**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q/A**

 

**(Mark One)**

 

| **ý**                         | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**                                                                                                                                                                                                                                                                                                                                                                                       |
|------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                         | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **                         | ** ** | **For the  quarterly period ended April 30, 2004**                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** **                         | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **or**                             |
| ** **                         | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **o**                              | ** ** | **TRANSITION  REPORT 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** |

 

| **MESABI TRUST**                                                                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
| (Exact name  of registrant as specified in its charter)                                                                                          |
|                                                                                                                                             |
| **New York**                                                                                                                                     | ** ** | **13-6022277** |
| (State or  other jurisdiction of  incorporation or organization)                                                                                 | ** ** | (I.R.S.  Employer Identification No.) |
|                                                                                                                                             | ** ** |   |
| **c/o Deutsche Bank Trust Company Americas****Trust & Securities Services – GDS****60 Wall Street****27th Floor****New York, New York** | ** ** | **10005** |
| (Address of  principal executive offices)                                                                                                        | ** ** | (Zip code) |
| ** **                                                                                                                                       | ** ** | ** ** |
| **(615) 835-2749**                                                                                                                               |
| (Registrant’s  telephone number, including area code)                                                                                       |

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.      Yes   ý      No   o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).        Yes   o      No   ý

 

As of May 31, 2004, there were 13,120,010 Units of Beneficial Interestin Mesabi Trust outstanding.

 

 

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**EXPLANATORY NOTE**

 

This Amendment on Form 10-Q/A (this “Amendment”) amends the QuarterlyReport on Form 10-Q for Mesabi Trust’s quarter ended April 30, 2004 whichwas previously filed with the Securities and Exchange Commission on June 14,2004.  This Amendment is made to reflectthe independent review by the Trust’s independent accountants, Gordon, Hughesand Banks, LLP, of the condensed balance sheet of Mesabi Trust (the “Trust”) asof April 30, 2004, and the related condensed statements of income and cashflows for the three–month period then ended.

 

All references to Mesabi Trust’s independent accountants and Exhibit99.1, the independent accountant’s review report, are amended herein.  No other changes are effected by thisAmendment.  This Amendment does notreflect events occurring after the original filing date of the Quarterly Reporton June 14, 2004.

 

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**PART I - FINANCIAL INFORMATION**

 

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

 
| ** ** | ** **                          | **Three Months Ended  April 30,** | ** ** |
|------------|-------------------------------------|----------------------------------------|------------|
| ** ** | ** **                          | **2004**                               | ** ** | **2003** | ** ** |
|       |                                |                                   |       |   |   |
| **A.**     | **Condensed  Statements of Income** |                                   |       |   |   |   |
|       |                                |                                   |       |   |   |   |
|       | Revenues                            |                                   |       |   |   |   |
|       | Royalty income                      |                                   | $          | 927,207 |   | $ | 366,092 |   |
|       | Interest income                     |                                   | 10,502     |   | 12,073 |   |
|       |                                |                                   | 937,709    |   | 378,165 |   |
|       |                                |                                   |       |   |   |   |
|       | Expenses                            |                                   | 101,742    |   | 128,162 |   |
|       |                                |                                   |       |   |   |   |
|       | Net income                          |                                   | $          | 835,967 |   | $ | 250,003 |   |
|       |                                |                                   |       |   |   |   |
|       | Number of units outstanding         |                                   | 13,120,010 |   | 13,120,010 |   |
|       |                                |                                   |       |   |   |   |
|       | Net income per unit (Note 2)        |                                   | $          | 0.0637 |   | $ | 0.0191 |   |
|       |                                |                                   |       |   |   |   |
|       | Distributions declared per unit     |                                   | $          | 0.05 |   | $ | — |   |

 

See Notes to Financial Statements.

