Board Thread:Administrator's Noticeboard/@comment-5985257-20130118140220/@comment-5995685-20130119011339

The only way for cobalt ore to spawn is once you hit hardmode it lets you break the demon alters, which makes said ore spawn. So unless your using a mod that messes with it or your playing a map which has had hard mode activated, there is no way for it to spawn.

Also silver ore sometimes looks blue when its underwater, maybe it just looked like Cobalt.