Cobalt Blue adds silver to a streamlined Halls Creek development case

Silver adds a third revenue stream to Halls Creek

Cobalt Blue Holdings Limited (ASX:COB) has put a more integrated shape around its Halls Creek copper and zinc project, adding silver recovery to a common processing plant and producing a preliminary value of A$317 million. The updated Scoping Study forecasts a pre-tax IRR of approximately 47%, with initial development capital estimated at A$75 million on a 100% project basis.

“Sandiego underground mine design”

The proposed operation would develop the Onedin and Sandiego deposits in sequence. Onedin would be mined by open cut, followed by underground mining at Sandiego, with material trucked to a processing plant at Onedin. The plant would recover silver doré first, followed by copper cathode and zinc oxide. Silver is expected to account for 7% of life-of-mine revenue, alongside copper at 56% and zinc at 37%.

Common plant reduces the proposed development footprint

The study estimates approximately 11 years of production, averaging 4,000 tonnes a year of copper cathode, 13,000 tonnes of contained zinc as zinc oxide and 130,000 ounces of contained silver. Total pre-tax free cash flow is estimated at approximately A$681 million, with payback around three years from first production.

The revised configuration removes the previously proposed Sandiego flotation concentrator and instead uses separate heap leach pads feeding shared recovery circuits at Onedin. Cobalt Blue said the arrangement could also accept additional regional feedstock, although that growth potential is not part of the core production case. The company’s updated plan follows the Halls Creek sampling program, which assessed heap leach optimisation and silver recovery ahead of the study.

Ownership and funding remain central to the investment case

Cobalt Blue currently holds a 51% interest in Halls Creek and has exercised its right to increase that stake to 75% by spending a further A$1.5 million on the tenements by 30 June 2028. The headline project economics are reported on a 100% basis, so they do not represent Cobalt Blue’s eventual attributable share.

The company says the first development stage is intended to generate the cash flow needed for Sandiego’s subsequent development, which is estimated to require A$116 million. Cobalt Blue expects to fund its share through equity, debt or a combination of both, while acknowledging that funding is not secured and could be dilutive or available only on less favourable terms. A partial sale of the project interest is also listed as a possible funding strategy.

Scoping economics still carry wide technical uncertainty

This is not yet a reserve-backed mine plan. The study has an accuracy range of plus or minus 35%, is insufficient to support Ore Reserve estimates and includes a production target made up of approximately 91% Indicated and 9% Inferred Mineral Resources. Cobalt Blue says project viability is not dependent on the Inferred component, but further drilling and engineering work will still be needed to test the schedule.

“Top: Halls Creek leach columns at the BHTC.”

Metallurgical assumptions are also unfinished. The reported recoveries are based on bench-scale testwork, while Sandiego was represented only in combined samples because of sample availability constraints. Further testing will examine heap leach performance, silver recovery, zinc oxide quality, reagent use and the separation stages needed to produce saleable products.

PFS target set for the first half of 2028

Cobalt Blue plans to advance Halls Creek to a Preliminary Feasibility Study targeted for the first half of 2028. That work is expected to refine mine designs, process engineering, capital and operating costs, while also addressing environmental baselines, heritage, Native Title engagement, approvals, product marketing and funding.

The base case uses long-term prices of US$13,007 a tonne for copper, US$3,086 a tonne for zinc and US$50 an ounce for silver, with an AUD/USD assumption of 0.70. The sensitivity analysis shows pre-tax NPV10 ranging from A$224 million at an AUD/USD rate of 0.80 to A$442 million at 0.60, before the project reaches the more demanding stages of financing, approvals and construction.