How Cobalt Blue Plans to Boost Margins and Expand Resources at Halls Creek

Engineering Review Unlocks Margin Expansion

Cobalt Blue Holdings Limited (ASX, COB) has announced a series of value engineering initiatives aimed at enhancing the economics of its Halls Creek Project in Western Australia. Building on the robust June 2025 Scoping Study, the company is exploring silver recovery in the initial Onedin open-pit stage and the inclusion of cobalt credits in the subsequent Sandiego underground operation. These developments could substantially improve cash flow and reduce unit costs, reinforcing the project's competitive position in the copper-zinc sector.

Notably, silver, currently excluded from Stage 1 financial models, occurs at significant grades averaging 37 g/t, representing an untapped revenue stream that could materially boost margins. Meanwhile, cobalt, found alongside high-grade copper-zinc mineralisation at Sandiego, aligns strategically with Cobalt Blue’s Kwinana Cobalt Refinery plans, potentially adding a valuable by-product credit to Stage 2.

Sandiego North Emerges as a Priority Exploration Target

The company has confirmed Sandiego North as a near-mine, high-impact discovery target, defined by a 700-metre copper-in-soil anomaly with multiple samples exceeding 200 ppm copper. Recent drilling, including hole ASWB01, intersected significant copper mineralisation, confirming continuity north of the existing resource. The mineralisation remains open along strike, offering a compelling opportunity for resource growth and project scale expansion.

This discovery is particularly important as it could extend the life of the Sandiego underground operation beyond the current 10-year model, enhancing the overall project value and production profile.

Strategic Centralised Processing Hub Under Review

Cobalt Blue is evaluating a centralised processing hub concept to integrate satellite deposits such as Mount Angelo North and Bommie Porphyry Copper. This approach aims to increase throughput, extend mine life, and lower capital intensity by leveraging existing infrastructure. The hub model could transform Halls Creek into a multi-deposit operation with improved capital efficiency and scale, positioning the project for long-term sustainability.

Broader Tenement Package Under Systematic Review

Beyond the immediate focus on Onedin and Sandiego, the company is systematically reviewing its extensive tenement package, covering approximately 250 square kilometres. This includes six exploration licences and five prospecting licences, with ongoing work to identify additional deposits and regional targets. The integrated review of geophysics, historical drilling, and geochemistry is designed to build a pipeline of exploration opportunities that complement near-mine development.

CEO Dr Andrew Tong emphasised the potential upside, stating that the team is well-positioned to unlock silver and cobalt credits, driving significant uplifts in cash flow and returns. The dual-track strategy of project optimisation alongside resource growth underscores Cobalt Blue’s ambition to establish Halls Creek as a long-life, multi-metal operation.

Technical and Regulatory Context

The announcement includes detailed geological and drilling data supporting the exploration results, with sampling and assay methods adhering to industry standards. While some zinc assay quality control issues were noted, the overall data integrity supports ongoing feasibility and resource estimation work. The project operates within secure mining leases expiring in 2031, with native title considerations and joint venture agreements in place, ensuring a clear path forward for development.