 

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| ** ** | ** **                                                                 | ** ** | **April 30, 2004** | ** ** | **January 31, 2004** | ** ** |
|------------|----------------------------------------------------------------------------|------------|-------------------------|------------|---------------------------|------------|
|       |                                                                       |       |                    |       |                      |       |
| **B.**     | **Condensed Balance Sheets**                                               | ** ** | ** **              | ** ** | ** **                | ** ** |
|       |                                                                       |       |                    |       |                      |       |
| ** ** | **Assets**                                                                 | ** ** | ** **              | ** ** | ** **                | ** ** |
|       |                                                                       |       |                    |       |                      |       |
|       | Cash                                                                       |       | $                       | 811,523    |                      | $          | 98,692 |   |
|       |                                                                       |       |                    |       |                      |       |
|       | U.S. Government securities, at amortized cost (which approximates  market) |       | 751,133                 |       | 4,826,046                 |       |
|       |                                                                       |       |                    |       |                      |       |
|       |                                                                       |       |                    |       |                      |       |
|       | Accrued income                                                             |       | 674,150                 |       | 449,780                   |       |
|       | Prepaid expenses                                                           |       | 34,054                  |       | 15,560                    |       |
|       |                                                                       |       | 2,270,860               |       | 5,390,078                 |       |
|       |                                                                       |       |                    |       |                      |       |
|       | 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                         |       |
|       |                                                                       |       |                    |       |                      |       |
|       |                                                                       |       | $                       | 2,270,863  |                      | $          | 5,390,081 |   |
| ** ** | ** **                                                                 | ** ** | ** **              | ** ** | ** **                | ** ** |
| ** ** | **Liabilities, Unallocated Reserve and Trust  Corpus**                     | ** ** | ** **              | ** ** | ** **                | ** ** |
|       |                                                                       |       |                    |       |                      |       |
|       | Liabilities                                                                |       |                    |       |                      |       |
|       | Distribution payable                                                       |       | $                       | 656,000    |                      | $          | 3,936,003 |   |
|       | Accrued expenses                                                           |       | 26,309                  |       | 45,491                    |       |
|       |                                                                       |       | 682,309                 |       | 3,981,494                 |       |
|       |                                                                       |       |                    |       |                      |       |
|       | Unallocated Reserve (Note 3)                                               |       | 1,588,551               |       | 1,408,584                 |       |
|       | Trust Corpus                                                               |       | 3                       |       | 3                         |       |
|       |                                                                       |       |                    |       |                      |       |
|       |                                                                       |       | $                       | 2,270,863  |                      | $          | 5,390,081 |   |
|            |                                                                            |            |                         |            |                           |            |  |  |  |

 

See Notes to Financial Statements.

 

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| ** ** | ** **                                                                     | ** ** | **Three Months Ended  April 30,** | ** ** |
|------------|--------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** ** | ** **                                                                     | ** ** | **2004**                               | ** ** | **2003** | ** ** |
|       |                                                                           |       |                                   |       |   |   |
| **C.**     | **Condensed  Statements of Cash Flows**                                        | ** ** | ** **                             | ** ** | ** ** | ** ** |
|       |                                                                           |       |                                   |       |   |   |
|       | Cash flows from operating activities                                           | ** ** | ** **                             | ** ** | ** ** | ** ** |
|       | Royalties received                                                             |       | $                                      | 693,349    |   | $ | 262,626 |   |
|       | Interest received                                                              |       | 19,989                                 |       | 19,910 |   |
|       | Expenses paid                                                                  |       | (139,417                               | )          | (98,338 | ) |
|       |                                                                           |       |                                   |       |   |   |
|       | Net cash provided by operating activities                                      |       | 573,921                                |       | 184,198 |   |
|       |                                                                           |       |                                   |       |   |   |
|       | Cash flows from investing activities                                           |       |                                   |       |   |   |
|       | Maturities of U.S. Government Securities                                       |       | 4,174,886                              |       | 99,420 |   |
|       | Purchases of U.S. Government Securities                                        |       | (99,973                                | )          | (214,902 | ) |
|       |                                                                           |       |                                   |       |   |   |
|       | Net cash provided by (used for) investing activities                           |       | 4,074,913                              |       | (115,482 | ) |
|       |                                                                           |       |                                   |       |   |   |
|       | Cash flow from financing activity                                              |       |                                   |       |   |   |
|       | Distributions to Unitholders                                                   |       | (3,936,003                             | )          | (2,492,802 | ) |
|       |                                                                           |       |                                   |       |   |   |
|       | Net change in cash                                                             |       | 712,831                                |       | (2,424,086 | ) |
|       |                                                                           |       |                                   |       |   |   |
|       | Cash, beginning of year                                                        |       | 98,692                                 |       | 2,515,457 |   |
|       |                                                                           |       |                                   |       |   |   |
|       | Cash, end of quarter                                                           |       | $                                      | 811,523    |   | $ | 91,371 |   |
|       |                                                                           |       |                                   |       |   |   |
| ** ** | **Reconciliation  of net income to net cash provided by operating activities** |       |                                   |       |   |   |
|       |                                                                           |       |                                   |       |   |   |
|       | Net income                                                                     |       | $                                      | 835,967    |   | $ | 250,003 |   |
|       | (Increase) in accrued income                                                   |       | (224,370                               | )          | (95,629 | ) |
|       | (Increase) Decrease in prepaid insurance                                       |       | (18,494                                | )          | 5,762 |   |
|       | Increase (Decrease) in accrued expenses                                        |       | (19,182                                | )          | 24,062 |   |
|       |                                                                           |       |                                   |       |   |   |
|       | Net cash provided by operating activities                                      |       | $                                      | 573,921    |   | $ | 184,198 |   |

