Keep in mind that, in lore, it was the Dwarves who were able to forge items into mithril*--until they got a hold of it, it was just a valuable rock. That's why I think that the discard pile would be the better call (taking something that was used and finding another usage for it).
Of course it is just my nature to contend that my submission is the best one.
-wtk
* Yes, Celebrimbor and a few Elves who had Dwarven training were able to as well.