Cleveland Cliffs Inc (CLF)

[nonferrous]

Greg: The North Shore plant Cliffs owns in Silver Bay, MN is feed by ore mined at the Peter Mitchell mine in Babbit, MN. Cliffs does not use "old tailings piles". The lands of the Mesabi Trust makes up a large percentage of the Peter Mitchell Mine around 70%, Ore mined from these lands are processed into taconite pellets, which are then sold by Cliffs to its customers. Mesabi Trust receives a royalty payment quarterly from Cliffs based on the amount of pellets sold. This payment structure was updated as of 2017 and is far better for Mesabi Trust than the previous 15 tear agreement that expired at he end of 2016.

Cliffs announcement that it will build a new HBI (Hot Briquetted Iron) plant in Toledo, OH and that all feedstock for the new plant, 2.4 million tons per year, and will come from the North Shore plant. This plant can produce around 5.5 million tons of pellets per year. So the HBI plant in Toledo will consume around 44% of North Shores production. This is great news for the North Shore plant but also Mesabi Trust. Mesabi trust benefits totally from Cliffs thru the first three quarters of 2017, Mesabi Trust has received over $29 million in royalty payments from Cliffs. Without going into detail Mesabi Trust will continue to receive royalty payments for at least another 40+ years.

For what it is worth, the Peter Mitchell mine has over 200 years ore remaining at current production rates. This number was given at the SME conference held in Duluth, MN in 2015.

Ferrous