Coeur Scores a Supreme Victory

Coeur d'Alene (NYSE: CDE  ) , while bruised and bloodied, is looking better all the time.

Sure, the beleaguered silver miner has one of the ugliest 52-week charts in the space, lagging peers like Silver Standard (Nasdaq: SSRI  ) , Silver Wheaton (NYSE: SLW  ) , and Pan American Silver (Nasdaq: PAAS  ) . But the story here keeps improving, and Coeur has markedly outperformed the other silver slingers of late. The most recent fortuitous event is a victory hammered out not in the mining camp, but in the courtroom.

Coeur's Kensington gold project sits roughly 45 miles north-northwest of Juneau, Alaska. While this property has been in the company portfolio since I was in kindergarten, Kensington has yet to become a mine. Coeur began construction in 2005, but a legal challenge brought by the Sierra Club and two other conservation groups has hamstrung development from that year to the present date.

The fight centers on Coeur's use of a local lake as a site to deposit several million tons of rock waste, known in the industry as tailings. When your deposit contains just a couple grams of gold per metric ton of ore, you've obviously got a great deal of left-over pulverized rock to deal with. Tailings are an unavoidable part of the mining process, and there are several disposal techniques, each with their respective pros and cons.

While the firm's disposal permit held up in District Court, the Ninth Circuit Court of Appeals was more sympathetic to the plaintiffs' claim that it violated the Clean Water Act. Coeur, in turn, took its case to the Supreme Court, which brings us to Monday's verdict.

By a 6-3 majority, the Court held that the permit is indeed lawful, and gave Coeur the golden thumbs-up. The miner's now gunning for gold production by the back half of 2010.

I don't follow Coeur nearly as closely as my colleague Chris Barker, who has documented each plot twist and turn. After surveying his past coverage (see the links below), you may just find that this latest golden "green light" sweetens the odds sufficiently enough to take a flyer on this precious metals miner. Compared to Goldcorp (NYSE: GG  ) or Yamana Gold (NYSE: AUY  ) , this firm certainly appears to present a relatively underappreciated growth story. Access to attractive financing now becomes the central question, and one which I'll be eager to see Chris tackle in the future.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (18)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 23, 2009, at 4:38 PM, blues4you wrote:

    Do we really need gold bad enough to destroy a pristine lake?

  • Report this Comment On June 23, 2009, at 4:49 PM, portefeuille wrote:

    The supreme court decision is here (pdf):

    http://www.supremecourtus.gov/opinions/08pdf/07-984.pdf .

  • Report this Comment On June 24, 2009, at 1:55 AM, Aquaren wrote:

    It is my understanding the small lake will, upon completion of the mining operation, be constructed to provide an improved environment for fish and wildlife.

    Contrary to news headlines describing a newfound license for Coeur to engage in a massive fish kill the aquatic life in the small lake can easily be temporarily relocated to nearby ponds, lakes and streams and then brought back to repopulate at the appropriate time.

    The reports that Coeur would be polluting nearby streams and waters is egregiously false. The requirements for cleaning the waters prior to discharge into surrounding waters, including using reverse osmosis (usually reserved for potable drinking water) will ensure minimal impact.

    Please view the information on which the Supreme Court decision was based....

    http://www.supremecourtus.gov/opinions/08pdf/07-984.pdf

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