 

See Notes to Financial Statements.

 

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**MESABI TRUST**

 

**NOTES TO FINANCIAL STATEMENTS**

 

Note 1.                             The financial statementsincluded herein have been prepared without audit (except for the balance sheetat January 31, 2004) in accordance with the instructions to Form 10-Qpursuant to the rules and regulations of the Securities and ExchangeCommission.  Certain information andfootnote disclosures normally included in financial statements prepared inaccordance with generally accepted accounting principles have been condensed oromitted pursuant to such rules and regulations. In the opinion of the Trustees, all adjustments, consisting only ofnormal recurring adjustments, necessary for a fair statement of (a) the resultsof operations for the three months ended April 30, 2004 and 2003, (b) thefinancial positions at April 30, 2004 and January 31, 2004, and (c)the cash flows for the three months ended April 30, 2004 and 2003, havebeen made.

 

Note 2.                             Earnings per unit arebased on weighted average number of units outstanding during the period(13,120,010 units).

 

Note 3.                             The Trustees havedetermined to maintain an Unallocated Reserve of at least $1,000,000 in liquidassets.  The actual amount of suchUnallocated Reserve may vary from quarter to quarter depending upon conditionsin the industry and the judgment of the Trustees.  At April 30, 2004, the UnallocatedReserve was represented by $914,401 in unallocated cash and U.S. Governmentsecurities, and $674,150 of accrued revenue primarily representing royaltiesnot yet received by the Trust but anticipated to be received in July 2004from Northshore Mining Company as part of the royalty due with respect to thefirst fiscal quarter, based upon reported lessee shipping activity for themonth of April 2004.

 

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

 

**Forward-Looking Information**

 

Certain statements contained in this document are forward-looking,including specifically those statements estimating calendar year 2004production or shipments and comments related to the commencement ofconstruction and opening of additional plants in 2004 and beyond.  All such forward-looking statements are basedon input from Northshore Mining Company (“Northshore”), which is thelessee/operator and a wholly-owned subsidiary of Cleveland-Cliffs Inc (“CCI”),and published announcements of CCI.  TheTrust has no control over the operations or activities of Northshore exceptwithin the framework of current agreements. Actual results could differ materially from those indicated in suchstatements.  Important factors that couldcause actual results to differ materially include those listed below under theheading “Important Factors Affecting Mesabi Trust”.

 

**Background**

 

Leasehold royalty income constitutes the principal source of the Trust’srevenue.  Royalty rates are determined inaccordance with the terms of Mesabi Trust’s leases and assignments of leases.  Three types of royalties comprise the Trust’sleasehold royalty income:

 

•                  Overridingroyalties, which historically constitute the majority of Mesabi Trust’s royaltyincome, are determined by both the volume and selling price of iron oreproducts shipped.

