** **

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**WASHINGTON,D.C. 20549

**FORM10-Q**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the quarterly period ended July 31, 2006**

**or**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the transition period from                              to                             **

**Commission File Number:  1-4488**

**MESABITRUST**

(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’stelephone number, including area code)

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.      Yes  x  No  o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act:

Large accelerated filer    o    Accelerated filer    x     Non-acceleratedfiler    o

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes o  No  x

As of September 7,2006, there were 13,120,010 Units of Beneficial Interest in Mesabi Trustoutstanding.

 

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**PART I - FINANCIAL INFORMATION**

**Item 1.****      ****Financial Statements. (Note 1)**

**Mesabi Trust**

**Condensed Statements of Income**

**Three and Six Months Ended July31, 2006 and 2005**

**(unaudited)**

 
| ** **                                       | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                       | ** ** | **July 31,**                | ** ** | **July 31,**              | ** ** |
| ** **                                       | ** ** | **2006**                         | ** ** | **2005**                       | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                       | ** ** | ** **                       | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| **A.****  Condensed  Statements of Income** | ** ** | ** **                       | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** |
|                                             |       |                             |       |                           |       |   |   |   |   |
| Revenues                                         |       |                             |       |                           |       |   |   |   |   |
| Royalty income                                   |       | $                                | 6,310,152  |                           | $          | 5,541,043 |   | $ | 7,947,151 |   | $ | 7,884,491 |   |
| Interest income                                  |       | 16,962                           |       | 12,410                         |       | 24,934 |   | 23,047 |   |
|                                             |       | 6,327,114                        |       | 5,553,453                      |       | 7,972,085 |   | 7,907,538 |   |
|                                             |       |                             |       |                           |       |   |   |   |   |
| Expenses                                         |       | 137,759                          |       | 145,972                        |       | 308,876 |   | 364,895 |   |
|                                             |       |                             |       |                           |       |   |   |   |   |
| Net income                                       |       | $                                | 6,189,355  |                           | $          | 5,407,481 |   | $ | 7,663,209 |   | $ | 7,542,643 |   |
|                                             |       |                             |       |                           |       |   |   |   |   |
| Weighted average  number of units outstanding    |       | 13,120,010                       |       | 13,120,010                     |       | 13,120,010 |   | 13,120,010 |   |
|                                             |       |                             |       |                           |       |   |   |   |   |
| Net income per  unit (Note 2)                    |       | $                                | 0.47       |                           | $          | 0.41 |   | $ | 0.58 |   | $ | 0.57 |   |
|                                             |       |                             |       |                           |       |   |   |   |   |
| Distributions  declared per unit                 |       | $                                | 0.40       |                           | $          | 0.37 |   | $ | 0.70 |   | $ | 0.70 |   |

 

See Notes toCondensed Financial Statements.

2

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**Mesabi Trust**

**Condensed Balance Sheets**

**July 31, 2006 (unaudited) andJanuary 31, 2006**

 
| ** **                                                                 | ** ** | **July 31, 2006** | ** ** | **January 31, 2006** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------|------------|--------------------------------|------------|
| ** **                                                                 | ** ** | **(unaudited)**             | ** ** | ** **                     | ** ** |
| **B.****  Condensed  Balance Sheets**                                 | ** ** | ** **                  | ** ** | ** **                     | ** ** |
|                                                                       |       |                        |       |                           |       |
| **Assets**                                                                 | ** ** | ** **                  | ** ** | ** **                     | ** ** |
|                                                                       |       |                        |       |                           |       |
| Cash                                                                       |       | $                           | 5,398,820  |                           | $          | 6,377,990 |   |
|                                                                       |       |                        |       |                           |       |
| U.S. Government  securities, at amortized cost (which approximates market) |       | 668,387                     |       | 648,193                        |       |
|                                                                       |       |                        |       |                           |       |
| Accrued income  receivable                                                 |       | 2,631,154                   |       | 4,277,766                      |       |
| Prepaid expenses                                                           |       | 61,904                      |       | 25,007                         |       |
| Total current  assets                                                      |       | 8,760,265                   |       | 11,328,956                     |       |
|                                                                       |       |                        |       |                           |       |
| 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                              |       |
|                                                                       |       |                        |       |                           |       |
|                                                                       |       | $                           | 8,760,268  |                           | $          | 11,328,959 |   |
|                                                                       |       |                        |       |                           |       |
| **Liabilities,  Unallocated Reserve and Trust Corpus**                     | ** ** | ** **                  | ** ** | ** **                     | ** ** |
|                                                                       |       |                        |       |                           |       |
| Liabilities                                                                |       |                        |       |                           |       |
| Distribution  payable                                                      |       | $                           | 5,248,004  |                           | $          | 6,166,405 |   |
| Accrued expenses                                                           |       | 48,035                      |       | 177,527                        |       |
| Total current  liabilities                                                 |       | 5,296,039                   |       | 6,343,932                      |       |
|                                                                       |       |                        |       |                           |       |
| Unallocated  Reserve (Note 3)                                              |       | 3,464,226                   |       | 4,985,024                      |       |
| Trust Corpus                                                               |       | 3                           |       | 3                              |       |
|                                                                       |       |                        |       |                           |       |
|                                                                       |       | $                           | 8,760,268  |                           | $          | 11,328,959 |   |

 

See Notes to CondensedFinancial Statements.

