ** ** | **2006** | ** ** |
| Base overriding royalties               |       | $                                 | 7,063,974  |   | $ | 8,278,728 |   |
| Bonus royalties                         |       | 5,474,730                         |       | 6,510,521 |   |
| Minimum advance royalty paid (recouped) |       | —                            |       | — |   |
| Fee royalties                           |       | 357,598                           |       | 317,606 |   |
| Total royalty income                    |       | $                                 | 12,896,302 |   | $ | 15,106,855 |   |

 

**Comparisonof Trust Income and Expenses for the Three and Nine Months Ended October 31,2007 and October 31, 2006**

Net income for the fiscal quarter ended October 31, 2007 was$6,593,131, a decrease of approximately 6.4% as compared to the three monthsended October 31, 2006.  The decrease innet income is the result of lower base overriding royalties and bonus royaltiesand is partially offset by higher fee royalties and lower trust expenses forthe three months ended October 31, 2007. Interest income received by Mesabi Trust decreased 36.6% as compared tothe prior comparable period primarily due to a decrease in the total investmentsheld by Mesabi Trust.  Mesabi Trustexpenses decreased 18.3% from the comparable prior period, primarily due to adecrease in the legal and accounting fees incurred in the administration of theTrust.  The following is a summary ofMesabi Trust’s income and expenses for the three months ended October 31, 2007and October 31, 2006.
| ** **           | ** ** | **Three Months Ended October 31,** | ** ** |
|----------------------|------------|------------------------------------|------------|
| ** **           | ** ** | **2007**                           | ** ** | **2006** | ** ** |
| Total royalty income |       | $                                  | 6,690,125  |   | $ | 7,159,704 |   |
| Interest income      |       | 12,930                             |       | 20,388 |   |
| Gross income         |       | 6,703,055                          |       | 7,180,092 |   |
|                 |       |                               |       |   |   |
| Expenses             |       | 109,924                            |       | 134,465 |   |
| Net income           |       | $                                  | 6,593,131  |   | $ | 7,045,627 |   |

 

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Net income for the nine months ended October 31, 2007 was $12,466,888,a decrease of approximately 15.2% as compared to the nine months ended October31, 2006.  This decrease can beattributed to lower base overriding royalties and bonus royalties and ispartially offset by higher fee royalties, as compared to the nine months endedOctober 31, 2006.  Interest income receivedby Mesabi Trust decreased 39.8% from the prior comparable period due to adecrease in the total investments held by Mesabi Trust.  Expenses incurred by Mesabi Trust increased3.0% from the comparable prior period. The following table summarizes Mesabi Trust’s income and expenses forthe nine months ended October 31, 2007 and October 31, 2006.
| ** **           | ** ** | **Nine Months Ended October 31,** | ** ** |
|----------------------|------------|-----------------------------------|------------|
| ** **           | ** ** | **2007**                          | ** ** | **2006** | ** ** |
| Total royalty income |       | $                                 | 12,896,302 |   | $ | 15,106,855 |   |
| Interest income      |       | 27,293                            |       | 45,322 |   |
| Gross income         |       | 12,923,595                        |       | 15,152,177 |   |
|                 |       |                              |       |   |   |
| Expenses             |       | 456,707                           |       | 443,341 |   |
| Net income           |       | $                                 | 12,466,888 |   | $ | 14,708,836 |   |

 

**Unallocated Reserve**

The Unallocated Reserve as of October 31,2007 was $2,651,353, a decrease of 6.5% as compared to the $2,834,647 inUnallocated Reserve as of October 31, 2006. The decrease in the Unallocated Reserve is the result of a decrease inthe cash and investments held by the Trust at the end of the fiscal quarterended October 31, 2007.  The Trusteeshave determined that a portion of the Unallocated Reserve, usually within therange of $500,000 to $1,000,000 or such other amount as the Trustees may deemprudent, should be maintained for unexpected loss contingencies.  As of October 31, 2007, $692,570, or 26% ofthe Unallocated Reserve was unallocated cash and U.S. Government securities,whereas, at October 31, 2006, $900,859, or 32% of the Unallocated Reserve wasunallocated cash and U.S. Government securities.

