Announcements

CALGARY/HONG KONG – Sunshine Oilsands Ltd. (the “Corporation” or “Sunshine”) (HKEX: 2012) today announced its financial results for the second quarter ended June 30, 2018. The Corporation’s condensed consolidated interim financial statements, notes to the condensed consolidated interim financial statements and management’s discussion and analysis have been filed on SEDAR (www.sedar.com) and with The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) (www.hkexnews.hk) and are available on the Corporation’s website (www.sunshineoilsands.com). All figures used in this release are in Canadian dollars unless otherwise stated.

MESSAGE TO SHAREHOLDERS

For three months ended June 30, 2018, the Company’s average bitumen production was 1,610 bbls/day. Diluent was blended at a 16.9% volumetric rate with the bitumen as part of the production process to create the marketable “Dilbit” blend product, and the average Dilbit sales volume was 1,850 bbls/day in the second quarter of 2018. Both production and sales in the second quarter were impacted by the planned facility turnaround and lower sales nominations resulting from temporarily constrained pipeline capacity.

Sunshine’s Capital Raising Activities during 2Q18

On June 7, 2018 the Company entered into a settlement agreement for a total of 30,765,000 class “A” common shares at a price of HKD $0.214 per share (approximately CAD $0.035 per common share), for gross proceeds of HKD $6.6 million (approximately CAD $1.1 million). On June 15, 2018 the Company completed the closing of this settlement agreement. This settlement agreement was entered into for settlement of indebtedness with an independent third party.

On June 25, 2018, the Company entered into a subscription agreement for convertible bonds in the principal amount up to HKD $11 million (approximately CAD $1.87 million) with independent third parties. With an initial conversion price of HKD $0.207 per share (approximately CAD $0.035 per share), a maximum of 53,140,097 Class “A” common shares will be allotted and issued upon the full conversion of the placing convertible bonds. The convertible bonds interest rate was 5.0% per annum and requires repayment in full within three months from the maturity date. On July 5, 2018 the Company did a partial completion of the convertible bonds in the amount of HKD $10,917,500 (approximately CAD $1.8 million), which represents 53,140,097 shares if fully converted. In addition, a placing commission of HKD $0.8 million (approximately CAD $0.13 million) was incurred in relation to the placement closing. The subscription agreement lapsed and the time to close the remaining convertible bonds lapsed. The net proceeds from the placing convertible bonds were used as general working capital.

On July 6, 2018, the Company entered into a settlement agreement for a total of 14,322,500 class “A” common shares at a price of HKD $0.192 per share (approximately CAD $0.032 per common share), for gross proceeds of HKD $2.75 million (approximately CAD $0.46 million). This settlement agreement was entered into for settlement of indebtedness with an independent third party.

Summary of Financial Figures

For 2Q18, Dilbit sales lowered by 18% to CAD $9.1 million from CAD $11.1 million mainly due to constrained pipeline capacity and planned facility maintenance in May 2018. Despite the drop in revenue, recurring loss declined 5% to CAD $31.1 million, excluding one-off and non-cash items, 2Q18 non-cash recurring net loss was CAD $22.3 million.

1H18 bitumen production was 1,822 bbl/day.

As at June 30, 2018 and December 31, 2017, the Corporation notes the following selected balance sheet figures.

2018 Outlook

Sunshine sees a brightening outlook as international oil prices stabilize and steadily increase and the heavy price differential narrows. The Company will continue to focus on cost controls and on carefully improving production performance as SAGD chambers mature, which will increase production at West Ells. Since the end of the first quarter, realizable Dilbit prices have increased significantly. The Company intends to ramp up production in an environment that is expected to achieve increasingly positive operating Dilbit netbacks. In addition, the Company sees potentially significant benefits resulting from re-activation of the Muskwa and Godin Area activities under a revised joint venture with new owners of the joint venture operator.

ABOUT SUNSHINE OILSANDS LTD.

The Corporation is a Calgary based public corporation, listed on the Hong Kong Stock Exchange since March 1, 2012. The Corporation is focused on the development of its significant holdings of oil sands and heavy oil leases in the Athabasca oil sands region. The Corporation owns interests in oil sands and petroleum and natural gas leases in the Athabasca region of Alberta. The Corporation is currently focused on executing milestone undertakings in the West Ells project area. West Ells Phase 1 is operational and has an initial production target of 5,000 barrels per day.

For further enquiries, please contact:

Kwok Ping Sun
Executive Chairman
Tel: + 852-3188-9298

Gloria Ho
Chief Financial Officer
Tel: + 852-3188-9298

Email: [email protected]

FORWARD LOOKING INFORMATION

This announcement contains forward-looking information relating to, among other things, (a) the future financial performance and objectives of Sunshine; (b) the plans and expectations of the Corporation; and (c) the anticipated closings of the current private placements and the timing thereof. Such forward-looking information is subject to various risks, uncertainties and other factors. All statements other than statements and information of historical fact are forward-looking statements. The use of words such as “estimate”, “forecast”, “expect”, “project”, “plan”, “target”, “vision”, “goal”, “outlook”, “may”, “will”, “should”, “believe”, “intend”, “anticipate”, “potential”, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on Sunshine’s experience, current beliefs, assumptions, information and perception of historical trends available to Sunshine, and are subject to a variety of risks and uncertainties including, but not limited to, those associated with resource definition and expected reserves and contingent and prospective resources estimates, unanticipated costs and expenses, regulatory approval, fluctuating oil and gas prices, expected future production, the ability to access sufficient capital to finance future development and credit risks, changes in Alberta’s regulatory framework, including changes to regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations and the impact thereof and the costs associated with compliance. Although Sunshine believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this announcement are not exhaustive and readers are not to place undue reliance on forward-looking statements as the Corporation’s actual results may differ materially from those expressed or implied. Sunshine disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this announcement, except as required under applicable securities legislation. The forward-looking statements speak only as at the date of this announcement and are expressly qualified by these cautionary statements. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. For a full discussion of the Corporation’s material risk factors, see the Corporation’s annual information form for the year ended December 31, 2017 and risk factors described in other documents we file from time to time with securities regulatory authorities, all of which are available on the Hong Kong Stock Exchange at www.hkexnews.hk, on the SEDAR website at www.sedar.com or the Corporation’s website at www.sunshineoilsands.com.