 

•                  Fee royalties,which historically constitute a smaller component of the Trust’s royaltyincome, are payable to Mesabi Land Trust, a Minnesota land trust of whichMesabi Trust is the sole beneficiary and for which US Bank N.A. acts astrustee, and are based on the amount of crude ore mined.  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,the third type of royalty, are discussed below.

 

With respect to the volume component of royalty calculation, Northshoreis obligated to pay Mesabi Trust base overriding royalties in varyingamounts.  The volume component ofoverriding royalties constitutes 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.

 

With respect to the selling price component of the overriding royaltycalculation, Northshore is obligated to pay to Mesabi Trust royaltybonuses.  The royalty bonus is 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) on an annual basis forinflation and deflation (the “Adjusted Threshold Price”).  The Adjusted Threshold Price was $40.61 perton for calendar year 2002, $41.13 per ton for calendar year 2003, and is$41.76 per ton for calendar year 2004. The royalty bonus percentage ranges from 1/2 of 1% of the gross proceeds(on all tonnage shipped for sale at prices between the Adjusted Threshold Priceand $2.00 above the Adjusted Threshold Price) to 3% of the gross proceeds onall tonnage shipped for sale at prices $10.00 or more above the AdjustedThreshold Price.  No royalty bonus hasbeen paid to the Trust for several years.

 

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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.  Advance royalties payablewere $676,814 for calendar year 2002, $685,630 for calendar year 2003, and are$696,161 for calendar year 2004.  Untiloverriding royalties (and royalty bonuses, if any) for a particular year equalor exceed the minimum advance royalty for the year, Northshore must makequarterly payments of up to 25% of the minimum advance royalty for theyear.  Because advance minimum royaltiesare essentially prepayments of base overriding and bonus royalties earned eachyear, any advance minimum royalties paid in a fiscal quarter are recouped bycredits against base overriding and bonus royalties earned in later fiscalquarters during the year.  Historically,advance minimum royalties have been paid in the first fiscal quarter andrecouped in the second fiscal quarter.

 

Northshore is obligated to make quarterly royalty payments in January,April, July and October of each year. 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 documents, Northshore may mine and ship iron oreproducts from lands other than Mesabi Trust lands.  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 from Mesabi Trust lands, and (ii) a portion of theaggregate quantity of all iron ore products shipped that were from any lands,such portion being 90% of the first four million tons shipped during such year,90% of the next two million tons shipped during such year, and 25% of alltonnage shipped during such year in excess of six million tons.

 

Mesabi Trust has no employees, but it engages independent consultantsto assist the Trustees in monitoring, among other things, the amount and salesprices of iron ore products shipped by Northshore from Silver Bay,Minnesota.  As noted above, theinformation regarding amounts and sales prices of shipped iron ore products isused to compute the royalties payable to Mesabi Trust by Northshore.  Deutsche Bank Trust Company Americas, theCorporate Trustee, also performs certain administrative functions for MesabiTrust.

 

**Current Developments**

 

***General***.  CCI indicated in its Form 10-Q filed April 29,2004 that 2004 production for Northshore is currently forecast at 5.0 milliontons of iron ore pellets, an increase of 100,000 tons from the forecast in CCI’sannual report filed February 13, 2004.

 

Northshore has not provided the Trust with an estimate for totalcalendar year 2004 shipments.  (Seedescription of the uncertainty of market conditions in the iron ore and steelindustry under “Important Factors Affecting Mesabi Trust” below.)  During calendar years 2003, 2002, 2001, 2000,and 1999, the percentage of shipments of iron ore products from Mesabi Trustlands was approximately 95.5%, 97.5%, 99.2%, 99.8%, and 98.9%, respectively, oftotal shipments.  Northshore has notadvised the Trustees as to the percentage of iron ore products it anticipatesshipping from Mesabi Trust lands in calendar year 2004.

 

***Mesabi NuggetProject***. CCI is participating in the Mesabi Nugget Project with Kobe Steel, Ltd.(“Kobe”), Steel Dynamics, Inc. (“SDI”), Ferrometrics, Inc. (“Ferrometrics”) andthe State of Minnesota.

