CLOSELY-HELD South African miner, Lontoh Coal, has brushed aside concerns about its Zimbabwe operations as it looks to raise between $300 million and $500 million from an initial public offering in Hong Kong.

Spokeswoman Lizelle du Toit said investors in Hong Kong “understand the risk of doing business” in Zimbabwe, where Lontoh Coal has one of its three mines, she said

The company, based in Johannesburg, may sell shares in Hong Kong as early as the first half of 2011.

Lontoh Coal has two coal mines in South Africa and a 51 percent stake in the Lubimbi project in Zimbabwe which has estimated reserves of 1.2 billion metric tons of high-quality thermal and coking coal in a planned open-cast mine, it said.

Some of the funds from the IPO will be used to develop Lubimbi, where production is expected to start in May next year, du Toit said.

The company said it “doesn’t foresee” problems with Zimbabwe’s empowerment laws under which all companies must sell 51 percent of their assets to locals, she said.

“We believe South Africa’s bi-lateral protection agreement with Zimbabwe will protect our investment, and meetings with Zimbabwean government officials have given us added confidence,” said Du Toit.

She however, declined to say how much the company is likely to invest in Zimbabwe.

Lubimbi is being developed by Lontoh's 51 percent Zimbabwean subsidiary, Liberation Mining, which expects to deliver coking and thermal coal to both regional and Asian off-take customers.

Lubimbi is situated on the fringes of the Gwai settlement, near Hwange, an area which hosts two-thirds of Zimbabwe's known coal deposits.

In July Lontoh chief executive, Tshepo Kgadima said they estimate Lubimbi’s cash costs at $20/t, and were looking to a 200-year life-of-mine.

"We've reached a stage where we know for sure that we can mine, and our priority is to begin by producing coking coal," Kgadima said then.