Papyrus Australia Launches $200K Loan to Fund TBS Mining Contract Delivery
Papyrus Australia has engaged L39 Capital as lead manager for a capital raising and, in connection, entered into a loan agreement with Irwin Biotech for an unsecured, interest-bearing loan of up to $200,000. Both L39 Capital and Irwin Biotech are related parties of PPY, with the funding intended to support the Company’s contract with TBS Mining Solutions Pty Ltd for the biodegradable Collar Keeper® product. Key elements of the arrangement, including loan conversion and option issues, are subject to PPY shareholder approval at the 2026 Annual General Meeting.
Inside the L39 Capital engagement
L39 Capital Pty Ltd has been engaged as lead manager to undertake a capital raising for Papyrus. L39 has already secured the Irwin Biotech Loan, and PPY and L39 are in advanced discussions on the Further Capital Raising, though terms of the Further Capital Raising have not yet been finalised.
L39’s fee structure under the engagement includes:
- Success fee of 6% (excluding GST) of gross funds received under the Irwin Biotech Loan and Further Capital Raising, payable in cash
- Subject to shareholder approval: 3,333,333 options in connection with the Irwin Biotech Loan, exercisable at $0.015, expiring three years from grant
- Subject to shareholder approval: one option for every six notional shares issued in any Further Capital Raising, exercisable at 150% of the relevant issue or conversion price, expiring three years from grant
The issue of options to L39 requires shareholder approval under ASX Listing Rule 10.11.
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The Irwin Biotech Loan terms explained
Papyrus has entered into a loan agreement with Irwin Biotech in respect of the $200,000 facility. Irwin Biotech is controlled by a director of L39 Capital, making it a related party of PPY.
| Term | Detail |
|---|---|
| Facility amount | Up to **$200,000**, unsecured, advanced on request |
| Interest rate | **1.5% per month** until repaid or converted |
| Conversion price | **$0.01 per share** (subject to shareholder approval) |
| Attaching options | One option per two Conversion Shares, exercisable at **$0.015**, **3-year expiry** |
| Repayment fallback | If shareholder approval not obtained by **1 December 2027**, full amount repayable **30 Business Days** after that date |
The conversion price of $0.01 with attaching options at $0.015 aligns the lender with equity upside. The repayment fallback provides a defined timeline if shareholder approval is not secured. The conversion of the Irwin Biotech Loan and the grant of options to Irwin Biotech requires approval under ASX Listing Rule 10.11.
Understanding related-party convertible loans
A convertible related-party loan is a financing arrangement where a party connected to the company, such as a director, major shareholder, or entity controlled by them, provides debt that can be converted into shares at a later date. Small-cap ASX companies often use these structures to access capital quickly without immediate share dilution, particularly when traditional financing options are limited or time-sensitive.
ASX Listing Rule 10.11 requires shareholder approval for related-party transactions to ensure that such arrangements are not on terms that unfairly favour the related party at the expense of other shareholders. This governance safeguard allows shareholders to vote on whether the transaction is in the company’s best interests.
“Convert into fully paid ordinary shares” means the loan amount (plus any accrued interest) is exchanged for new shares in the company at a predetermined price. Instead of repaying the loan in cash, the lender becomes a shareholder. “Attaching options” are additional rights granted to the lender, allowing them to purchase more shares at a set price within a specified timeframe, typically as an incentive for providing the loan.
For investors, this structure provides near-term capital without immediate dilution, as the shares are not issued until conversion occurs. However, potential future dilution from both the Conversion Shares and attaching options is subject to shareholders’ own vote at the AGM, giving them direct control over the final outcome.
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Where the funds are going and what’s next
The funds raised under the Irwin Biotech Loan will be allocated to the following areas:
- Progress the Company’s commercialisation activities
- Support delivery of the contract with TBS Mining Solutions Pty Ltd for the manufacture and supply of a biodegradable variant of their patented Collar Keeper® products
- General working capital purposes
As authorised by the Board
The funds raised under the Irwin Biotech Loan 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 PPY’s operational capability, ensure continuity of project execution, and position the Company to deliver on scale-up activities.
The facility strengthens Papyrus’s operational capability, ensures continuity of project execution, and positions the company to deliver on scale-up activities tied to an existing revenue-generating contract. Shareholder approvals for the loan conversion and option issues will be sought at the 2026 Annual General Meeting, with a final approval deadline of 1 December 2027 for loan conversion. The Further Capital Raising remains in advanced discussions, with no finalised terms announced at this stage.
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