 

8

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The project’s objective is to develop and apply a new iron makingtechnology (Kobe Steel’s Itmk3 process) for converting iron ore into nearlypure iron nugget form.  CCI has indicatedthat if the Mesabi Nugget Project successfully achieves commercialization, ironnuggets from this new process would be used as an alternative to steel scrap asa raw material for electric steel furnaces and blast furnaces or basic oxygenfurnaces of integrated steel producers.

 

Construction of the pilot plant at theNorthshore facility to test the Itmk 3 process was completed in May 2003.  CCI stated in its Form 10-Q filed April 29,2004 that the pilot plant is in a third operating phase, intended to confirmthe commercial viability of the Itmk 3 technology.  This third phase is scheduled to be completedin June 2004.  In a publishedinterview, CCI’s chairman and chief executive officer stated that Mesabi NuggetLLC (which is owned by CCI (through its wholly-owned subsidiary Iron UnitsLLC), Kobe, SDI and Ferrometrics) is considering construction of the firstcommercial plant, probably a $100 million, 500,000 tons-per-year facility (thelocation of which is still undetermined) that could begin production in early2006.   CCI’s chairman and chiefexecutive officer stated in the same interview that CCI intends to seek permitsto build two additional nugget plants at Silver Bay, each with capacity forabout 750,000 tons of nuggets annually, sometime in the future.  In a later published report, the president ofMesabi Nugget LLC stated that Mesabi Nugget LLC intends to build a full-scalenugget plant in Silver Bay sometime in the future.

 

Although the pilot plant is located atNorthshore, it is not certain that, if a fully operational facility isconstructed, it will be on Mesabi Trust lands. CCI reported in its Form 10-Q filed April 29, 2004 that while theproject participants are investigating environmental requirements timelines forvarious potential commercial sites in Minnesota and Indiana, a decision toproceed on construction has not been made. Construction of a fully operational facility in Minnesota, Indiana or inboth states would be subject to Mesabi Nugget LLC’s obtaining the necessarygovernmental permits.  However, in May2004, the Minnesota state legislature enacted legislation to shorten theenvironmental permitting timeline should the commercial plant be developed at anothersite owned by CCI in Hoyt Lakes, Minnesota, while Minnesota state agencies mayoffer tax and financial incentives for construction at the Hoyt Lakes site.

 

Although Mesabi Trust is not a direct partyto the Mesabi Nugget Project and its involvement in this project was notsolicited, in the event that a fully-operational plant were to be located atthe Northshore facility, the project would expectedly use iron ore from theMesabi Trust lands.   In addition, ironore from Trust lands could potentially still be used, were a fully-operationalplant to be located in Indiana or at another location other thanNorthshore.  It is still uncertain as towhether the Mesabi Nugget Project will successfully achieve commercialization,or where a fully-operational plant would be located, or whether it would useiron ore from the Mesabi Trust lands. Therefore, the Trustees are unable to make projections as to whether anyprospective future royalties might be payable to the Trust.

 

***SecuritiesRegulation***. The Trust is a publicly-traded trust listed on the New York StockExchange (“NYSE”) and is therefore subject to extensive regulation under, amongothers, the Securities Act of 1933, the Securities Exchange Act of 1934, NYSErules and regulations and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).  Issuers failing to comply with suchauthorities risk serious consequences, including criminal as well as civil andadministrative penalties.  In mostinstances, these laws, rules and regulations do not specifically address theirapplicability to publicly-traded trusts such as Mesabi Trust.  In particular, Sarbanes-Oxley provides forthe adoption by the Securities and Exchange Commission (the “SEC”) and NYSE ofcertain rules and regulations that may be impossible for the Trust to literallysatisfy because of its nature as a pass-through trust.  During fiscal 2004, the SEC and NYSE adoptedrules and regulations pursuant to Sarbanes-Oxley that require a publicly-tradedcompany’s board of directors, audit committee or executive directors (orsimilar body) to act with respect to certain corporate governance matters.  The Trust does not have, nor does theAgreement of Trust provide for, a board of directors, an audit committee or anyexecutive officers.  Moreover, the Trusthas no employees at

 

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all. Therefore, the Trust cannot literally comply with many of these rulesand regulations.  The Trustees intend tofollow the SEC’s and NYSE’s rulemaking closely and attempt to comply with suchrules and regulations where possible.