At October 31, 2007, $1,958,783, orapproximately 74% of the Unallocated Reserve was accrued revenue, primarilyrepresenting royalties not yet received by the Trust but anticipated to bereceived from Northshore in January 2008. Comparatively, at October 31, 2006, $1,933,788, or approximately 68% ofthe Unallocated Reserve was accrued revenue. The slight increase in accrued revenue, which is based upon reportedlessee shipping activity for the month of October 2007, is reflected as accruedincome receivable on the balance sheet at October 31, 2007.  The Trustees anticipate that the accruedincome receivable will be distributed to Unitholders in January 2008, afterproviding for expenses and unexpected loss contingencies.

The Trust’s Unallocated Reserve as of October31, 2007 increased by $1,511,679, or 132%, as compared to the UnallocatedReserve for the fiscal year ended January 31, 2007.  This increase in the Unallocated Reserve isprimarily due to the accrual of royalty income for shipments from Northshoreduring the month of October 2007.  AtJanuary 31, 2007, $409,764, or approximately 36% of the Unallocated Reserve wasaccrued income receivable while $729,910 or 64% was unallocated cash and U.S.Government securities.

The Trustees will continue to monitor the economic circumstances of theTrust to strike a responsible balance between distributions to Unitholders andthe need to maintain adequate reserves at a prudent level, given theunpredictable nature of the iron ore industry, the Trust’s dependence on theactions of the lessee/operator, and the fact that the Trust essentially has noother liquid assets.

 

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Although the actual amount of the UnallocatedReserve will fluctuate from time to time, and may increase or decrease from itscurrent level, it is currently intended that future distributions will behighly dependent upon royalty income as it is received and the level of Trustexpenses.  The amount of future royaltyincome available for distribution will be subject to the volume of iron oreproduct shipments and the dollar level of sales by Northshore.  Shipping activity is greatly reduced duringthe winter months and economic conditions, particularly those affecting thesteel industry, may adversely affect the amount and timing of such futureshipments and sales.

**Recent Developments**

***Production and Shipments***.  CCI reported in its Form 10-Q filed November6, 2007 that production at Northshore for the three months ended September 30,2007 was 1.3 million tons and total production for the nine months endedSeptember 30, 2007 was approximately 3.9 million tons.    Comparatively, production of iron orepellets at Northshore for the three and nine months ended September 30, 2006,was 1.3 million tons and 3.8 million tons, respectively.  Northshore has not provided the Trustees withan estimate of total expected shipments of iron ore pellets for calendar year2007.

During calendaryears 2006, 2005, 2004, 2003 and 2002, the percentage of shipments of iron oreproducts from Mesabi Trust lands was approximately 90.9%, 90.1%, 92.0%, 95.5%and 97.5%, respectively, of total shipments. Northshore has not advised the Trustees as to the percentage of iron oreproducts from Mesabi Trust lands it anticipates shipping in calendar year2007.  See the description of theuncertainty of market conditions in the iron ore and steel industry under “ImportantFactors Affecting Mesabi Trust” below and the information underthe heading “Risk Factors” in Part I — Item 1A of Mesabi Trust’s Annual Reporton Form 10-K for the year-ended January 31, 2007.

***Mesabi Nugget Project.***  In2002, CCI began participating in the Mesabi Nugget Project with Kobe Steel,Ltd. (“Kobe Steel”), Steel Dynamics, Inc., Ferrometrics, Inc. and the State ofMinnesota by constructing a pilot plant at its Northshore mine.  The pilot plant was used to develop and applya new iron making technology (Kobe Steel’s Itmk3 process) for converting ironore into nearly pure iron nugget form. After a third operating phase of the pilot plant test in 2004confirmed the commercial viability of the technology, the pilot plant endedoperations on August 3, 2004. In November 2006, CCI announced that theparticipants in the Mesabi Nugget Project were unable to reach agreement onterms necessary to move forward with construction of a reduced iron plant andefforts to jointly develop the Mesabi Nugget Project at CCI’s Cliffs Erie sitein Hoyt Lakes, Minnesota were suspended.