3

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**Mesabi Trust**

**Condensed Statements of CashFlows**

**Six Months Ended July 31, 2006and 2005 (unaudited)**

 

 
| ** **                                                                     | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                     | ** ** | **July 31,**              | ** ** |
| ** **                                                                     | ** ** | **2006**                       | ** ** | **2005** | ** ** |
|                                                                           |       |                           |       |   |   |
| **C.****  Condensed  Statements of Cash Flows**                           | ** ** | ** **                     | ** ** | ** ** | ** ** |
|                                                                           |       |                           |       |   |   |
| Cash flows from operating activities                                           |       |                           |       |   |   |
| Royalties received                                                             |       | $                              | 9,591,781  |   | $ | 9,599,253 |   |
| Interest received                                                              |       | 26,915                         |       | 26,655 |   |
| Expenses paid                                                                  |       | (475,264                       | )          | (356,774 | ) |
|                                                                           |       |                           |       |   |   |
| Net cash provided by operating activities                                      |       | 9,143,432                      |       | 9,269,134 |   |
|                                                                           |       |                           |       |   |   |
| Cash flows from investing activities                                           |       |                           |       |   |   |
| Maturities of U.S. Government Securities                                       |       | 10,810,385                     |       | 8,452,420 |   |
| Purchases of U.S. Government Securities                                        |       | (10,830,579                    | )          | (8,352,420 | ) |
|                                                                           |       |                           |       |   |   |
| Net cash provided by (used for) investing activities                           |       | (20,194                        | )          | 100,000 |   |
|                                                                           |       |                           |       |   |   |
| Cash flow from financing activities                                            |       |                           |       |   |   |
| Distributions to Unitholders                                                   |       | (10,102,408                    | )          | (8,200,006 | ) |
|                                                                           |       |                           |       |   |   |
| Net change in cash                                                             |       | (979,170                       | )          | 1,169,128 |   |
|                                                                           |       |                           |       |   |   |
| Cash, beginning of year                                                        |       | 6,377,990                      |       | 3,970,870 |   |
|                                                                           |       |                           |       |   |   |
| Cash, end of quarter                                                           |       | $                              | 5,398,820  |   | $ | 5,139,998 |   |
|                                                                           |       |                           |       |   |   |
| **Reconciliation of net income to net cash provided  by operating activities** | ** ** | ** **                     | ** ** | ** ** | ** ** |
|                                                                           |       |                           |       |   |   |
| Net income                                                                     |       | $                              | 7,663,209  |   | $ | 7,542,643 |   |
| Decrease in accrued income receivable                                          |       | 1,646,612                      |       | 1,718,370 |   |
| Increase in prepaid expenses                                                   |       | (36,897                        | )          | (4,762 | ) |
| (Decrease) increase in accrued expenses                                        |       | (129,492                       | )          | 12,883 |   |
|                                                                           |       |                           |       |   |   |
| Net cash provided by operating activities                                      |       | $                              | 9,143,432  |   | $ | 9,269,134 |   |

 

See Notes toCondensed Financial Statements.

4

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**MESABITRUST**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**July 31, 2006 (unaudited)**

Note 1.         The financial statements included herein havebeen prepared without audit (except for the balance sheet at January 31, 2006)in accordance with the instructions to Form 10-Q pursuant to the rules andregulations of the Securities and Exchange Commission.  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles have been condensed or omitted pursuant to suchrules and regulations.  In the opinion ofthe Trustees, all adjustments, consisting only of normal recurring adjustments,necessary for a fair statement of (a) the results of operations for the threemonths and six months ended July 31, 2006 and 2005, (b) the financial positionat July 31, 2006 and January 31, 2006, and (c) the cash flows for the sixmonths ended July 31, 2006 and 2005, have been made.

Note 2.         Earnings per unit are based on weightedaverage number of units outstanding during the periods presented (13,120,010units).

Note 3.         The Trustees have determined that theUnallocated Reserve should be maintained at a prudent level, usually within therange of $500,000 to $1,000,000, to meet present or future liabilities of theTrust.  Accordingly, although the actualamount of the Unallocated Reserve will fluctuate from time to time, and mayincrease or decrease from its current level, it is currently intended thatfuture distributions will be highly dependent upon royalty income as it isreceived quarterly and the level of Trust expenses that the Trustees anticipateoccurring in subsequent quarters.  TheTrustees determine the level of distributions on a quarterly basis afterreceiving notification from Northshore Mining Company as to the amount ofroyalty income that will be received and after determination of any known oranticipated expenses, liabilities and obligations of the Trust.  At July 31, 2006, the Unallocated Reserve wasrepresented by $833,072 in unallocated cash and U.S. Government securities, and$2,631,154 of accrued revenue primarily representing royalties not yet receivedby the Trust but anticipated to be received in October 2006 from NorthshoreMining Company as part of the royalty due with respect to the second fiscalquarter, based upon reported lessee shipping activity for the month of July2006.

5

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

**Forward-Looking Statements**

Certain statements contained in this document are considered “forward-lookingstatements” within the meaning of the Private Securities Litigation Reform Actof 1995.  All such forward-lookingstatements, including those statements estimating calendar year 2006 productionor shipments, 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,” “believe,”“anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast”and other similar words.  Suchforward-looking statements are inherently subject to known and unknown risksand uncertainties.  Actual results andfuture developments could differ materially from the results or developmentsexpressed in or implied by these forward-looking statements.  For a discussion of the factors, includingbut not limited to, those that could adversely affect the Trust’s actual resultsand performance, see “Risk Factors” in Part I – Item 1A of the Trust’s AnnualReport on Form 10-K for the year-ended January 31, 2006.  Mesabi Trust undertakes no obligation, otherthan that imposed by law, to make any revisions to the forward-looking statementscontained in this filing or to update them to reflect circumstances occurringafter the date of this filing.

**Background**

Mesabi Trust (“Mesabi Trust”or the “Trust”), formed pursuant to an Agreement of Trust dated July 18, 1961(the “Agreement of Trust”), is a trust organized under the laws of the State ofNew York.  The Agreement of Trustspecifically prohibits the Trustees from entering into or engaging in anybusiness.  This prohibition applies evento business activities the Trustees 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 the Trust (“Unitholders”) after thepayment of, or provision for, such expenses and liabilities, and protecting andconserving the assets held.

