So one way or the other before the Erin shareholders are asked to vote on the transaction involving InvestCo you will know who InvestCo is and I just wanted to make that very clear. Also I think it's important to note that at this point in time the TSX Venture exchange is aware of who InvestCo is and they are aware as to the circumstances why they can't be why their name can't be divulged at this point in time and the TSX Venture is OK with that fact and they have approved that we announced it in this fashion at this point in time.
The agreement between us and InvestCo has 3 principal elements, first is that InvestCo is granted the first option to invest 5.135 million to aquire either an equity position in Erin directly, common shares of Erin, or an equity interest in Balkan Gold, Balkan Gold of course is our wholly owned subsidiary that has all the rights to the Piskanja boron project. This is an option at InvestCo's choosing to invest, either or. In either case, the proceeds from this initial tranche of 5.135 million are to be used exclusively to fund a pre agreed upon work program at Piskanja that's desinged to advance the project through to Feasibility including all the permitting activities to obtain a mining license, exploitation license from the Serbian government. The second commercial element in the agreement is subject to completion of option one or tranche one. InvestCo will be granted a 2nd option to acquire 15 US million dollars worth of equity of Balkan Gold, Balkan Gold only, not an either or on the second option.
The proceeds from the exercise of Option 2 are to be used exclusively to fund future Piskanja mine design, development and construction costs at Piskanja.
The 3rd commercial element is that, again subject to completion of the first tranche, InvestCo in its capacity as an experienced global commodity, marketing and trading company will provide its marketing and advisory expertise to us, to Balkan Gold and Erin for the future sale of all borite products from Piskanja for the initial 3 year period.
Now I'll provide a little more detail but I do encourage you all to read the entire news release for more complete information if you haven't already done so. So first of all, as I said, InvestCo will be granted option one and that exercise period commences now and expires 90 days from the point in time that we an extension on our Piskanja license and that's due for renewal by July 11th of this year so InvestCo will be in a position to, or must be in a position to make their initial tranche investment over the course of the next few months. The option one grants InvestCo the right for this 5.135 million to purchase either 51% of the share capital of Balkan Gold or alternatively the 5.135 million US worth of shares in Erin and the number of shares would be, will be dictated by the pricing of Erin and it's based on a formula where they're allowed a discount permissible under TSX policy with a price being fixed at the higher of either the volume weighted 20 trading day average price or the closing price that notice is given but highly likely the investment is going ti be made directly into Balkan Gold.
Upon exercise of option one, InvestCo, as I said, becomes the marketer of all the products produced from Piskanja for 3 years and for that they'll be paid a 1% marketing fee, 1% of the invoice amount and subject to completion of option one, they will then be granted option two, and they basically have 3 months within the time that we receive our mining license in which to excercise option two. And the option two gives them the right to purchase an additional 24% stake in Balkan Gold for 15 million so the entire agreement would allow them to purchase up to obstensively 75% of the deal for a total of 20 million 135. And of course the agreement is subject to TSX Venture approval and your approval, our approval as shareholders.
19:20 More information on InvestCo
A little more information on InvestCo itself, at least to the extent that I can. Again I can't tell you specifically their name but as I said this will happen at least by the point in time that the information circular is released in order for all of us shareholders to vote on the transaction. But I can at this point give you a, you know a fair bit of descriptive information about InvestCo, some of it was in the news release already and some of this will be new.
InvestCo is a global trading and investment specialist. It was established in 2009 by the senior management team from one of the world's largest energy commodity trading companies. It's headquartered in Europe and it manages the sourcing and sales of commodities along with the associated physical logistics as well as hedging of underlying price exposure for their clients. They're both involved in the financial commodity markets as well as the physical commodity markets and through their industry relationships they have developed trade finance structures that are very conducive to help develop mining assets. They make equity investments in mining projects such as ours and both mining projects and the logistics of mining projects. They utilize their commodity networks and experience in doing so... importantly for us they're willing to invest capital at an early stage, at an earlier stage anyway than a lot of investors are and they work with management by providing the marketing and hedging and structuring expertise. They have acted as a marketing agent and advisor for a variety of mining companies, investment funds, commodity funds, etc. over many many years. They also have an extensive debt and equity network that help bring mining projects like ours into production. They've worked with a number of alternative funding partners such as sovereign wealth funds, hedge funds, etc. so they look for alternative to traditional capital markets methodology of raising funds which rely on things like private placements, brokers, underwriting of IPO, etc. They have expertise in trading several different commodities including energy commodities, fertilizers and various metals. They also have expertise in structuring offtake and supply agreements which is very important for us as well as trade finance, commodity prepayments and multi commodity transactions so they're really a full service commodity trading house.
A little bit about their Chief Executive Officer. He has many many years experience in mining, in trading and structured commodity transactions. He's built and run several highly successful commercial trading businesses in several different commodity areas. He's also run the merger and acquisition activities in several commodity related sectors. He was an integral part of the management team of one of world's largest energy commodity trading companies. He co-founded and managed the international operations of what became one of the largest physical commodity traders across Europe and Asia. He led the acquisition and operation and the eventual sale of a major energy company to an investment bank and he did that just prior to establishing InvestCo. He's got his MBA and PHD in business and is a very very highly qualified indidual to be sure and they're willing to lend all that expertise over to us. So they bring a lot to the table just besides money. Money of course is important but they bring a lot to the table besides money.