 

**Important Factors Affecting Mesabi Trust**

 

The Agreement of Trust dated July 18, 1961 (the “Agreement ofTrust”) specifically prohibits the Trustees from entering into or engaging inany business.  This prohibition seeminglyapplies even to business activities the Trustees deem necessary or proper forthe preservation 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 Trust’sCertificate Holders after the payment of, or provision for, such expenses andliabilities, and protecting and conserving the assets held.

 

Accordingly, the income of the Trust is highly dependent upon theactivities and operations of Northshore, and the terms and conditions of theAmendment of Assignment, Assumption and Further Assignment of Peters Lease (the“Amended Assignment of Peters Lease”), the Amendment of Assignment, Assumptionand Further Assignment of Cloquet Lease (the “Amended Assignment of CloquetLease”), and the Assumption and Assignment of Mesabi Lease (together with theAmended Assignment of Peters Lease and the Amended Assignment of Cloquet Lease,the “Amended Assignment Agreements”).  TheTrust and the Trustees have no control over the operations and activities ofNorthshore, except within the framework of the Amended Assignment Agreements.

 

Due to winter weather, and the increasing royalty percentages based ontonnage shipped in a calendar year, results for a particular calendar quarterare typically not indicative of results for future quarters or the year as awhole.  Factors which can impact theresults of the Trust in any quarter or year include:

 

1.                             Shipping Conditions inthe Great Lakes.  Shipping activityby Northshore is dependent upon when the Great Lakes shipping lanes freeze forthe winter months (typically in January) and when they re-open in the spring(typically late-March or April). Base overriding royalties to Mesabi Trust are based on shipments made ina calendar quarter.  Because thereordinarily is little or no shipping activity in the first calendar quarter, theTrust typically receives only the minimum royalty (or slightly more than theminimum) for that period.

 

2.                             Operations ofNorthshore.  Because the primaryportion of the Trust’s revenues derive from iron ore product shipped byNorthshore from Silver Bay, Northshore’s processing and shipping activitiesdirectly impact the Trust’s revenues in each quarter and for each year.  In turn, a number of factors affectNorthshore shipment volume.  Thesefactors include, among others, the economic conditions in the iron oreindustry, pricing by domestic and international competitors, long-term customercontracts or arrangements by Northshore or its competitors, availability of oreboats, production at Northshore’s mining operations, and production at thepelletizing/processing facility.  If anypelletizing line becomes idle for any reason, production and shipments (and,consequently, Trust income) could be adversely impacted.

 

3.                             Increasing Royalties.  As described elsewhere in this Report, theroyalty percentage paid to the Trust increases as the aggregate tonnage of ironore products shipped, attributable to the Trust, in any calendar yearincreases.  Assuming a consistent salesprice per ton throughout a calendar year, shipments of iron ore productattributable to the Trust later in the year generate a higher royalty to theTrust.

 

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4.                             Percentage of MesabiTrust Ore.  As described elsewhere inthis Report, Northshore has the ability to process and ship iron ore productsfrom lands other than Mesabi Trust lands. In certain circumstances, the Trust may be entitled to royalties onthose other shipments, but not in all cases. In general, the Trust will receive higher royalties (assuming all otherfactors are equal) if a higher percentage of shipments are from Mesabi Trustlands.  The percentages of shipments thatcame from Mesabi Trust lands were 95.5%, 97.5%, 99.2%, 99.8%, and 98.9% incalendar years 2003, 2002, 2001, 2000, and 1999, respectively.

 

5.                             Uncertainty of MarketConditions in the Steel and Iron Ore Industry.  Although CCI reported in its Form 10-Q forits quarterly period ending March 31, 2004 that it experienced recordfirst quarter iron ore pellet sales and is projecting an overall increase intotal 2004 pellet sales (as compared to 2003), CCI cautioned in such Form 10-Qthat significant risks and uncertainties may impact its forecast, including,but not limited to, changes in customer demand, an increase in certain steelimports, a decrease in iron ore production in North America due to globalovercapacity of steel, customer failure, and customer or potential customerrestructuring and financial difficulty (which could result in reducedproduction capacity over time). Furthermore, there exists consolidation and intense competition in thedomestic steel market.

