Papyrus Australia Locks in $500K Loan to Fund TBS Mining Contract Delivery
Papyrus locks in $500,000 loan facility to fund commercialisation and TBS Mining contract delivery
Papyrus Australia has entered into four unsecured loan agreements with sophisticated and professional investors for aggregate facilities of up to $500,000. The 14 August 2026 announcement confirms these facilities are in addition to the $500,000 December 2025 Loans, which were subsequently converted to Secured and Unsecured Convertible Notes. Interest accrues at 1.5% per month until the loans are repaid or converted.
The funds are targeted at progressing the company’s commercialisation activities and supporting delivery of the TBS Mining Solutions Pty Ltd contract for the manufacture and supply of a biodegradable variant of TBS’s patented Collar Keeper® products. The structure provides non-dilutive-until-converted funding, allowing Papyrus to access immediate operational capital without going straight to market for equity.
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Who is lending and how the funds convert
Under the Loan Agreements, each of the four lenders has agreed to advance up to $125,000 on request, with funds payable within 5 business days of Papyrus submitting a request. J G M Investment Group Pty Ltd atf Muchnicki Family Trust is a related party (controlled by a director of L39 Capital, itself a related party of PPY under Listing Rule 10.11.4). All other lenders are unrelated to Papyrus.
The four lenders:
- Maryton Australia Pty. Ltd. (unrelated)
- Antanas Guoga (unrelated)
- J G M Investment Group Pty Ltd atf Muchnicki Family Trust — related party (LR 10.11.4)
- Davsam Pty Limited atf Roseman Retirement Fund (unrelated)
Subject to shareholder approval, the outstanding loan amount (including accrued interest) will convert into Tranche 2 Unsecured Convertible Notes at $1.00 per note, issued within 10 business days of approval being obtained. If approval is not obtained by 1 December 2027, the loans are repayable in full 30 business days after that date.
| Term | Detail |
|---|---|
| Face Value | $1.00 per note |
| Maturity | 2 years after issue date |
| Interest | 1.00% per month, capitalising quarterly unless PPY pays |
| Security | Unsecured |
| Conversion Price (within 12 months) | $0.009 |
| Conversion Price (after 12 months) | 80% of 5-day VWAP, capped at $0.009, floored at $0.0075 |
| Bonus | One Tranche 2 UCN Option per two Conversion Shares (exercise $0.015, 2-year term) |
What convertible notes mean for investors
A convertible note is a loan that can convert into shares rather than being repaid in cash. Companies use them for speed and flexibility, deferring dilution until a later conversion event occurs. The structure allows Papyrus to access capital immediately while preserving optionality for both the company and the lenders.
For Papyrus shareholders, conversion at $0.009 (or VWAP-linked pricing after 12 months) introduces potential future dilution, but preserves cash now for the TBS Mining contract and commercialisation activities. Shareholder approval is required before the loans can convert into equity.
The conversion price mechanism ties the ultimate share issuance to the company’s trading performance. If shares trade above $0.009 beyond the 12-month mark, noteholders convert at $0.009. If shares trade below $0.0075, the floor protects against excessive dilution.
L39 Capital’s role and the shareholder approval pathway
The lenders were introduced to Papyrus by L39 Capital Pty Ltd under its lead manager engagement (announced 22 July 2026). L39 Capital is entitled to a success fee and, subject to shareholder approval, options in connection with the Loan Agreements.
L39 Capital fee structure:
- 6% (ex-GST) cash success fee on gross funds received under the Loan Agreements
- Subject to shareholder approval: 8,333,333 Broker Options, exercise price $0.015, expiring three years from grant
2026 AGM approvals sought:
- Issue of up to 535,000 Tranche 2 Unsecured Convertible Notes
- Issue of 8,333,333 Broker Options to L39 Capital
- Approvals sought under Listing Rule 7.1 or 10.11 as applicable (Muchnicki conversion requires LR 10.11)
The announcement notes the company may issue a further $536,154 in Secured Convertible Notes to new investors subject to approval, separate from the $500,000 Loan Agreements covered in this update.
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Where the money goes and what comes next
The funds committed under the Loan Agreements will be used to progress the company’s commercialisation activities and support delivery of the company’s contract with TBS Mining Solutions Pty Ltd for the manufacture and supply by the company of a biodegradable variant of their patented Collar Keeper® products, as well as for working capital purposes.
Use of Funds
“The funds committed under the Loan Agreements will be used to progress the Company’s commercialisation activities and to support delivery of the Company’s contract with TBS Mining Solutions Pty Ltd for the manufacture and supply by the Company of a biodegradable variant of their patented Collar Keeper® products, as well as for working capital purposes.”
These measures strengthen Papyrus’s operational capability and position the company to deliver on scale-up activities. The upcoming 2026 AGM serves as the key date for shareholder approvals. If approval is not obtained at the AGM, Papyrus may seek approval at any subsequent general meeting held prior to 1 December 2027, the backstop date for conversion.
The structure ties the capital directly to a named, revenue-generating commercial contract. For investors, the investment angle is execution capability, not just balance-sheet support.
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