The Trustees do not intendto expand their responsibilities beyond those permitted or required by theAgreement of Trust, the Amendment to the Agreement of Trust dated October 25,1982 (the “Amendment”), and those required under applicable law.  The Trust has no employees, but it engagesindependent consultants to assist the Trustees in, among other things,monitoring the amount and sales prices of iron ore products shipped from SilverBay, Minnesota, based on information supplied to the Trustees by NorthshoreMining Company (“Northshore”), the lessee/operator of the 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 incomeconstitutes the principal source of the Trust’s revenue.  Royalty rates are determined in accordancewith the terms of Mesabi Trust’s leases and assignments of leases.

Three types of royalties, aswell as royalty bonuses, comprise the Trust’s leasehold royalty income:

·                                          Base overriding royalties, which historically constitute the majorityof Mesabi Trust’s royalty income, are determined by both the volume and sellingprice of iron ore products shipped. Northshore is obligated to pay Mesabi Trust base overriding royalties invarying 

6

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amounts, based on the volume of iron oreproducts shipped.  Base overridingroyalties are calculated as a percentage of the gross proceeds of iron oreproducts produced at Mesabi Trust lands (and to a limited extent other lands)and shipped from Silver Bay, Minnesota. The percentage ranges from 2-1/2% of the gross proceeds for the firstone million 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.  (See the section entitled “RoyaltyComparisons” below for more information.)

·                                          Royalty bonuses are earned when iron ore products shippedfrom Silver Bay are sold at prices above a threshold price.  The royalty bonus is a percentage of thegross proceeds of product shipped from Silver Bay and sold at prices above athreshold price.  The threshold price isadjusted (but not below $30.00) on an annual basis for inflation and deflation(the “Adjusted Threshold Price”).  TheAdjusted Threshold Price is $44.60 per ton for calendar year 2006.  Comparatively, the Adjusted Threshold Pricewas $42.89 for calendar year 2005.  Theroyalty bonus percentage ranges from 1/2 of 1% of the gross proceeds (on alltonnage shipped for sale at prices between the Adjusted Threshold Price and$2.00 above the Adjusted Threshold Price) to 3% of the gross proceeds (on alltonnage shipped for sale at prices $10.00 or more above the Adjusted ThresholdPrice).  Royalty bonuses are subject toprice adjustments under the CCI Pellet Agreements and, as described elsewherein this report, such adjustments may be positive or negative.  (See the section entitled “RoyaltyComparisons” below for more information.)

·                                          Fee royalties, which historically constitute a smallercomponent of the Trust’s royalty income, are payable to Mesabi Land Trust, aMinnesota land trust, which holds a 20% interest as fee owner in the PetersLease.  Mesabi Trust holds the entirebeneficial interest in the Mesabi Land Trust for which U.S. Bank N.A. acts astrustee.  Mesabi Trust is entitled toreceive the net income of the Mesabi Land Trust, which is generated fromroyalties on the amount of crude ore mined after the payment of expenses.  Currently, the fee royalty on crude ore isbased on an agreed price per ton, subject to certain indexing.  Crude ore is the source of iron oxides usedto make iron ore pellets and other products.

·                                          Minimum advance royalties: Generally, Northshore’s obligation to pay base overriding royalties androyalty bonuses with respect to the sale of iron ore products accrues upon theshipment of those products from Silver Bay. However, regardless of whether any shipment has occurred, Northshore isobligated to pay to Mesabi Trust a minimum advance royalty.  Each year, the amount of the minimum advanceroyalty is adjusted (but not below $500,000 per annum) for inflation anddeflation.  The minimum advance royaltywas $714,988 for calendar year 2005 and is $743,420 for calendar year2006.  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 tomake quarterly royalty payments in January, April, July and October of eachyear.  In the case of base overridingroyalties and royalty bonuses, these quarterly royalty payments 

7

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areto be made whether or not the related proceeds of sale have been received byNorthshore by the time such payments become due.

Under the relevantagreements, Northshore may mine and ship iron ore products from lands otherthan Mesabi Trust lands.  Northshorealone determines whether to mine off Trust and/or such other lands, based onits current mining and engineering plan. The Trustees do not exert any influence over mining operationaldecisions.  To encourage the use of ironore products from Mesabi Trust lands, Mesabi Trust receives royalties on statedpercentages of iron ore shipped from Silver Bay, whether or not the iron oreproducts are from Mesabi Trust lands. Mesabi Trust receives royalties at the greater of (i) the aggregatequantity of iron ore products shipped that were mined from Mesabi Trust lands,and (ii) a portion of the aggregate quantity of all iron ore products shippedthat were mined from any lands, such portion being 90% of the first fourmillion tons shipped during such year, 85% of the next two million tons shippedduring such year, and 25% of all tonnage shipped during such year in excess ofsix million tons.

As noted above, the informationregarding amounts and sales prices of shipped iron ore products is used tocompute the royalties payable to Mesabi Trust by Northshore.  Deutsche Bank Trust Company Americas, theCorporate Trustee, also performs certain administrative functions for MesabiTrust.