 

In light of the current steel industryenvironment, uncertainties arising from war and other global events, and theabove-mentioned risks and factors, it is uncertain whether prices on domesticsteel products will be maintained at these current relatively higher levels,and whether steel mills will be able to operate at capacity levels in 2004 andbeyond.  Furthermore, although overallthere appears to have been an increase in the demand for domestic steelproducts over the last fiscal year, it is nevertheless uncertain whether thisincrease in demand will continue and the extent to which it will impactroyalties paid to the Trust in fiscal year 2005 and beyond.

 

**Comparison of three months ended April 30,2004 and April 30, 2003**

 
| ** **           | ** ** | **Three Months Ended April 30,** | ** ** |
|----------------------|------------|---------------------------------------|------------|
| ** **           | ** ** | **2004**                              | ** ** | **2003** | ** ** |
| Total royalty income |       | $                                     | 927,207    |   | $ | 366,092 |   |
| Interest income      |       | 10,502                                |       | 12,073 |   |
| Gross income         |       | $                                     | 937,709    |   | $ | 378,165 |   |
|                 |       |                                  |       |   |   |
| Expenses             |       | 101,742                               |       | 128,162 |   |
| Net income           |       | $                                     | 835,967    |   | $ | 250,003 |   |

 
| ** **          | ** ** | **As of April 30,** | ** ** |
|---------------------|------------|--------------------------|------------|
| ** **          | ** ** | **2004**                 | ** ** | **2003** | ** ** |
| Unallocated reserve |       | $                        | 1,588,551  |   | $ | 1,316,051 |   |
|                     |            |                          |            |  |  |  |  |

 

**The increase in royalty income is due toincreases in pellet shipments and price, and a higher applicable royalty rate,as compared to the comparable prior period. Expenses decreased from the comparable prior period, primarily due todecreases in general and administrative expenses.**

 

11

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The increase in UnallocatedReserve is primarily due to increased revenue for the quarter.  The Trustees anticipate that the amount ofUnallocated Reserve will fluctuate from time to time, depending upon a numberof factors, including but not limited to the income for a particular period,the amount and timing of distributions, uncertainty about future royalty incomeand the uncertainty of future expenses.

 

**Royalty Comparisons**

 

The following chart summarizes Mesabi Trust’s royalty income for thethree months ended April 30, 2004 and April 30, 2003, respectively:

 
| ** **                              | ** ** | **Three Months Ended April 30,** | ** ** |
|-----------------------------------------|------------|---------------------------------------|------------|
| ** **                              | ** ** | **2004**                              | ** ** | **2003** | ** ** |
| Base overriding royalties               |       | $                                     | 829,941    |   | $ | 234,378 |   |
| Bonus royalties                         |       | 0                                     |       | 0 |   |
| Minimum advance royalty paid (recouped) |       | 0                                     |       | 45,089 |   |
| Fee royalties                           |       | 97,266                                |       | 86,625 |   |
| Total royalty income                    |       | $                                     | 927,207    |   | $ | 366,092 |   |

 

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

 

Notapplicable.

 

**Item4.  Controls and Procedures.**

 

***Evaluation ofDisclosure Controls and Procedures***.  The Trustees maintain disclosure controls andprocedures designed to ensure that information required to be disclosed by theTrust in the reports that it files or submits under the Securities Exchange Actof 1934, as amended, is recorded, processed, summarized and reported within thetime periods specified in the rules and regulations of the Securities andExchange Commission.  Disclosure controlsand procedures include controls and procedures designed to ensure thatinformation required to be disclosed by the Trust is accumulated andcommunicated by Northshore, and the Trust’s independent auditors andconsultants to the Trustees as appropriate to allow timely decisions regardingrequired disclosure.

 

As of the end of the period covered by this Report, the Trusteescarried out an evaluation of the Trust’s disclosure controls andprocedures.  The Trustees have concludedthat the disclosure controls and procedures are effective, while noting certainlimitations on disclosure controls and procedures as set forth below.

