By Salini Krishnan
Versamet Royalties (TSX-V: VMET) has entered into a definitive agreement to acquire a cornerstone gold stream on Skeena Resources’ (TSX: SKE; NYSE: SKE) Eskay Creek project in British Columbia. The transaction, valued at $360 million (C$500 million), represents the largest acquisition in Versamet’s history and signals a significant consolidation of Tier-1 streaming assets within the Canadian mining sector.
The move comes at a time of record-high precious metals prices and intense competition for high-margin royalty and streaming interests. By securing a 3.52% gold stream on one of the world’s highest-grade past-producing gold-silver mines, Versamet is positioning itself as a major mid-tier player in the royalty space. For Skeena Resources, the deal provides a critical capital injection as it moves toward the planned restart of Eskay Creek, currently one of the most anticipated development projects in the Golden Triangle.
The Anatomy of the $360 Million Gold Stream
The transaction is structured to provide Versamet with immediate scale and long-term exposure to Eskay Creek’s production profile. The $360 million consideration is split between $340 million in cash and $20 million in Versamet common shares. The cash portion is being paid to fund entities managed by Orion Resource Partners and affiliates of Blackstone, who have been instrumental in the project’s recent financing rounds.
Under the terms of the agreement, Versamet will receive 3.52% of the payable gold produced from Eskay Creek for the entire life of the mine. Unlike many other streaming agreements that include “step-downs” (where the percentage of production drops after certain milestones are met) or “buydown” provisions (where the operator can buy back part of the stream), this deal provides Versamet with a flat 3.52% for the duration of operations.
In exchange for the gold deliveries, Versamet will make ongoing cash payments to Skeena equal to 10% of the spot gold price at the time of delivery. This “10% of spot” structure is a hallmark of high-quality streaming deals, ensuring the streamer maintains a fixed 90% margin regardless of how high gold prices climb.
Why It Matters: Strategic Scale and Asset Quality
This acquisition represents approximately 34% of Versamet’s $1.05 billion market capitalization. It is a “company-maker” deal that fundamentally alters the firm’s growth trajectory.
For investors, the primary appeal lies in the quality of the underlying asset. Eskay Creek is located in the heart of British Columbia’s Golden Triangle, a region known for its world-class deposits and stable geopolitical environment. During its previous operation (1994–2008), Eskay Creek was the highest-grade gold mine in the world. Skeena’s modern iteration of the project aims to replicate that success through open-pit mining of the remaining high-grade resources.
Caption: Geological mapping and exploration in the Golden Triangle have accelerated as companies like Skeena Resources de-risk past-producing sites.
The deal also significantly improves Versamet’s jurisdictional profile. By 2028, this single transaction is expected to increase Versamet’s Canadian exposure to roughly 50% of its total portfolio value. In an era where resource nationalism is rising in many parts of the world, having a cornerstone asset in Canada is a major de-risking factor for royalty investors.
Market Snapshot: The Eskay Creek Gold Stream
| Parameter | Detail |
|---|---|
| Total Consideration | $360 Million ($340M Cash / $20M Shares) |
| Stream Percentage | 3.52% of Payable Gold |
| Ongoing Payment | 10% of Spot Gold Price |
| Expected Annual Deliveries | >10,000 oz Gold (First 5 Years) |
| Total Attributable Production | >30,000 Gold Equivalent Ounces (GEOs) |
| Project Status | 49% Construction Complete (as of Feb 2026) |
| First Production Estimate | Q2 2027 |
Financing and Balance Sheet Strength
To fund the $340 million cash portion of the deal, Versamet has secured an amended credit facility totaling $400 million. This facility, provided by the Bank of Montreal (BMO) and National Bank of Canada, includes a $250 million revolving facility and a $150 million term facility.
The use of debt to finance the acquisition reflects Versamet’s confidence in its existing cash flow. The company reported 189% revenue growth over the last twelve months, largely driven by the ramp-up of other assets in its portfolio. By leveraging its balance sheet now, Versamet is betting that the cash flows from Eskay Creek: starting in 2027: will comfortably service the debt while leaving room for further dividend increases or bolt-on acquisitions.
