The Supreme Court of Canada has ruled that Imperial Metals Corp. (TSX:III) can proceed with a major mining project in northwestern British Columbia, but Ottawa needs to do more to ensure its environmental assessment laws are followed.

In a ruling released Thursday, the high court granted an appeal by MiningWatch Canada, a non-profit organization that encourages responsible mining practices, that objected to an assessment of the proposed gold and copper mine, known as the Red Chris project.

In granting environmental approval to Red Chris, the federal government evaluated only a proposed tailings pond without taking into consideration the rest of the project -- a mine and a mill -- and concluded that a comprehensive study of the project was unnecessary.

"The responsible authority or minister cannot reduce the scope of the project to less than what is proposed by the proponent," Justice Marshall Rothstein wrote in delivering the court's decision. In other words, the government is obligated under the Environmental Assessment Act to consider proposed mining projects in their entirety, not piece by piece.

However, the ruling will not stop the project from going ahead since MiningWatch did not have a direct financial interest in the case and it didn't challenge project's approval -- only the way it was carried out.

While there will be no repeat of the assessment process for Red Chris, the ruling makes it clear that future projects need comprehensive environmental assessments where required.

A spokesman from the Department of Fisheries and Oceans -- the department named in the case due to its role in assessing the proposed tailings pond -- said the government didn't want to comment on the decision until it had thoroughly reviewed it.

The ruling was applauded by groups on both sides of the case.

MiningWatch spokesman Jamie Kneen said it will force the government to follow its own law and will make the Environmental Assessment Act "relevant."

"Government agencies had been consistently restricting the application of the law and now they can't do that anymore," Kneen said.

"I think the Canadian Environmental Assessment Act was widely perceived as becoming more and more irrelevant to actual environment protection and sustainable development in this country, and I think we just reversed that."

The act is up for review later this year, and Kneen said MiningWatch will argue it needs to be strengthened in some areas, including allowing for regional assessments and improving provisions for public participation.

MiningWatch had warned that the project was being built in one of the last-remaining wilderness regions of North America, in an area called Scared Headwaters, where three major salmon-bearing rivers meet.

Nathan Cullen, the NDP critic for natural resources and energy who also happens to be MP of the area, also applauded the decision for encouraging "green mining."

"When a mine goes bad it can last hundreds of years, so getting it right the first time is crucial," said Cullen, who remains worried about the environmental and social impacts of Red Chris on the small aboriginal community nearby.

The Tahltan Central Council said it hoped the decision would prompt the federal government to conduct a full comprehensive environmental assessment of the proposed Red Chris Mine despite the ruling.

"The proposed Red Chris Mine will have serious, long-lasting effects on Tahltan Territory," said Annita McPhee, chairwoman of the Tahltan Central Council.

"We hope that the federal government will recognize today's decision from the Court as an opportunity to finally begin this needed review."

Meanwhile, shares in Imperial Metals gained $1.07 or almost seven per cent to $16.50 in Thursday trading on the Toronto Stock Exchange. Shares in Solitaire Metals Corp. (TSXV:SLT), a junior miner that owns land adjacent to Red Chris, gained half a cent or more than five per cent to 10 cents.

A B.C. mining association also applauded the decision for allowing the Red Chris project to proceed, while also encouraging greater collaboration between the federal and provincial governments.

"It's a project that will create hundreds of new jobs, millions of dollars in new investment and opportunities for First Nations in the (area)," said Pierre Gratton, president and CEO of the Mining Association of British Columbia.

"We also welcome the court's recognition that the federal and provincial governments can and should do all that they can to minimize duplication and co-ordinate better. This has been an issue for our association and for industry across Canada for some time," he added.

Sam Harling, economic development officer for the Terrace Economic Development Authority, which represents the region where Red Chris is located, said the area has lost a lot of jobs in forestry.

"This is extremely welcome news at this moment for northwestern B.C. and all of its communities," Harling said.

Gratton added that he expects mining projects in the Terrace area could bring "upwards of $6 billion of private sector investment into B.C. by B.C.-based companies at a time when we most need it."