**Resultsof Operations**

As shown in the table below,production of iron ore pellets at Northshore from Mesabi Trust lands during thefiscal quarter ended July 31, 2006 totaled approximately 1.25 million tons, andactual shipments over the same period totaled approximately 1.43 milliontons.  By comparison, actual pelletproduction during the same period in 2005 totaled approximately 1.04 milliontons, and actual shipments approximated 1.35 million tons.
| Three Months Ended | ** ** | **Pellets Produced from   Trust Lands** | ** ** | **Shipments from Trust   Lands** | ** ** |
|------------------------------|------------|-------------------------------------------------------------|------------|-------------------------------------------------|------------|
| July 31, 2006                |       | 1,246,138                                                   |       | 1,427,269                                       |       |
| July 31, 2005                |       | 1,035,952                                                   |       | 1,351,033                                       |       |

 

During the six months ended July 31, 2006, production of iron orepellets at Northshore from Mesabi Trust lands totaled approximately 2.46million tons, and actual shipments over the same period totaled approximately1.96 million tons.  By comparison, actualpellet production during the same period in 2005 totaled approximately 2.19million tons, and actual shipments approximated 1.89 million tons.
| Six Months Ended | ** ** | **Pellets Produced from   Trust Lands** | ** ** | **Shipments from Trust   Lands** | ** ** |
|----------------------------|------------|-------------------------------------------------------------|------------|-------------------------------------------------|------------|
| July 31, 2006              |       | 2,464,724                                                   |       | 1,964,328                                       |       |
| July 31, 2005              |       | 2,191,887                                                   |       | 1,888,975                                       |       |

 

The higher production andshipment figures through July 31, 2006, are the result of increased miningactivity at Northshore combined with an increase in the volume of shipmentsfrom Silver Bay.

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**Comparisonof Three Months Ended July 31, 2006 and July 31, 2005**

Net income for the quarterended July 31, 2006 was $6,189,355 an increase of approximately 14% compared tothe fiscal quarter ended July 31, 2005. This increase was due to increases in the base overriding royalties paidto the Trust, resulting from an increase in the volume of shipments, and higherroyalty bonuses during the quarter due to increases in pellet prices.  In addition, expenses decreased nearly 6%from the comparable prior period due to a reduction in the general andadministrative expenses, primarily legal and accounting fees, incurred by theTrust.  The following table provides asummary of results for the three months ended July 31, 2006 and July 31, 2005,respectively.
|                       | ** ** | **Three Months Ended July 31,** | ** ** |
|-----------------------|------------|-----------------------------------------------------|------------|
| ** **            | ** ** | **2006**                                            | ** ** | **2005** | ** ** |
| Total royalty  income |       | $                                                   | 6,310,152  |   | $ | 5,541,043 |   |
| Interest income       |       | 16,962                                              |       | 12,410 |   |
| Gross income          |       | 6,327,114                                           |       | 5,553,453 |   |
|                  |       |                                                |       |   |   |
| Expenses              |       | 137,759                                             |       | 145,972 |   |
| Net income            |       | $                                                   | 6,189,355  |   | $ | 5,407,481 |   |

 

**Comparisonof Six Months Ended July 31, 2006 and July 31, 2005**

Net income for the sixmonths ended July 31, 2006 was $7,663,209, an increase of approximately 2% overthe six months ended July 31, 2005.  Thisincrease was due to a slight increase in the bonus royalties figure for thefirst half of fiscal 2007.  Trustexpenses also decreased 15% from the comparable prior period due to a reductionin the general and administrative expenses, primarily legal and accountingfees, incurred by the Trust.  Followingis a summary of results for the six months ended July 31, 2006 and July 31,2005, respectively.
|                       | ** ** | **Six Months Ended July 31,** | ** ** |
|-----------------------|------------|---------------------------------------------------|------------|
| ** **            | ** ** | **2006**                                          | ** ** | **2005** | ** ** |
| Total royalty  income |       | $                                                 | 7,947,151  |   | $ | 7,884,491 |   |
| Interest income       |       | 24,934                                            |       | 23,047 |   |
| Gross income          |       | 7,972,085                                         |       | 7,907,538 |   |
|                  |       |                                              |       |   |   |
| Expenses              |       | 308,876                                           |       | 364,895 |   |
| Net income            |       | $                                                 | 7,663,209  |   | $ | 7,542,643 |   |

 

**UnallocatedReserve**

Unallocated Reserve as ofJuly 31, 2006 was $3,464,226, an increase of approximately 29% compared to theUnallocated Reserve as of July 31, 2005. The increase is primarily due to an increase in the royalty revenue thatwas accrued on the Trust’s balance sheet at the end of the fiscal quarter endedJuly 31, 2006, but not yet paid to the Trust. At July 31, 2006, approximately 76% of the Unallocated Reserve, or$2,631,154, was accrued revenue primarily representing royalties not yetreceived by the Trust but anticipated to be received in October 2006 fromNorthshore as part of the royalty due with respect to the Trust’s second fiscalquarter.  The increased royalty revenueaccrual, which is based upon reported lessee shipping activity for the month ofJuly 2006, is reflected as Accrued Income Receivable on the balance sheet atJuly 31, 2006, which the Trustees anticipate will be distributed, afterproviding for expenses and reserves, during the quarter in which it isreceived.

9

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The Trustees have determinedthat a portion of the Unallocated Reserve, usually within the range of $500,000to $1,000,000 or such other amount as the Trustees may deem prudent, should bemaintained as a reserve for unexpected loss contingencies.  At July 31, 2006, approximately 24% of theUnallocated Reserve, or $833,072, was represented by unallocated cash and U.S.Government securities.

