Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF) has identified several opportunities to enhance project value and margin expansion at its Halls Creek Project in Western Australia, following a comprehensive review of value engineering options and historical exploration data.
"The upside opportunities presented in this release offer immense value-add to the core project outlined in the recent Scoping Study. COB has the right team to unlock silver and cobalt credits, potentially driving major uplifts in cashflow and return on installed plant," CEO Dr Andrew Tong said.
“Resource growth and associated project life could be realised through the drill-ready exploration opportunities.”
Halls Creek Project regional deposits and prospects.
Engineering review identifies cost efficiencies
The company’s review of the June 2025 Scoping Study has highlighted several areas for margin improvement. Notably:
- Silver recovery presents a significant opportunity to improve Stage 1 project margins.
- Cobalt, found within high-grade copper-zinc zones at the Sandiego deposit, may be incorporated into future Mineral Resource estimates, potentially providing a by-product credit that would improve Stage 2 cost competitiveness.
- A centralised processing hub is being assessed to integrate satellite deposits into the development plan. This could enable increased throughput, reduced capital intensity per unit, and a longer mine life.
Sandiego North confirmed as a priority growth target
Exploration at Sandiego North has revealed a compelling target defined by a 700-metre copper-in-soil anomaly with multiple samples exceeding 200 parts per million (ppm) copper.
- Drillhole ASWB01 returned intercepts of 5 metres at 1.37% copper and 2 metres at 1.71% copper, confirming mineralisation north of the existing Sandiego resource.
- Deep drilling shows mineralisation trending toward Sandiego North, with high-grade zones remaining open along strike.
Sandiego - Sandiego North long section illustrating significant cobalt and copper intersections. The underground development design prepared for the Scoping Study is shown with areas of potential extension identified.
The company is now systematically reviewing the wider tenement package to assess its potential for a multi-deposit development strategy.
Engineering review flags major uplift potential at Halls Creek
A suite of value-enhancing initiatives targeting substantial margin expansion at its Halls Creek Project in Western Australia has been outlined, building on the strong fundamentals established in the June 2025 Scoping Study.
The company is progressing several value engineering opportunities aimed at reducing costs and increasing revenues. Notably, the recovery of silver from the Onedin deposit and the inclusion of cobalt from the Sandiego underground operation are being evaluated as potential new revenue streams. These metals offer strategic alignment with Cobalt Blue’s downstream battery metals aspirations at Kwinana.
A centralised processing hub is under review to integrate satellite deposits, aiming to increase throughput, reduce capital intensity, and extend the mine life. In parallel, the company has activated an exploration pipeline, with Sandiego North emerging as a compelling near-mine target and regional programs advancing to support long-term growth.
Project overview and economics
The staged Halls Creek development includes:
- Stage 1 – Onedin Open Pit / Heap Leach: Producing copper metal and zinc sulphate monohydrate.
- Stage 2 – Sandiego Underground / Flotation: Delivering copper and zinc concentrates with silver credits.
Stage 1 - Onedin and Stage 2 - Sandiego cash cost US/lb copper (net of zinc credits).
The Scoping Study delivered strong base-case economics, with Stage 1 C1 cash costs of US$1.33 per pound of copper and Stage 2 at US$1.11 per pound, benchmarked against a long-term copper price of US$4.55 per pound.
Silver recovery presents a material upside
Future testwork will investigate silver recovery from Onedin, which hosts high-grade silver intersections such as:
- 55.1 metres at 3.5% copper and 103 grams per tonne (g/t) silver, including 16.6 metres at 10.2% copper and 316 g/t silver
- 118 metres at 1.1% copper and 52 g/t silver, including 21 metres at 2.1% copper and 66 g/t silver
Despite an average grade of 37 g/t silver (3.6 million ounces contained), silver is currently excluded from the Stage 1 model. With silver trading around A$58 per ounce and processing costs at A$52.12 per tonne, recovery could significantly boost margins.
Cobalt inclusion and Sandiego North target underpin project growth strategy
Cobalt Blue is progressing initiatives that could significantly expand the scale and value of its Halls Creek Project in Western Australia, building on the strong economics delivered in the June 2025 Scoping Study.
Key opportunities include incorporating cobalt into Stage 2 plans aligned with the Kwinana battery metals strategy, establishing a centralised processing hub to integrate nearby deposits, and targeting resource growth at Sandiego North.
Cobalt upside in stage 2.
The presence of cobalt mineralisation within the Sandiego deposit offers upside for Stage 2, supporting alignment with the proposed Kwinana Cobalt Refinery strategy.
Historical drilling indicates cobalt occurs alongside high-grade copper and zinc zones. Including cobalt in future Mineral Resource estimates and feasibility studies could deliver a meaningful by-product credit, further improving Stage 2 cost competitiveness and enhancing exposure to battery-grade cobalt and nickel markets.
Centralised hub model under review
The company is also assessing the viability of a centralised processing hub to accommodate ore from satellite deposits. This strategy aims to improve capital efficiency, increase throughput and extend the project’s life-of-mine beyond the current 10-year model.
Potential contributors include:
- Mount Angelo North: 1.72 million tonnes at 1.4% copper, 1.4% zinc, and 12.3 grams per tonne silver
- Bommie Porphyry Copper: 95.6 million tonnes at 0.27% copper
By leveraging existing infrastructure, the project could scale up production while maintaining low unit capital intensity.
Sandiego North offers immediate growth opportunity
Cobalt Blue has identified Sandiego North as a priority target for near-term resource growth. The zone, located over 700 metres north of the current Sandiego boundary, is defined by strong copper-in-soil anomalies and high-grade intersections including:
- 5 metres at 1.4% copper from 50 metres, and
- 2 metres at 1.7% copper from 85 metres.
Soil sampling in 2023 defined a 700-metre anomalous copper trend linking Sandiego with the ASWB01 drill location. Despite these indicators, the area remains untested by systematic drilling.
Several nearby holes suggest continuity of mineralisation, with fault structures likely influencing lens displacement. The Sandiego North corridor is now a priority for follow-up drilling, supported by viable access defined in the underground mine design completed during the Scoping Study.
The company will continue advancing these growth vectors alongside feasibility studies, aiming to optimise project development while unlocking further battery metals potential across the broader Halls Creek tenement package.
Building the pipeline through regional targeting
While Sandiego North remains the standout near-term growth prospect, the company is advancing a broader pipeline of exploration targets across the Halls Creek Project. This regional strategy is guided by an integrated review of geophysics, historical drilling, geochemistry, and mapping, aiming to unlock sustained discovery beyond the known deposits.
Geophysical analysis has revealed that both the Sandiego and Onedin deposits are closely associated with distinctive magnetic anomalies linked to magnetite alteration. These anomalies, characterised by short strike lengths and cross-stratigraphic orientation, provide a repeatable geophysical signature that may be traceable elsewhere within the tenement package. Both deposits also lie near induced polarisation (IP) and electromagnetic (EM) conductors — highlighting the utility of these methods for exploration, even in areas affected by deep weathering.
Several magnetic and EM anomalies have been detected along favourable stratigraphy and are now being systematically assessed. The evaluation process incorporates:
- surface mapping of gossans,
- surficial geochemical anomalies, and
- a reassessment of historical drilling data to determine the scope and quality of previous exploration.
This regional exploration program is designed to build a pipeline of high-quality targets for future drill testing, supporting long-term resource growth and complementing near-mine development plans.