 

Due to the contractual arrangements of the Agreement of Trust and theAmendment to the Agreement of Trust dated October 25, 1982 (the “Amendment”),there are certain potential weaknesses that may limit the effectiveness ofdisclosure controls and procedures established by the Trustees and theirability to verify the accuracy of certain financial information.  The contractual limitations creating potentialweaknesses in disclosure controls and procedures may be deemed to include:

 

•                  Northshorealone controls (i) historical operating data, including iron ore productionvolumes, marketing of iron ore products, operating and capital expenditures asthey relate to Northshore, environmental and other liabilities and the effectsof regulatory changes; (ii) plans for Northshore’s future operating and capitalexpenditures; (iii) geological data relating to reserves; and (iv) projectedproduction of iron ore products.  Whilethe Trustees request

 

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material informationfor use in periodic reports as part of their disclosure controls andprocedures, the Trustees do not control this information, and they rely onNorthshore to provide accurate and timely information for use in the Trust’sreports filed with the Securities and Exchange Commission.  Moreover, while each quarter Northshorefurnishes shipment and royalty calculations to the Trustees, Northshore hasdeclined to support this information with a written certification attesting towhether Northshore has established disclosure controls and procedures andinternal controls sufficient to enable it to verify that the informationfurnished to the Trustees is accurate and complete.  Northshore is not required either by contractor by governmental laws or regulations to provide such a certification.

 

•                  Gordon,Hughes and Banks, LLP, which serves as the Trust’s independent accountants, hasdelivered a report to the Trust concluding that based upon its review of thefinancial statements of the Trust for its quarter ended April 30, 2004(the “Financial Statements”), it is not aware of any material modificationsthat should be made to the Financial Statements in order for the FinancialStatements to be in conformity with generally accepted accounting principles.

 

•                  Underthe terms of the Agreement of Trust and the Amendment, the Trustees areentitled to, and in fact do rely, upon certain experts in good faith, including(i) the independent consultants with respect to monthly production and shipmentreports, which include figures on crude ore production and iron ore pelletshipments and discussions concerning the condition and accuracy of the scalesand plans regarding the development of the Trust’s mining property; and (ii)the independent auditors they have contracted with respect to reviews offinancial data related to shipping and sales reports provided by Northshore.

 

The Trustees do not intend to expand their responsibilities beyondthose permitted or required by the Agreement of Trust, the Amendment, and thoserequired under applicable law.

 

***Changes in InternalControl Over Financial Reporting***.  To the knowledge of the Trustees, there hasbeen no significant change in the Trust’s internal control over financial reportingthat occurred during the Trust’s last fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, the Trust’s internalcontrol over financial reporting.  TheTrustees note for purposes of clarification that they have no authority over,and make no statement concerning, the internal control over financial reportingof Northshore.

 

**PARTII - OTHER INFORMATION**

 

# **Item 1.**                     LegalProceedings.

#  

None.

 

# **Item 2.**                     Changes inSecurities and Use of Proceeds.

#  

None.

 

# **Item 3.**                     Defaults UponSenior Securities.

#  

None.

 

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# **Item 4.**                     Submission ofMatters to a Vote of Security Holders.

#  

None.

 

# **Item 5.**                     OtherInformation.

#  

None.

 

# **Item 6.**                     Exhibits andReports on Form 8-K.

#  

(a)                                  Exhibits.

 
| 31     | Certification  of Corporate Trustee of Mesabi Trust pursuant to Rule 13a-14 of the  Securities Exchange Act of 1934, as adopted pursuant to Section 302 of  the Sarbanes-Oxley Act of 2002. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                             |
| 32     | Certification  of 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 of  Gordon, Hughes and Banks, LLP regarding its review of the un-audited interim  financial statements of Mesabi Trust for its quarter ending April 30,  2004.                       |

 

(b)                                 Reports on Form 8-K.

 

None.

 

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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:* |

 

 
| Date: January 21,  2005 | By:    | /s/ Rodney  Gaughan |
|------------------------------|--------|---------------------|
|                         |   | Name:               | Rodney  Gaughan |
|                         |   | Title:              | Assistant  Vice President |

 

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* There are no principalexecutive officers or principal financial officers of the registrant.

 

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