The Trustees will continueto monitor the economic circumstances of the Trust to strike a responsiblebalance between distributions to Unitholders and the need to maintain adequatereserves at a prudent level, given the unpredictable nature of the iron oreindustry, the Trust’s dependence on the actions of the lessee/operator, and thefact that the Trust essentially has no other liquid assets.  Following is a comparison of UnallocatedReserve over the past year.
|                      | ** ** | **As of July 31,** | ** ** |
|----------------------|------------|-----------------------------------|------------|
| ** **           | ** ** | **2006**                          | ** ** | **2005** | ** ** |
| Unallocated  Reserve |       | $                                 | 3,464,226  |   | $ | 2,682,399 |   |
|                      |            |                                   |            |  |  |  |  |

 

Althoughthe actual amount of the Unallocated Reserve will fluctuate from time to time,and may increase or decrease from its current level, it is currently intendedthat future distributions will be highly dependent upon royalty income as it isreceived and the level of Trust expenses. The amount of future royalty income available for distribution will besubject to the volume of iron ore product shipments and the dollar level ofsales by Northshore.  Shipping activityis greatly reduced during the winter months and economic conditions,particularly those affecting the steel industry, may adversely affect theamount and timing of such future shipments and sales.

**Royalty Comparisons**

Royalties received in July2006 included a royalty bonus payment, reflecting prices of pellets shippedthat exceeded the current Adjusted Threshold Price of $44.60 per ton.  Total royalty income for the three monthsended July 31, 2006 increased approximately 14%, as compared to the priorcomparable period due to an increase in the volume of shipments and generallyhigher pellet prices.  The followingtable summarizes Mesabi Trust’s royalty income for the three months ended July31, 2006 and July 31, 2005, respectively:
|                                          | ** ** | **Three Months Ended July 31,** | ** ** |
|------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                               | ** ** | **2006**                                            | ** ** | **2005** | ** ** |
| Base overriding  royalties               |       | $                                                   | 3,373,097  |   | $ | 3,011,663 |   |
| Bonus royalties                          |       | 2,823,672                                           |       | 2,445,365 |   |
| Minimum advance  royalty paid (recouped) |       | —                                              |       | — |   |
| Fee royalties                            |       | 113,383                                             |       | 84,015 |   |
| **Total  royalty income**                |       | $                                                   | 6,310,152  |   | $ | 5,541,043 |   |

 

Total royalty income for the six months ended July 31, 2006 increasedless than 1%, as compared to the prior comparable period.  The slightly higher total royalty incomefigure is the result of a small increase in bonus royalties and fee royaltyfigures due to higher pellet prices and increased production atNorthshore.  The following tablesummarizes Mesabi Trust’s royalty income for the six months ended July 31, 2006and July 31, 2005, respectively:

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|                                          | ** ** | **Six Months Ended July 31,** | ** ** |
|------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                               | ** ** | **2006**                                          | ** ** | **2005** | ** ** |
| Base overriding  royalties               |       | $                                                 | 3,912,795  |   | $ | 3,936,680 |   |
| Bonus royalties                          |       | 3,809,214                                         |       | 3,768,634 |   |
| Minimum advance royalty  paid (recouped) |       | —                                            |       | — |   |
| Fee royalties                            |       | 225,142                                           |       | 179,177 |   |
| **Total royalty income**                 |       | $                                                 | 7,947,151  |   | $ | 7,884,491 |   |

 

**Recent Developments**

***Production and Shipments***.  CCI reported in its Form 10-Qfiled July 27, 2006 that production for the first six months of 2006 forNorthshore was approximately 2.5 million tons of iron ore pellets, representingan increase of approximately 100,000 tons from the first six months of2005.  CCI’s  forecast for production at Northshore iscurrently set at 5.0 million tons of iron ore pellets (using iron ore minedboth from Mesabi Trust lands and from other than Mesabi Trust lands) forcalendar year 2006, which represents an increase of 100,000 tons from totalactual production for calendar year 2005. Northshore has not provided the Trustees with an estimate of itscalendar year 2006 shipments of iron ore pellets.

During calendar years 2005, 2004, 2003, 2002 and2001, the percentage of shipments of iron ore products from Mesabi Trust landswas approximately 90.1%, 92.0%, 95.5%, 97.5% and 99.2%, respectively, of totalshipments.  Northshore has not advisedthe Trustees as to the percentage of iron ore products from Mesabi Trust landsit anticipates shipping in calendar year 2006. See the description of the uncertainty of market conditions in the ironore and steel industry under “Important Factors Affecting Mesabi Trust” below and the information under the heading “RiskFactors” in Part I – Item 1A of the Trust’s Annual Report on Form 10-K for theyear-ended January 31, 2006.

***Capacity Expansions***.  In a Form 8-K filed August 10,2006, CCI stated that it is reevaluating its plans to restart an idled pelletfurnace at the Northshore Mine’s pellet facility.  As previously reported, CCI decided to deferplans to repair and restart an idle furnace at Northshore until marketconditions improved.  CCI estimates thatits annual production would increase by approximately 800,000 tons if it wereto restart the idle furnace at Northshore. Northshore has not provided the Trustees with an estimate of its futureproduction plans or anticipated shipments of iron ore pellets.  Accordingly, the Trustees are unable to makeany projections as to the extent to which CCI’s potential capacity expansions,if any, may impact future royalties payable to the Trust.

***Iron Ore Pricing and Contract Adjustments.***  During the course of its fiscal year some portion of the royalties paidto Mesabi Trust will be based on estimated prices for iron ore products soldunder certain term contracts between Northshore, CCI and certain of theircustomers (the “CCI Pellet Agreements”). Mesabi Trust is not a party to the CCI Pellet Agreements.  These prices are subject to interim and finalpricing adjustments, which can be positive or negative, and which adjustmentsare dependent in part on multiple price and inflation index factors that arenot known until after the end of a contract year. This can result insignificant and frequent variations in royalties received by Mesabi Trust (andin turn the resulting amount available for distribution to Unitholders by theTrust) from quarter to quarter and on a comparative historical basis, and thesevariations, which can be positive or negative, cannot be predicted by MesabiTrust.

