HARARE, April 3 (Reuters) - 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 ounces annually, 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 ( BLK ) 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.