In its Form 10-Kfiled May 25, 2007, CCI announced that it was evaluating opportunities todevelop a commercial-scale reduced iron nugget production facility to utilizeKobe Steel’s ITmk3 technology.  In itsForm 8-K filed August 17, 2007, CCI announced that it and Kobe Steel intend toconstruct a commercial-scale reduced iron nugget production facility at CCI’sEmpire Mine site in Palmer, Michigan. CCI also announced that the project is subject to obtaining environmentalpermits, execution of final agreements between CCI and Kobe Steel, and finalapproval of each company’s board of directors. The Trust has never been a participant in the Mesabi Nugget Project inany respect and the Trustees are unable to make any projections regarding the extent towhich CCI’s plans to build the commercial-scale reduced iron plant at CCI’sEmpire Mine site might impact shipments from Silver Bay or future royaltiespayable to Mesabi Trust.

***Capacity Expansions***.  In its Form 10-Q filed November 6, 2007, CCIconfirmed that it is continuing construction activity to restart an idledpellet furnace at Northshore’s pelletizing facility in Silver Bay,Minnesota.  CCI reported that the restartof the idled furnace will increase annual capacity by approximately 600,000tons beginning in 2008, increasing capacity to approximately 800,000 tonsthereafter.  CCI has not indicatedwhether the increase in capacity will result in an increase in production

 

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at Northshore or shipments of iron ore pellets fromSilver Bay, Minnesota.  Accordingly, theTrustees are unable to make any projections regarding the extent to which therestart of the idled furnace at Northshore may impact future royalties payableto Mesabi Trust.

***Iron Ore Pricing and ContractAdjustments.***  During the course of itsfiscal year some portion of the royalties paid to Mesabi Trust are based onestimated prices for iron ore products sold under term contracts between CCIand its subsidiaries and certain of their customers (the “CCI Pellet Agreements”).  Mesabi Trust is not a party to any of the CCIPellet Agreements.  These prices aresubject to interim and final pricing adjustments, which can be positive ornegative, and which adjustments are dependent in part on a variety of price andinflation index factors, including but not limited to the internationalbenchmark pellet price, hot band steel prices and various Producer PriceIndexes.  Although Northshore makesinterim adjustments to the royalty payments on a quarterly basis, these priceadjustments cannot be finalized until after the end of a contract year. Thismay result in significant and frequent variations in royalties received byMesabi Trust (and in turn the resulting amount of funds available fordistribution to Unitholders by the Trust) from quarter to quarter and on acomparative historical basis, and these variations, which can be positive ornegative, cannot be predicted by Mesabi Trust.

***Northshore Administrative PermittingProceedings***.  In its Form 10-Q filedNovember 6, 2007, CCI did not provide an update to the matters previouslyreported regarding the administrative permit amendment application that CCI submitted onDecember 16, 2006 to the Minnesota Pollution Control Agency with respect toNorthshore’s Title V operating permit or the Notice of Intent to Sue thatNorthshore received from the Save Lake Superior Association and the Sierra Clubon July 30, 2007.  See the disclosureunder the heading “*Recent Developments -**Northshore Administrative Permit Amendment*”in the Trust’s Form 10-Q filed September 9, 2007 for more information on theseproceedings.  Even though the Trust isnot a party to either of these proceedings, the Trustees will continue tomonitor the status of the proceedings. Given the inherent uncertainty surrounding these proceedings, theTrustees are unable to predict what effect, if any, a decision adverse toNorthshore and/or CCI with respect to these proceedings would have on royaltiespayable to the Trust.

***Securities Regulation***.  Mesabi Trust is a publicly-traded trustlisted on the New York Stock Exchange (“NYSE”) and is therefore subject toextensive regulation under, among others, the Securities Act of 1933, theSecurities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”)and the rules and regulations of the NYSE. Issuers failing to comply with such authorities risk seriousconsequences, including criminal as well as civil and administrative penalties.  In most instances, these laws, rules andregulations do not specifically address their applicability to publicly-tradedtrusts such as Mesabi Trust.  Inparticular, Sarbanes-Oxley mandated the adoption by the Securities and ExchangeCommission (the “SEC”) and NYSE of certain rules and regulations that areimpossible for Mesabi Trust to literally satisfy because of its nature as apass-through trust.  Pursuant to NYSErules Mesabi Trust is exempt from many of the corporate governance requirementsthat apply to publicly traded corporations.  Mesabi Trust does not have, nor does the Agreement of Trust provide for,a board of directors, an audit committee, a corporate governance committee or acompensation committee.  The Trusteesintend to closely monitor the rulemaking activity of the SEC and the NYSE andwill comply with such rules and regulations to the extent applicable.

