Under a letter of intent, Temas holds an option to earn up to 50% equity interest in Balkan Gold, Erin's wholly-owned subsidiary which holds the licence to Piskanja, by expending a total of 10.5 million euro ($12.9 million) towards the development of the project within a 36-month period, Erin said in a filing with the Toronto Stock Exchange on Thursday.
Upon receiving approval of the option transaction, Temas will make a one-time payment of 250,000 own shares and 250,000 share purchase warrants to Erin, while each 210,000 euro advanced to the project will earn Temas an additional 1% undivided equity interest in Balkan Gold, to a maximum of 50%.
Erin will remain operator on the project until such time as Temas has exercised the option and earned its 50% interest in Balkan Gold, at which point Temas will become operator of Piskanja.
"Temas is an exceptionally good fit for this project. Not only are they willing to match their funding commitments for Piskanja with the anticipated equity requirements for project development right through to production, but in addition, they have an experienced management team with like-minded thinking towards the development of Piskanja. Undoubtedly we are stronger with them as our partner," said Tim Daniels, CEO of Erin.
During the three-year option period, a joint technical committee made up of members from both Erin and Temas will have the final say on matters pertaining to programmes and budgets, Erin said.
"Having the ability to work on a very advanced project with a very high demand commodity that would be the only European production of borates should add significant shareholder value, along with our Ilmenite deposits in Canada. Having access to premier projects that could produce products that end up in consumer and industrial products should allow Temas evolve from an explorer to producer," Michael Dehn, CEO of Temas, noted.
Piskanja is a high-grade boron deposit with an indicated mineral resource of 7.8 million tonnes, and an inferred resource of 3.4 million tonnes, calculated in accordance with the Canadian Institute of Mining Definition Standards on Mineral Resources and Reserves.
