Papyrus Australia has secured a key milestone under its TBS Mining Contract by executing a board production deal with a Vietnam manufacturer, while raising $325,000 to support commercial scale-up and facility establishment.
- Milestone 1 achieved with Vietnam board production contract
- $325,000 raised plus $536,000 convertible note capacity
- Engineering design progresses for pulp production scale-up
- Board samples produced to support TBS contract testing
Vietnam Manufacturing Partnership Advances Commercialisation
Papyrus Australia (ASX:PPY) marked a significant step towards commercial production by executing a binding Board Production Contract with a Vietnam-based paperboard manufacturer, satisfying Milestone 1 of its $4.2 million TBS Mining Contract. This agreement allows Papyrus to supply virgin banana fibre pulp from Australia while leveraging the Vietnam partner's established manufacturing capabilities to convert the pulp into jumbo paperboard rolls. Two initial trial runs are planned at fixed cost, with long-term pricing to be negotiated post-trials.
This strategic move frees Papyrus to concentrate on scaling its proprietary pulp technology, a critical element of its commercialisation pathway. The arrangement also reflects a pragmatic approach to managing non-core processing by outsourcing to experienced partners, reducing operational complexity as Papyrus builds its Vietnam production footprint.
Engineering and Sample Production Progress
Supporting the manufacturing contract, Papyrus completed the second phase of its engineering and design work focused on scaling pulp production technology. This technical progress underpins the upcoming commercial-scale facility in Vietnam and aligns with the requirements of the TBS contract milestones.
Meanwhile, the company commenced production of full-size board samples for TBS, utilizing pulp produced at its Adelaide R&D facility. These samples are integral to Milestones 2 and 3, which cover delivery and acceptance testing. The sample production builds on recent achievements where Papyrus delivered 200 biodegradable product samples to TBS, enabling formal product testing and field trials within the contract’s cure period 200 biodegradable product samples.
Capital Raising Strengthens Financial Position
Financially, Papyrus raised $325,000 during April through a combination of a share placement and new short-term director loans. The placement involved issuing 17.5 million shares at $0.01 each, accompanied by unlisted options exercisable at $0.02. Additionally, the company progressed converting existing loans into secured and unsecured convertible notes, subject to shareholder approval at an Extraordinary General Meeting scheduled for 24 June 2026.
Notably, Papyrus retains the capacity to raise a further $536,154 in secured convertible notes, providing flexibility to fund ongoing commercialisation activities and the delivery of the TBS contract. This capital strategy builds on prior funding rounds, including a $175,000 placement and convertible note conversions announced in April $175K placement and convertible notes.
Cash Flow and Operational Expenditure
The April 2026 Appendix 4C cash flow report reveals Papyrus incurred $80,000 in net operating cash outflows, primarily driven by prototyping equipment installation, R&D facility operating costs, staff expenses, and corporate overheads. The company held $451,000 in cash at month-end, supplemented by $722,000 in unused financing facilities, translating to an estimated 14.7 months of available funding at current burn rates.
Of note, $214,000 of the cash balance is restricted funds held by Papyrus’s Egyptian subsidiary, which does not impact the Australian operations’ liquidity. The company’s financing facilities include loan arrangements with related parties and investors, convertible notes with monthly interest rates, and an R&D tax incentive secured facility, reflecting a diversified funding base supporting its commercial ambitions.
Bottom Line?
Papyrus’s milestone achievement and capital raise set the stage for scaling production in Vietnam, but shareholder approvals and long-term pricing negotiations remain key upcoming hurdles.
Questions in the middle?
- Will shareholder approval at the June EGM proceed smoothly to convert loans into equity and notes?
- How soon can Papyrus transition from trial production runs to full commercial output in Vietnam?
- What pricing terms will Papyrus negotiate with its Vietnam manufacturing partner post-trials?