DAR ES SALAAM, TANZANIA - Tanzania could become the biggest gold producing country in Africa  following new discoveries of gold in the most unlikely areas of Lindi and Nachingwea districts in the south of the country.

Reports reaching East African Business Week from New York, USA, said a joint venture agreement has been signed with Douglas Lake Minerals Inc. for the right to acquire and develop a portion of the Douglas Lake's Mkuvia Gold Project.

Ruby Creek and Douglas Lake have entered into a joint venture development agreement dated November 7, 2009, covering 125 sq km of the 380 sq km Mkuvia Gold Project located in the south of Tanzania.

Ruby Creek has agreed to purchase a 70% interest for US$3 million in a series of payments over 3 years.

This will be the first gold mining venture to be located in southern Tanzania. Most gold mining is happening in the Lake Victoria zone, Mbeya and Rukwa region, but the south wasn't until now regarded as a potentially gold bearing zone.

Tanzania has become one of the fastest-emerging gold producers in Africa, and is now the continent's third-largest gold-producing country after South Africa and Ghana. Annual production of gold has increased from around 43.2 tonnes in 2002 to about 48.0 tonnes in 2003.

Based on ongoing projects and developing mines, Tanzania's estimated gold reserves have been calculated at a conservative total that is in excess of 36 M oz (1000 t).

In 2003, Tanzania reported a 20% increase in gold exports from US$414 million to US$504 million and accounted for more than 62% of total export revenues, compared with 49% in 2002.

There was a tremendous increase in gold exports which resulted in the signing of another gold-mining contract, this time between the Government of Tanzania and Pangea Minerals Ltd.

Douglas Lake is the latest in a series of gold mining ventures. It established a joint venture on the Mkuvia project area in July 2008, having spent more than $2.1m in the past 16 months of exploration.

Douglas Lake is now in the final stages of applying for their mining license.

Rob Slavik, the president of Ruby Creek, along with the management of Douglas Lake, went on a first site visit to the Mkuvia property in April 2008.

"In April, 2008 while on a tour reviewing resource property opportunities in Tanzania, I had the good fortune to be with Douglas Lake management when we were introduced to the property that came to be known as the Mkuvia Gold Project," Slavik said.

"We observed many artisanal miners having great success recovering gold, using only hand tools in all surface areas of the property that we viewed. Deeper diggings revealed coarser gold. I have continued to follow the progress of the property and have been greatly encouraged by the work and results produced to date."

Douglas Lake has spent more than $2million in the past 16 months in exploration, developing an understanding of the mineralization on a portion of the property, focusing on a relatively small area for mechanized production (about 10 sq km).

Douglas Lake has completed its technical report, reserve estimate, feasibility study and mining plan and is awaiting its environmental impact assessment report and upon receipt will file its first mining license application with approval expected in the first quarter of 2010.

It is anticipated that the second mining license application would be approved in early third quarter of 2010.

Each year since 1998, a new gold mine has been opened in Tanzania. The mines are owned by Resolute Ltd; Ashanti Goldfields in joint venture with AngloGold; Barrick Gold Corp; Placer Dome Inc; Meremeta Ltd; and Pangea Goldfields Inc in joint venture with Miniere du Nord.

AgloGold Ashanti owns 50% of the Geita mine in Tanzania. The mine which started production in August 2000 produced a record 661,045 oz at a cash operating cost of US$170/oz in 2003, compared with 579,043 oz at US$163/oz in 2002. The upgrade of the crushing and leach tank sections of the processing plant was successfully commissioned in the first quarter of 2003 and the capacity of the plant was increased significantly.