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CCI reported in its Form 10-Q filed July 27, 2006that it experienced a decrease in sales margins for the second quarter andfirst half of 2006 versus the same period in 2005.  The decrease was primarily due to lower salesvolume and higher production costs, partially offset by higher sales pricerealizations.  According to CCI, theincrease in sales prices of approximately 13 percent in its second quarter and14 percent in the first half of 2006 reflected contractual base priceincreases, higher term sales contract escalation factors including higher steelpricing, higher Producers Price Index, and lag year adjustments, partially offsetby lower international benchmark steel prices. CCI reported a 15percent increase in operating expenses in its second quarter with a 12 percentincrease through June 30, 2006, due to higher energy and supply pricing, higherlabor costs, increased maintenance activity and lower production. The Trustees areunable to predict whether base contract iron ore prices will continue toincrease or whether such increases have any potential impact on futureroyalties payable to the Trust.

Because the shipments of ironore products using iron ore mined from Mesabi Trust lands represent only afraction of CCI’s overall sales and because Mesabi Trust is not party to theCCI Pellet Agreements, while this news indicates that the trend of pricesrealized by CCI appears higher, the actual impact on royalties (and ultimatelydistributions by Mesabi Trust) cannot be estimated.

***Mittal Steel USA Agreements.***  Even though Mesabi Trust is nota party to any iron ore supply contract with any customer of Northshore/CCI,the royalties it receives under the Amended Assignment Agreements are dependenton the volume and price of iron ore products that are shipped from SilverBay.  A substantial portion of shipmentsof iron ore from Mesabi Trust lands are sold under one of the CCI Pellet Agreements,the Pellet Sale and Purchase Agreement dated April 10, 2002 between CCI(together with Northshore and other affiliates) and International Steel Group,Inc. (together with its affiliates, “ISG”) (the “ISG Agreement”).  According to the terms of the ISG Agreement,CCI is ISG’s sole supplier of iron ore through 2016 for its Cleveland andIndiana Harbor Works.  The term of theISG Agreement is through December 31, 2016, unless either party gives the otherwritten notice to terminate by December 31, 2014 (two years prior to the end ofthe term).  If no notice of terminationis given, the agreement will continue on an annual basis, subject totermination with 2-years’ prior written notice. The ISG Agreement also provides for upward or downward adjustments ofiron ore prices, which adjustments are dependent in part on multiple price andinflation index factors that are not known until after the end of a contractyear.  Many portions of the ISG Agreementsuch as prices, price adjustments and price adjustment formulas have receivedconfidential treatment in accordance with the rules of the Securities andExchange Commission and the Trustees have not been permitted to review theentire agreement.  The Trustees are not ableto quantify the effect of the amendment to the ISG Agreement on futureroyalties payable to the Trust.

Additional shipments of iron ore from Mesabi Trustlands are sold under the Amended and Restated Pellet Sale and PurchaseAgreement dated May 17, 2004 between certain affiliates of CCI (includingNorthshore), ISG and ISG Weirton Inc. (the “Weirton Agreement”).  According to the terms of the WeirtonAgreement, CCI is one of two suppliers of iron ore pellets through 2018 toWeirton (now Mittal Steel-Weirton).

In its Form 10-Qfiled July 27, 2006, CCI reported that on April 13, 2006, it entered into aletter agreement with Mittal Steel USA that resolved a dispute between thecompanies over the terms of the iron ore supply agreement between CCI andMittal Steel USA’s Weirton facility.  Under the terms of the letter agreement, thethree separate iron ore supply agreements between CCI and Mittal Steel USA’sCleveland and Indiana Harbor West, Indiana Harbor East and Weirton facilitieswere modified to aggregate Mittal Steel USA’s purchases under the agreementsduring the years 2006 through and including 2010. During this period, MittalSteel USA is obligated to purchase specified minimum tonnages of iron orepellets on an aggregate basis as specified in the letter agreement.  The terms of the letter agreement permitMittal Steel USA to manage its ore inventory levels through buy downprovisions, which permit Mittal Steel USA to reduce its tonnage purchaseobligation each year at a specified price per ton, and with deferralprovisions, which permit Mittal Steel USA to defer a portion of 

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itsannual tonnage purchase obligation beginning in 2007.  The letter agreement also permits MittalSteel USA to use the committed volume at any of its facilities.  As part of the settlement, CCI canceled aninvoice for approximately 325,000 tons of iron ore pellets that were notpurchased by Mittal Steel USA’s Weirton facility in January 2006. Inaddition, Mittal Steel USA waived all Special Steel Payment claims as describedin CCI’s Form 8-K filed on February 10, 2006.

The terms of the letteragreement resulted in a definitive agreement that amended the terms of thethree separate iron ore supply agreements between the Company and Mittal SteelUSA’s Cleveland and Indiana Harbor West, Indiana Harbor East and Weirton facilities.

The Trust is not a party to the ISG Agreement orthe Weirton Agreement and the Trustees are unable at this time to determinewhat, if any, impact CCI’s settlement with Mittal may have on royalties alreadypaid or payable in the future to the Trust.

***Mesabi Nugget Project.***  Since 2002, CCI has been participating in theMesabi Nugget Project with Kobe Steel, Ltd. (“Kobe Steel”), Steel Dynamics,Inc., Ferrometrics, Inc. and the State of Minnesota.  The project’s objective is to develop andapply a new iron making technology (Kobe Steel’s Itmk3 process) for convertingiron ore into nearly pure iron nugget form. CCI has indicated that if the Mesabi Nugget Project successfullyachieves commercialization, iron nuggets from this new process would be used asan alternative to steel scrap as a raw material for electric steel furnaces andblast furnaces or basic oxygen furnaces of integrated steel producers.

