“This transaction represents excellent value and takes us a large step toward our stated goal of 1.8 million ounces annual gold production by 2012, while lowering our average cash cost by $40 to $50 per ounce,” said Joseph Conway, president and CEO of Toronto, Canada-based Iamgold.

Under the terms of the transaction, Iamgold will acquire and finance development of the Essakane project, one of West Africa’s largest undeveloped gold reserves. Orezone exploration assets will be distributed pro rata to Orezone shareholders to create an entity known as “New Orezone.” Each Orezone shareholder will receive 0.08 of an Iamgold share and a pro rata share of New Orezone for each Orezone share held. Upon completion of the transaction, Iamgold will become a 16.6% shareholder of New Orezone.

In addition, Iamgold will provide Orezone with immediate C$20 million equity financing at C$0.28/share, subject to regulatory approvals. Iamgold also will open a corporate African operations office based in Dakar, Senegal.

Orezone’s main asset is the 4-million-oz Essakane gold project, located in Burkina Faso, West Africa. Construction commenced in September 2008 on the mine, which is expected to produce more than 300,000 oz/y over a minimum nine-year mine life at an average cash operating cost of $358/oz, using a $600/oz gold price and $85/bbl oil price. Full production is anticipated in late 2010, requiring a remaining capital expenditure of approximately $350 million.

Ron Little, CEO of Orezone said, “New Orezone will be well financed through this transaction and [will] host three advanced gold projects including Bombore, the second largest gold resource in Burkina Faso with 1.7 million ounces of measured and indicated resources.”

Assuming Orezone shareholders approve the transaction at the special meeting, and final court approvals are obtained, the transaction is expected to close by the end of February 2009.

When in production in late 2010, Essakane will contribute more than 25% of Iamgold’s gold production, bringing the company’s annual production to more than 1 million oz/y. “With this transaction, we are able to achieve a significant production increase in the near-term, a cost reduction of $40 to $50 per ounce and a 32% increase in reserves, with modest share dilution,” said Conway.

Iamgold currently has interests in two gold mines in Mali, two in Ghana, and one in Botswana. In 2008, about half of the company’s global gold production was from these African operations.