just double checked and when I try it with my mithril axe it is the same thing. Its acting like I dont have it in my inventory (showing an X through the tool) when I try to upgrade it.
Btw this is my first post, and I just want to say how much I really love this game. Like the work that has been put into it is shown. I've never played a farming/exploration game like it and I've never felt so addicted to a game before. Please keep up the good work and thank you for what you've already done!