JOHANNESBURG (miningweekly.com) – New coal black economic empowerment (BEE) company Lontoh Coal intends listing on the main board of the JSE this year and having a secondary listing on either the ASX or the Hong Kong exchange.

Lontoh CEO Tshepo Kgadima tells Mining Weekly Online that the emerging Southern African coking and thermal coal exploration and mining company is aiming to be a three-million ton a year producer - one million tons a year from its South African assets and two-million tons a year from its proposed Zimbabwe operations.

Initial seed capital has enabled the company to acquire assets in KwaZulu-Natal and Limpopo provinces in South Africa and two properties in Zimbabwe.

It has raised additional exploration capital through a private placement of shares that has given the company broad-based BEE credentials.

It is continuing to raise capital through the sale of shares in preparation for the company's listing towards the end of the year on the main board of the JSE.

"Our aim for 2010, is to list on the main board of the JSE and within in 18 months thereafter to list on either the Australian or Hong Kong stock exchanges," Kgadima tells Mining Weekly Online.

The company, which will issue 230-million shares on listing, is expected to have a market value of from R2,5-billion to R3-billion, which will translate into a share price of between R7 a share and R8 a share.

The company has R70-million to ensure that it reaches the next critical stage to firm up its reserves in Zimbabwe and to increase its production profile at Hlobane View colliery in Vryheid.

That will be followed by the raising of additional capital to ensure that it can develop a production capacity of two million tons a year in Zimbabwe.

It is envisaged that the 900-ha anthracite, coking and thermal coal Hlobane View colliery will produce at a rate of one million tons a year for 23 years.

Further, the company has an exploration project at Lephalale in Limpopo province, where the inferred metallurgical and thermal coal resource is reportedly 648-million tons.

Production from the Hlobane View tailings will begin this month, and provide a revenue stream while the company awaits the conversion of a new-order prospecting right into a mining right.

Lontoh is looking to making an acquisition close to Hlobane View, an area it favours because of its closeness to the rail network to Richards Bay, where the company intends exporting from the bulk terminal.

"Outside of that acquisition, we don't anticipate any other acquisitions. The portfolio we have now positions us to be a junior coal miner of three million tons a year of both coking and thermal coal without requiring an additional acquisitions," he adds.

Lontoh intends supplying the international market with 1,8-million tons a year through the Richards Bay dry-bulk terminal in KwaZulu-Natal and the port of Motola in Mozambique, and the domestic ferrochrome market and copper mines in Zambia and the Democratic Republic of Congo with 1,2-million tons a year.

"We're looking to supplying 600 000 t a year to the copper mining companies, that are importing their coking coal from Australia," Kgadima tells Mining Weekly Online.

Lontoh is estimating a cash cost of production of $40/t and a plus-rail cost of $90/t against a coking coal price that has hit the $200/t mark.

"Even at $150/t, we'll still be making very respectable margins," he adds.

The company expects the thermal coal price to remain steady over the next three years at between $90/t and $95/t, and the company's profit margin to be between $20/t and $30/t.

Payback of the company's investment is expected in two years.

The company's two coal properties in Zimbabwe are in the Lubimbi and Entuba coalfields. Lubimbi, 245 km from Bulawayo, hosts opencastable thermal and coking coal, as well as coal-bed methane resources, and the smaller Entuba, near Hwange, has opencast and underground coking and thermal coal reserves of 110-million tons.

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