TORONTO (miningweekly.com) – The TSX-listed stock of precious metals producer Starcore International on Wednesday closed up 22.58% after the company announced that it would buy explorer American Consolidated Minerals in an all-scrip deal.

Starcore explores, extracts and processes gold and silver through its subsidiary Compania Minera Pena de Bernal, which owns the San Martin mine, in Queretaro, Mexico.

Under the terms of the agreement, each American Consolidated shareholder would receive one Starcore common share for every three American Consolidated shares held. After the deal had closed, former American Consolidated shareholders would own about 4% of Starcore shares, which also on Wednesday yielded a maiden dividend of $0.02 a share, payable on September 30 to shareholders of record on August 29.

American Consolidated is a Vancouver-based firm with interests in three exploration projects in the US and Mexico.

Starcore, which had cash holdings of about $9.5-million, said the acquisition provided an attractive low-risk and high-reward opportunity in North America. It would fund work on American Consolidated's three properties through current cash flows from the San Martin mine.

American Consolidated held the Toiyabe property, in Nevada, on which it was currently focused and which had an indicated mineral resource of more than 173 000 oz of gold, the Sierra Rosario property, in Mexico, and the Lone Ranch project, in Washington State.

Starcore said the new properties would give it the potential to increase its resource base in North America, positively impacting its valuation at a relatively small capital cost.

The deal was subject to regulatory approval, as well as voting by American Consolidated's shareholders. American Consolidated had agreed to seek voting lock-up agreements for a minimum of 25% of its shares as a condition of a definitive agreement.

Starcore expected to execute a definitive deal within 30 days.

Starcore shares on Wednesday rose C$0.03 to close at C$0.19 apiece.