The market’s reaction has been largely positive. Following the announcement, Versamet shares rose 6.7% to C$14.79 on the TSX Venture Exchange. This reflects investor approval of the deal’s accretive nature; the production from Eskay Creek is expected to be significantly higher than the cost of capital used to acquire the stream.
Eskay Creek: Project Timeline and 2026-2027 Outlook
As of February 28, 2026, the construction at Eskay Creek was reported at 49% completion. Skeena Resources has been methodically de-risking the project, focusing on infrastructure development and long-lead item procurement.
The project is currently on track for first production in the second quarter of 2027. Once operational, Eskay Creek is anticipated to produce an average of more than 300,000 ounces of gold annually during its first five years. Over an initial 12-year mine life, the average production is expected to be approximately 230,000 ounces per year.
https://cdn.marblism.com/u6VkLX_7Yli.webp
Modern mineral processing facilities, such as the one being constructed at Eskay Creek, utilize modular units to increase efficiency and reduce the environmental footprint.
For Versamet, this timeline implies a brief “waiting period” before the cash flow begins. However, the streaming model allows the company to benefit from any exploration success Skeena achieves in the meantime. Given the geological potential of the Golden Triangle, there is a strong possibility that the 12-year mine life could be extended through further drilling, all of which would accrue to Versamet at no additional capital cost.
Contextualizing the Gold Market in 2026
The timing of this deal is crucial. As noted in recent reports on central bank gold reserves, the demand for bullion has reached record highs in the first quarter of 2026. This macro-environment has created a floor for gold prices, making streaming assets even more attractive to diversified mining investors.
While other commodities have seen volatility: such as the recent nickel rally: gold remains the “safe haven” anchor for most royalty portfolios. By locking in a large-scale gold stream now, Versamet is hedging against potential downturns in industrial metals while maintaining high leverage to gold’s upside.
The Competition for Tier-1 Streams
The Eskay Creek deal is part of a broader trend of “mega-streams” appearing on the market. Large-scale developers are increasingly turning to streamers to fill the final gaps in their construction financing. This trend was highlighted in the silver streaming scramble earlier this year, where major miners sought out specialized capital to avoid equity dilution.
Versamet’s ability to win this deal against larger competitors like Franco-Nevada or Wheaton Precious Metals suggests a nimbler, more aggressive approach to growth. By utilizing a mix of cash, shares, and debt, and maintaining strong relationships with private equity firms like Orion and Blackstone, Versamet has shown it can compete for the industry’s most coveted assets.
Key Risks to Consider
Despite the bullish outlook, the transaction is not without risks. The primary risk remains the execution of construction at Eskay Creek. While the project is nearly halfway finished, the second half of mine construction often involves the most complex integration of processing technology and power infrastructure. Any delays in the Q2 2027 production target would defer Versamet’s expected cash flows.
Furthermore, while the Golden Triangle is a premier mining district, it is subject to harsh winter conditions and complex logistical requirements. Skeena must maintain its social license and continue its collaborative work with First Nations partners to ensure long-term stability.
Caption: Heavy-duty mining equipment and excavators are essential for maintaining production schedules in the rugged terrain of British Columbia.
Conclusion: A Transformative Milestone
The $360 million Eskay Creek gold stream is a transformative event for Versamet Royalties. It provides the company with a long-life, high-margin asset in one of the world’s best mining jurisdictions. For the broader industry, it reinforces the vitality of the streaming model as a vital source of development capital.
As the industry watches for the first pour at Eskay Creek in 2027, Versamet will likely focus on integrating this massive acquisition into its reporting and looking for smaller, high-upside royalties to complement its now-substantial base. Investors interested in the streaming sector should view this deal as a benchmark for how mid-tier royalty companies can use strategic leverage to acquire world-class production.
For more insights into the companies shaping the future of the Canadian mining landscape, explore our latest Skillings Mining Review reports and deep-dive analysis on commodity trends.
