KEY POINTS
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Cobalt Blue targets A$317m value from its Halls Creek project.
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Silver will provide a third revenue stream alongside copper and zinc.
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The A$75m project targets 11 years of production and a three-year payback.
Australian mining company Cobalt Blue has identified an opportunity to recover silver alongside copper and zinc at its Halls Creek project in Western Australia, potentially creating a third revenue stream and improving the project’s financial returns.
The company outlined the opportunity in an updated scoping study covering the sequential development of the Onedin and Sandiego deposits using a shared processing plant at Onedin.
The proposed development will produce three saleable metals: copper cathode, zinc oxide and silver doré.
According to the study, incorporating silver recovery from both deposits would give the project an estimated pre-tax net present value (NPV) of approximately A$317 million and an internal rate of return (IRR) of 47%.
The development is also expected to generate about A$618 million in free cash flow over its estimated 11-year production life, with an initial capital requirement of A$75 million.
Cobalt Blue estimates that the project could recover its initial investment within three years of commencing production.
Silver Creates Third Revenue Stream
The inclusion of silver recovery marks a significant change to the Halls Creek development plan, as the updated study identifies additional value in metal already contained in the Onedin and Sandiego deposits.
Previously, the project development strategy focused on producing copper and zinc. The revised approach incorporates silver recovery, allowing the company to generate revenue from three different metals through a common processing system.
The updated study forecasts average annual production of approximately 4,000 tonnes of copper cathode, 13,000 tonnes of contained zinc in the form of zinc oxide and 130,000 ounces of contained silver in doré.
These production estimates are based on an 11-year mine life.
Cobalt Blue expects copper to remain the project’s largest source of revenue, accounting for approximately 56% of total earnings.
Zinc is projected to contribute 37%, while silver is expected to generate the remaining 7%.
The financial assessment uses conservative long-term commodity price assumptions of $13,000 per tonne for copper, $3,100 per tonne for zinc and $50 per ounce for silver.
The addition of silver is expected to strengthen the project’s revenue base by allowing Cobalt Blue to commercialise another metal already present in the deposits rather than relying exclusively on copper and zinc sales.
Single Processing Plant to Reduce Costs
A central feature of the updated development strategy is the use of one processing plant to handle ore from both the Onedin and Sandiego deposits.
The shared facility will be located at Onedin and is expected to process material from the two deposits through a common production pathway.
This approach replaces the previously proposed plan to construct a separate flotation concentrator at Sandiego.
By consolidating processing operations, Cobalt Blue intends to reduce infrastructure requirements, improve capital efficiency and simplify the development of the project.
The company believes that operating a single facility for three saleable metals will reduce the amount of external funding required to bring Halls Creek into production.
The shared processing infrastructure could also provide opportunities to introduce additional mineral feedstock from other deposits in the surrounding region.
Such additional material could support higher production volumes, extend the project’s operating life and improve its overall financial performance.
Company Says Updated Study Improves Project Economics
Cobalt Blue chief executive officer Dr Andrew Tong described the updated scoping study as an important milestone in the development of Halls Creek.
He said the incorporation of silver recovery from both Onedin and Sandiego creates an opportunity to produce three saleable metals through a single processing facility.
According to Tong, the staged development approach provides a simpler and more capital-efficient route to production while reducing the project’s dependence on external financing.
The company is seeking to maximise the value of the mineral resources by using shared infrastructure and recovering multiple metals from the deposits.
The proposed arrangement is also expected to provide flexibility for future expansion, particularly if additional regional feedstock becomes available.
Cobalt Blue Targets 2028 for Next Study
Cobalt Blue is continuing technical and financial assessments of the Halls Creek project as it advances towards a preliminary feasibility study.
The company is targeting completion of the study in the first half of 2028.
The preliminary feasibility study is expected to provide further technical and economic information to guide the project’s development and investment decisions.
The updated scoping study’s estimated A$317 million pre-tax net present value, 47% internal rate of return and A$75 million initial capital requirement provide the current financial basis for the proposed development.
If the project advances as planned, Halls Creek could become a multi-metal operation producing copper, zinc and silver through a shared processing facility over an estimated 11-year production period.