In its Form 10-Q filed July 27, 2006, CCI affirmedits continued involvement in the Mesabi Nugget Project.  CCI’s board of directors has authorized $50million in capital expenditures for the Mesabi Nugget Project, subject to theproject obtaining non-recourse financing for its capital requirements in excessof equity investments made by the project participants and the projectparticipants reaching mutually agreed upon terms.  The authorized capital expenditures by CCIinclude $21 million for construction and operation of the commercial nuggetplant, $25 million to expand the Northshore concentrator to provide the ironore concentrate, and $4.4 million for railroad improvements to transport theconcentrate.  CCI stated further that itsequity interest in the venture is expected to be approximately 25 percent.

Although Mesabi Trust is not a party to the MesabiNugget project and its involvement in this project has not been solicited, ironore from Mesabi Trust lands may be used to supply concentrate to the commercialmodules.  At this time, however, theTrustees are unable to make projections as to whether, and to what extent, anypossible future royalties might be payable to the Trust with respect to anycommercial nugget plants.

***USWA Written Notification. ***In its Form 10-Q filed April 27, 2006, CCI stated that it received a “WrittenNotification” from the United Steel Workers Association indicating that,effective April 1, 2006, the USWA initiated an organizing campaign atNorthshore.  CCI stated that, pursuant toits collective bargaining agreements with the USWA, it was required to remainneutral during the organizing campaign. In its Form 10-Q filed July 27, 2006, CCI reported that based uponsubsequent conversations with USWA representatives, the organizing campaign hasbeen postponed pending resolution of issues relating to the neutralitycommitment in the collective bargaining agreement.  CCI also reported that although previousefforts to organize Northshore employees have been unsuccessful, it cannotpredict the timing of when a campaign may begin or the outcome of a campaignwhen it begins.  The Trustees cannotdetermine the impact such a campaign may have, if any, on the future royaltiesof the Trust.

***EPA Notice of Violation.***  In a Form 8-K filed on February 15, 2006, CCIreported that Northshore received a Notice of Violation (the “Notice”) from theU.S. Environmental Protection Agency 

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(“EPA”) alleging: (1)that Northshore violated the Prevention of Significant Deterioration (“PSD”)requirements of the Clean Air Act in the 1990 restart of Furnaces 11 and 12;(2) that Northshore violated the PSD Regulations in the 1995 restart of Furnace6; (3) Title V operating permit violations for not including in the Title Vpermit all applicable requirements (including a compliance schedule for PSD andBest Available Control Technology requirements associated with the furnacerestarts); and (4) Northshore’s failure to comply with calibration ofmonitoring equipment as required under Northshore’s Title V permit.  CCI reported in its Form 10-Q filed July 27,2006 that the alleged violations took place before it acquired Northshore(formerly Cyprus Northshore Mining Company) in a stock purchase in 1994.  CCI has investigated the allegations in the Notice andhas communicated its position to the EPA. TheTrust has not been named in the Notice and the Trustees have not received anyinformation regarding the Notice, other than that which has been publiclyreported by CCI.  The Trustees cannotdetermine the impact, if any, of any proven violations on the future royaltiesof the Trust.

***Securities Regulation***.  The Trust is a publicly-tradedtrust listed on the New York Stock Exchange (“NYSE”) and is therefore subjectto extensive 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 administrativepenalties.  In most instances, theselaws, rules and regulations do not specifically address their applicability topublicly-traded trusts such as Mesabi Trust. In particular, Sarbanes-Oxley mandated the adoption by the Securitiesand Exchange Commission (the “SEC”) and NYSE of certain rules and regulationsthat are impossible for the Trust to literally satisfy because of its nature asa pass-through trust.  Pursuant to NYSErules the Trust is exempt from many of the corporate governance requirementsthat apply to publicly traded corporations.  The Trust does not have, nor does the Agreement of Trust provide for, aboard of directors, an audit committee, a corporate governance committee or acompensation committee.  The Trusteesintend to closely monitor the SEC’s and NYSE’s rulemaking activity and willcomply with such rules and regulations to the extent applicable.

**ImportantFactors Affecting Mesabi Trust**

The Agreement of Trustspecifically prohibits the Trustees from entering into or engaging in anybusiness.  This prohibition seeminglyapplies even to business activities the Trustees deem necessary or proper forthe preservation and protection of the Trust Estate (as such term is definedbelow).  Accordingly, the Trustees’activities in connection with the administration of Trust assets are limited tocollecting income, paying expenses and liabilities, distributing net income tothe Trust’s Unitholders after the payment of, or provision for, such expensesand liabilities, and protecting and conserving the assets held.  Consequently, the income of the Trust ishighly dependent upon the activities and operations of Northshore, and theterms and conditions of the leases and assignments of leases between the Trustand Northshore.

Neither the Trust nor theTrustees have any control over the operations and activities of Northshore,except within the framework of the leases and assignments of leases between theTrust and Northshore.  CCI alone controls(i) historical operating data, including iron ore production volumes, marketingof iron ore products, operating and capital expenditures as they relate toNorthshore, environmental and other liabilities and the effects of regulatorychanges; (ii) plans for Northshore’s future operating and capital expenditures;(iii) geological data relating to reserves (iv) projected production of ironore products; and (v) the decision to mine off Trust and/or state lands (whichis 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 the Trust’s disclosure controls andprocedures, the Trustees do not control this information and they rely on the 

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informationin CCI’s periodic and current filings with the SEC to provide accurate andtimely information in the Trust’s reports filed with the SEC.

In accordance with theAgreement of Trust and the Amendment, the Trustees are entitled to, and in factdo rely, upon certain experts in good faith, including (i) the independentconsultants with respect to monthly production and shipment reports, whichinclude figures on crude ore production and iron ore pellet shipments, anddiscussions concerning the condition and accuracy of the scales and plansregarding the development of the Trust’s mining property; and (ii) theaccounting firm they have contracted with for non-audit services, includingreviews of financial data related to shipping and sales reports provided byNorthshore and a review of the schedule of leasehold royalties payable to theTrust.