**Important Factors Affecting Mesabi Trust**

The Agreement of Trust specifically prohibits the Trustees fromentering into or engaging in any business. This prohibition seemingly applies even to business activities theTrustees deem necessary or proper for the preservation and protection of theTrust Estate (as such term is defined below). Accordingly, the Trustees’ activities in connection with theadministration of Trust assets are limited to collecting income, payingexpenses and liabilities, distributing net income to Mesabi Trust’s Unitholders

 

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after the payment of, or provision for, suchexpenses and liabilities, and protecting and conserving the assets held.  Consequently, the income of Mesabi Trust ishighly dependent upon the activities and operations of Northshore, and theterms and conditions of the leases and assignments of leases between MesabiTrust and Northshore.

Neither Mesabi Trust nor the Trustees have any control over theoperations and activities of Northshore, except within the framework of theAmended Assignment Agreements.  CCI alonecontrols (i) historical operating data, including iron ore production volumes,marketing of iron ore products, operating and capital expenditures as theyrelate to Northshore, environmental and other liabilities and the effects ofregulatory changes; (ii) plans for Northshore’s future operating and capitalexpenditures; (iii) geological data relating to ore reserves (iv) projectedproduction of iron ore products; (v) contracts between CCI and Northshore withtheir customers; and (vi) the decision to mine off Mesabi Trust and/or statelands (which is based on its current mining and engineering plan).  The Trustees do not exert any influence overmining operational decisions, nor do the Trustees provide any input regardingthe ore reserve estimate reported by CCI. While the Trustees request material information for use in periodicreports as part of their evaluation of Mesabi Trust’s disclosure controls andprocedures, the Trustees do not control this information and they rely on theinformation in CCI’s periodic and current filings with the SEC to provideaccurate and timely information in Mesabi Trust’s reports filed with the SEC.

In accordance with the Agreement of Trust and the Amendment, theTrustees are entitled to, and in fact do rely, upon certain experts in goodfaith, including (i) the independent consultants with respect to monthlyproduction and shipment reports, which include figures on crude ore productionand iron ore pellet shipments, and discussions concerning the condition andaccuracy of the scales and plans regarding the development of Mesabi Trust’smining property; and (ii) the accounting firm they have contracted with fornon-audit services, including reviews of financial data related to shipping andsales reports provided by Northshore and a review of the schedule of leaseholdroyalties payable to Mesabi Trust.

For a discussion of additional factors, including but not limited tothose that could adversely affect Mesabi Trust’s actual results andperformance, see “Risk Factors” in Part I — Item 1A of Mesabi Trust’s AnnualReport on Form 10-K for the year-ended January 31, 2007.

**Critical Accounting Policies**

This “Trustees’ Discussion and Analysis of Financial Condition andResults of Operations” is based upon Mesabi Trust’s financial statements, whichhave been prepared in accordance with accounting principles generally acceptedin the United States.  The preparation ofthese financial statements requires the Trustees to make estimates andjudgments that affect the reported amounts of assets, liabilities, revenues andexpenses, and related disclosure of contingent assets and liabilities.  These estimates form the basis for makingjudgments about the carrying value of assets and liabilities that are notreadily apparent from other sources.  TheTrustees base their estimates and judgments on historical experience and onvarious other assumptions that the Trustees believe are reasonable under thecircumstances.  However, future eventsare subject to change and the best estimates and judgments may requireadjustment.

Critical accounting policies are those that have meaningful impact onthe reporting of Mesabi Trust’s financial condition and results, and thatrequire significant management judgment and estimates.  The Trustees have determined that there areno critical accounting policies.

 

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**Item3.  Quantitative and QualitativeDisclosures About Market Risk.**

Not applicable.

**Item4.  Controls and Procedures.**

***Evaluation of Disclosure Controlsand Procedures******. ***The Trustees maintain disclosure controls andprocedures designed to ensure that information required to be disclosed byMesabi Trust in the reports that it files or submits under the SecuritiesExchange Act of 1934, as amended, is recorded, processed, summarized andreported within the time periods specified in the rules and regulations of theSecurities and Exchange Commission. Disclosure controls and procedures include controls and proceduresdesigned to ensure that information required to be disclosed by Mesabi Trust isaccumulated and communicated by Northshore and consultants to the Trustees asappropriate, to allow timely decisions regarding required disclosure.

