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Revett Rock Creek Update – 3-29-2010

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I recently received an update on the status of Revett’s ( RVM, RVIMF) Rock Creek project. The suspense surrounding Revett and Rock Creek continues to build like some sort of Hollywood movie. After reading today’s press release, I immediately called Revett to see if I could squeeze out any additional details. Armed with that info, let’s carefully analyze today’s press release and see what information we can glean from reading in between the lines. Sometimes looking for what is NOT there can clue you in on what is there. [Thanks to GoldStockMania reader/subscriber Phillip for the heads up.]

I first want to express my disappointment with the way the Judge has handled his communications with the case. I was expecting the judge to provide some sort of preliminary feedback during the March 17th meeting. As you know, Revett provided an update to the Judge on their progress made towards the previous environmental requirements set forth by the Forest Service. Apparently, the judge did not provide much of any feedback on their presentation. The only information we got out of that meeting was that the Court would make a ruling over the next several weeks.

As of today we get the following update, which says something and virtually nothing at the same time if that is possible. To me, it would have made more sense for the Judge to release his order and full opinion simultaneously and finally clear the air, instead of this piecemeal non-sense.

Here is my analysis of the press release and what it probably means regarding the short-term outcome for Rock Creek. GoldStockMania newsletter subscribers stay tuned for a Revett Alert providing additional information coming soon.

SPOKANE VALLEY, WASHINGTON, Mar. 29, 2010 (Marketwire) — Revett Minerals Inc. (TSX:RVM) (OTCBB:RVMIF) (“Revett” or “the Company”) announces that the US District Court has issued an order pending a full opinion with respect to the legal status of the Rock Creek project.

In other words, the Judge has a ruling regarding the Rock Creek project that will determine its legal status but will be announced at a later date ( hopefully soon). While we are waiting, the Judge has made a new order discussed below.

The court has ruled that “the Forest Service’s decision to approve the Rock Creek Mine Project is vacated, and the 2003 Record of Decision and 2001 Final Environmental Impact Statement are set aside and remanded to the Forest Service for further action consistent with the Court’s forthcoming opinion”.

In other words, the judge has now cancelled the forest Service’s previous approval of the Rock Creek project.  Furthermore, he is sending back the Environmental Impact Statement and the 2003 Record of decision to the Forest Service for further action to be determined by his ruling.

John Shanahan, President and CEO, stated “We will know more about what actions will be required by Revett and the agencies once the courts’ opinion has been released. We remain optimistic the Rock Creek project will be advanced in an environmentally and economically responsible manner.” Source: Marketwire Canada (March 29, 2010 – 8:30 PM EDT)

Okay, this last paragraph is self explanatory. The CEO of Revett is saying to interested parties, hang in there, we are committed to the Rock Creek project regardless of with the court’s ruling is.

I picked up some additional detail from another news release, “Molloy blocks mine beneath Cabinet Mountains Wilderness.”

Molloy tossed claims grounded in the Endangered Species Act and the Clean Water Act, but upheld other charges – namely that the Forest Service, in approving the mine, had violated both the National Environmental Policy Act and the Forest Service Organic Act.

So, what does this all mean? What information is hidden between the lines? I am glad you asked….

The Bad:

First of all, it is plain to see that the Judge has already cancelled the approval for this project. What does that mean? This means that no development will be taking place at least until the Judge’s full opinion is revealed and any requirements are satisfied or challenged in a higher court. Second, with Judge saying that the Forest Service violated the National Environment Policy and the Forest Service Organic Act in approving the Rock Creek mine, this is likely to introduce further delays. Until additional information is known, we don’t know what type of delays we can expect from this news.

The Good:

It turns out that Judge Molloy made a surprise moved in favor of Revett and threw out two claims by the plaintiffs; the Endangered Species Act and the Clean water act. We can conclude that Revett must have met the requirements for these. I thought one of these would be a sticking point, but apparently they both are off the table now which is great news for Revett!

Summary:

What does all of this tell us about what Malloy’s full opinion might include or not include? For sure, the ruling is not going to give Revett the green light to proceed with development on Rock Creek anytime soon. Further delays are implied by the the Judge’s statement that further action will be required by the Forest Service. This “further action(s)”, could range from the minor to the major.

I would guess that the Judge and the environmentalist have cooked up something that would  lean towards the major end of the scale in hopes of inflicting the maximum delay on the project as possible. I covered their delay plan in the Revett Minerals Stock Trading Card. I guess Malloy did not have enough to maintain the claims on the Environment and Clean Water Acts, so he threw them out knowing that he could use the National Environment Policy and the Forest Service Organic Act as a backup.

Unless the required actions are minor, this is not going to be good for Revett’s stock price short-term. I will send out a quick alert to my newsletter subscribers on how I plan to tweak my Revett trading strategy ASAP in light of this information.

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