African development banks are seen as the most likely funders of Caledonia Mining Corporation's planned $250-million gold mine in Zimbabwe, the mining company's CEO Mark Learmonth said on Wednesday.

Caledonia, which already owns the Blanket gold mine in Zimbabwe, is updating a feasibility study ahead of the planned construction of a new mine at Bilboes to produce at least 170 000 oz/y, making it potentially the country's biggest gold mine.

The southern African country has significant mineral resources, including platinum group metals, gold and lithium, but has struggled to attract investment due to economic instability and jitters over property rights after the government seized white-owned farms at the turn of the century.

Caledonia, backed by investors including BlackRock and Cape Town-based fund manager Allan Gray, is one of the few foreign investors - along with Anglo American Platinum and Impala Platinum - to brave Zimbabwe's tough economy marked by foreign currency shortages and episodes of hyperinflation.

The company is in preliminary talks with the "most likely lenders", Learmonth said during a conference call.

"They are going to be African development banks who have indicated a high degree of interest in this project," he said.

Learmonth said debt would form the bulk of the funding for the Bilboes project.

"We will not be approaching the market for any non-debt funding until we've got a better idea of what the debt capacity is because, frankly, nothing is going to be as cheap as debt funding," Learmonth said.

He said once funding was in place, "optimistically" a year from now, construction of the mine would likely take two years after financial close.

Caledonia's operating profit plunged 62% to $15.18-million in 2023, from $40.28-million a year earlier, mainly due to higher administrative and production costs.