As part of their evaluation of Mesabi Trust’s disclosure controls andprocedures, the Trustees rely on quarterly shipment and royalty calculationsprovided by Northshore.  BecauseNorthshore has declined to support this information with a writtencertification attesting to whether Northshore has established disclosurecontrols and procedures and internal controls sufficient to enable it to verifythat the information furnished to the Trustees is accurate and complete, theTrustees also rely on (a) an annual certification from Northshore andNorthshore’s parent, CCI, certifying as to the accuracy of the royaltycalculations, and (b) the related due diligence review performed by the Trust’sexternal accountants.  In addition,Mesabi Trust’s consultants review the schedule of leasehold royalties payableand shipping and sales reports provided by Northshore against production andshipment reports prepared by the Eveleth Fee Office, Inc., an independentconsultant to Mesabi Trust (“Eveleth Fee Office”). The Eveleth Fee Officegathers production and shipping information from Northshore and preparesmonthly production and shipment reports for the Trustees. Furthermore, as partof its engagement by Mesabi Trust, the Eveleth Fee Office also attendsNorthshore’s calibration and testing of its crude ore scales and boat loaderscales which are conducted on a periodic basis.

As of the end of the period covered by this report, the Trusteescarried out an evaluation of Mesabi Trust’s disclosure controls andprocedures.  The Trustees have concludedthat such disclosure controls and procedures are effective.

***Changes in Internal Control OverFinancial Reporting***.  Tothe knowledge of the Trustees, there has been no change in Mesabi Trust’sinternal control over financial reporting that occurred during Mesabi Trust’slast fiscal quarter that has materially affected, or is reasonably likely tomaterially affect, Mesabi Trust’s internal control over financialreporting.  The Trustees note forpurposes of clarification that they have no authority over, and make nostatement concerning, the internal control over financial reporting ofNorthshore or CCI.

 

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**PART II - OTHER INFORMATION**

**Item 1.****                    ****LegalProceedings.**

None.

**Item 1A.****           ****RiskFactors**

There have been no materialchanges in Mesabi Trust’s risk factors as described in Part I Item 1A, “RiskFactors” in Mesabi Trust’s Annual Report on Form 10-K for the year endedJanuary 31, 2007.

**Item 2.****                    ****UnregisteredSales of Equity Securities and Use of Proceeds.**

None.

**Item 3.****                    ****DefaultsUpon Senior Securities.**

None.

**Item 4.****                    ****Submissionof Matters to a Vote of Security Holders.**

None.

**Item 5.****                    ****OtherInformation.**

None.

**Item 6.****                    ****Exhibits.**

31        Certificationof Corporate Trustee of Mesabi Trust pursuant to Rule 13a-14 of the                 Securities Exchange Act of1934, as adopted pursuant to Section 302 of the                 Sarbanes-Oxley Act of2002.

32                        Certificationof Corporate Trustee of Mesabi Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1               Report ofGordon, Hughes & Banks, LLP, dated December 5, 2007 regarding its review ofthe unaudited interim financial statements of Mesabi Trust for its quarterended October 31, 2007.

** **

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

| MESABI  TRUST                                                     |
|-------------------------------------------------------------------|
| (Registrant)                                                      |
|                                                              |
| By:                                                               | DEUTSCHE  BANK TRUST COMPANY AMERICAS  Corporate Trustee |
| Principal  Administrative Officer and duly authorized signatory:* |
|                                                              |
| By:                                                               | DEUTSCHE  BANK NATIONAL TRUSTCOMPANY |
|                                                              |

Date:  December 5, 2007

|   |                                           |
|--------|------------------------------------------------|
| By:    | /s/  Rodney Gaughan                            |
|   | Name:  Rodney Gaughan                          |
|   | Title:  Vice President                    |
|   | Deutsche  Bank National Trust Company          |
|   |  For Deutsche Bank Trust Company Americas |

 

 

*There are no principal executive officers or principal financial officers ofthe registrant.

 

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