For a discussion ofadditional factors, including but not limited to those that could adverselyaffect the Trust’s actual results and performance, see “Risk Factors” in Part I– Item 1A of the Trust’s Annual Report on Form 10-K for the year-ended January31, 2006.

**CriticalAccounting Policies**

This “Trustees’ Discussionand Analysis of Financial Condition and Results of Operations” is based uponthe Trust’s financial statements, which have been prepared in accordance withaccounting principles generally accepted in the United States.  The preparation of these financial statementsrequires the Trustees to make estimates and judgments that affect the reportedamounts of assets, liabilities, revenues and expenses, and related disclosureof contingent assets and liabilities. These estimates form the basis for making judgments about the carryingvalue of assets and liabilities that are not readily apparent from othersources.  The Trustees base theirestimates and judgments on historical experience and on various otherassumptions that the Trustees believe are reasonable under thecircumstances.  However, future eventsare subject to change and the best estimates and judgments may requireadjustment.

Critical accounting policiesare those that have meaningful impact on the reporting of the Trust’s financialcondition and results, and that require significant management judgment andestimates.  The Trustees have determinedthat there are no critical accounting policies.

**Item 3.  Quantitativeand Qualitative Disclosures About Market Risk.**

Not applicable.

**Item 4.  Controls andProcedures.**

***Evaluation of Disclosure Controls and Procedures******. ***The Trusteesmaintain disclosure controls and procedures designed to ensure that informationrequired to be disclosed by the Trust in the reports that it files or submitsunder the Securities Exchange Act of 1934, as amended, is recorded, processed,summarized and reported within the time periods specified in the rules andregulations of the Securities and Exchange Commission.  Disclosure controls and procedures includecontrols and procedures designed to ensure that information required to bedisclosed by the Trust is accumulated and communicated by Northshore, andconsultants to the Trustees as appropriate, to allow timely decisions regardingrequired disclosure.

As part of their evaluationof the Trust’s disclosure controls and procedures, the Trustees rely onquarterly shipment and royalty calculations provided by Northshore.  Because Northshore has declined to supportthis information with a written certification attesting to whether Northshorehas established disclosure controls and procedures and internal controlssufficient to enable it to verify that the 

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informationfurnished to the Trustees is accurate and complete, the Trustees must rely on(a) a general certification from Northshore and Northshore’s parent, CCI,certifying as to the accuracy of the royalty calculations, and (b) CCI’s conclusionsthat its overall disclosure controls and procedures are effective.  In addition, the Trust’s consultants reviewthe schedule of leasehold royalties payable and shipping and sales reportsprovided by Northshore against production and shipment reports prepared by theEveleth Fee Office, Inc., an independent consultant to the Trust (“Eveleth FeeOffice”). Eveleth Fee Office gathers production and shipping information fromNorthshore and prepares monthly production and shipment reports for theTrustees. Furthermore, as part of its engagement by the Trust, Eveleth FeeOffice also attends Northshore’s calibration and testing of its crude orescales and boat loader scales which are conducted on a periodic basis.

As of the end of the periodcovered by this report, the Trustees carried out an evaluation of the Trust’sdisclosure controls and procedures.  TheTrustees have concluded that such disclosure controls and procedures areeffective.

***Changes in Internal Control Over Financial Reporting******.***  Tothe knowledge of the Trustees, there has been no change in the Trust’s internalcontrol over financial reporting that occurred during the Trust’s last fiscalquarter that has materially affected, or is likely to materially affect, theTrust’s internal control over financial reporting.  The Trustees note for purposes ofclarification that they have no authority over, and make no statementconcerning, the internal controls of Northshore.

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**PART II -OTHER INFORMATION**

**Item 1.****      ****Legal Proceedings.**

None.

**Item 1A.****   ****Risk Factors**

There have been no material changes in theTrust’s risk factors as described in Part I Item 1A, “Risk Factors” in theTrust’s Annual Report on Form 10-K for the year ended January 31, 2006.

**Item 2.****      ****Unregistered Sales of EquitySecurities and Use of Proceeds.**

None.

**Item 3.****      ****Defaults Upon Senior Securities.**

None.

**Item 4.****      ****Submission of Matters to a Voteof Security Holders.**

None.

**Item 5.****      ****Other Information.**

None.

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

31        Certification of Corporate Trustee of MesabiTrust pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32        Certification of Corporate Trustee of MesabiTrust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002.

99.1     Report of Gordon, Hughes & Banks, LLP,dated September 5, 2006 regarding its review of the unaudited interim financialstatements of Mesabi Trust for its quarter ended July 31, 2006.

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**SIGNATURES**

Pursuant to the requirementsof the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.
|                    | MESABI TRUST |                                   |
|-------------------------|--------------|----------------------------------------|
|                    | (Registrant) |                                   |
|                    |         |                                   |
|                    | By:          | DEUTSCHE BANK TRUST COMPANY   AMERICAS |
|                    |         | Corporate Trustee                      |
|                    |         |                                   |   |
|                    | By:          | DEUTSCHE BANK NATIONAL TRUST  COMPANY  |   |
|                    |         |                                   |   |
|                    |         |                                   |   |
| Date: September 8, 2006 | By:          | /s/ Rodney Gaughan                     |   |   |
|                    |         | Name: Rodney Gaughan                   |   |
|                    |         | Title:  Assistant Vice President  |   |
|                         |              |                                        |  |  |

 

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* There are no principal executive officers orprincipal financial officers of the registrant.

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