Very nice to see an update.
I'm not sure how this negotiation will go. I can't really see them turning back peacefully, well rather, even if they turned back peacefully, they would come back with a larger army. I don't think they would accept an evil aligned country to simply grow and trust their word that they have no aggressive intentions towards others. The mercenaries and holy knights also cannot simply be dealt with - after all if they do not return it will be proof that they encountered something dangerous in the forest and will just prompt a larger army to come investigate.