By Michelle Mcquigge, The Canadian Press

TORONTO - Iamgold Corp. (TSX:IMG) has struck a deal to acquire Africa-focused gold miner Orezone Resources Inc. (TSX:OZN) in an all-stock transaction valued at $139 million.

The friendly takeover, valued at 49 cents per Orezone share, would give Toronto-based Iamgold ownership of the Essekane gold project in the West African country of Burkina Faso.

The development, begun in September and set to reach full production in 2010, is expected to produce 300,000 ounces of gold a year over a nine-year life.

That will boost Iamgold's overall gold output by about 25 per cent, after an estimated $350 million in further capital investment.

Orezone chief executive Ron Little praised the deal as a way to complete the project "during these difficult markets."

Iamgold is offering 0.08 of a share for each share of Orezone, whose other assets will be spun off into a separate new exploration company majority owned by existing Orezone stockholders.

Speaking on a conference call on Thursday, Iamgold chief executive Joseph Conway described the deal as a "story of compeling economics," touting the benefits to shareholders in both companies as well as the strength of Orezone's resource base.

'This transaction is a large step forward for Iamgold. In reaching our stated goal of 1.8 million ounces, this is going to be a significant boost," he said. "We also believe that this will have a significant possibility for rerating as we increase our near-term production."

Orezone shares had nearly doubled in early trade in Toronto on Thursday, up 28.5 cents to 46 cents a share.

Iamgold shares were down 20 cents trading at $5.9 a share.