Announcements

Hong Kong (September 28, 2018) and Calgary, Alberta (September 28, 2018) - The Board of Directors (the “Board”) of Sunshine Oilsands Ltd. (the “Corporation” or “Sunshine”) (HKEX: 2012) wishes to announce the following:

On September 28, 2018 (Hong Kong time), the Corporation and the Placing Agent entered into the CB Placing Agreement pursuant to which the Corporation has conditionally agreed to issue and the Placing Agent has conditionally agreed to place, on a best-effort basis, the Placing CB in the principal amount of up to HK$11 million to not less than six Placees who and whose ultimate beneficial owners will be third parties independent of and not connected with the Corporation and its connected persons.

The Placing CB will be issued under the General Mandate. The issue price for the Placing CB shall be up to HK$11 million (being 100% of the principal amount of the Placing CB).

Based on the Conversion Price of HK$0.207 per Share, up to 53,140,096 new Shares will be allotted and issued upon the full exercise of the Placing CB, representing (i) approximately 0.88% of the existing issued share capital of the Corporation as at the date of this announcement; and (ii) approximately 0.88% of the allotment and issued share capital of the Corporation as enlarged by the issue of the Conversion Shares (assuming there was no repurchase of Shares or issue of other new Shares).

As the Placing CB under the CB Placing will be allotted and issued under the General Mandate, no Shareholders’ approval is required for the CB Placing or the allotment and issue of the Conversion Shares.

As completion of the CB Placing is subject to fulfilment of the conditions as set out in the CB Placing Agreement, and as the Placing Agent is entitled to rescind the CB Placing Agreement under certain circumstances, the CB Placing may or may not proceed. Shareholders and potential investors of the Corporation are reminded to exercise caution when dealing in the Shares.

THE CB PLACING AGREEMENT

Date

September 28, 2018 (Hong Kong time)

Parties

1. the Corporation
2. the Placing Agent

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Placing Agent and its associates and their respective ultimate beneficial owners are independent of and not connected with the Corporation and its connected persons.

On September 28, 2018 (Hong Kong time), the Corporation and the Placing Agent entered into the CB Placing Agreement pursuant to which the Corporation has conditionally agreed to issue and the Placing Agent has conditionally agreed to place, on a best-effort basis, the Placing CB in the principal amount of up to HK$11 million to not less than six Placees who and whose ultimate beneficial owners will be third parties independent of and not connected with the Corporation and its connected persons. The Placing CB will be issued under the General Mandate.

The issue price for the Placing CB shall be up to HK$11 million (being 100% of the principal amount of the Placing CB).

The Placees (and their respective ultimate beneficial owners) shall be third parties independent of and not connected with the Corporation and its connected persons. It is not expected that any Placee will become a substantial shareholder of the Corporation as a result of the Placing CB subscribed by it on a fully converted basis as at the Completion Date.

The Placing Agent shall receive a placing commission of 0.5% of the aggregate principal amount (i.e. the issue price) of the Placing CB successfully placed by the Placing Agent. The Directors (including the independent non-executive Directors) are of the view that such placing commission is fair and reasonable, taking into account the current market condition.

PRINCIPAL TERMS OF THE PLACING CB

The terms of the Placing CB have been negotiated on an arm’s length basis, principal terms of which are summarized as follows:

CONVERSION PRICE

The Conversion Price is HK$0.207 per Share. The Conversion Price was determined after arm’s length negotiations between the Corporation and the Placing Agent with reference to the market condition and the prevailing market price of the Shares. The Directors consider that the Conversion Price is fair and reasonable.

Conditions Precedent of the CB Placing Agreement

Completion of the CB Placing pursuant to the CB Placing Agreement is conditional upon:

1. the Listing Committee granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked the approval of listing of and permission to deal in all the Conversion Shares which may fall to be allotted and issued upon the exercise of the Conversion Right; and
2. each of the Corporation and the Placing Agent having obtained all necessary consents and approvals in respect of the CB Placing Agreement and the transactions contemplated thereunder (including the issue of the Placing CB).

The Corporation and the Placing Agent shall use their respective best endeavor to procure the fulfilment of the conditions set out above on or before October 2, 2018. If the above conditions are not fulfilled by 5:00 p.m. on October 2, 2018 (or such other date as agreed between the Corporation and the Placing Agent in writing), the CB Placing Agreement shall forthwith cease and terminate and neither the Corporation nor the Placing Agent shall have any claim against each other, save for any antecedent breach.

Completion of the CB Placing

Completion of the CB Placing shall take place on the Completion Date, which shall be October 2, 2018, subject to the fulfilment of the conditions set out above.

Rescission

If any of the following events shall occur at any time prior to 5:00 p.m. on the Business Day prior to the Completion Date, the Placing Agent may, by giving a written notice to the Corporation, at any time prior to 5:00 p.m. on the Business Day prior to the Completion Date, rescind the CB Placing Agreement without liability to the Corporation and, the CB Placing Agreement shall thereupon cease to have effect and none of the parties thereto shall have any rights or claims by reason thereof:

1. (if there has come to the notice and in the reasonable opinion of the Placing Agent:
   1. any material breach of the warranties given by the Corporation in the CB Placing Agreement; or
   2. any material breach of any of the obligations imposed upon the Corporation; or
   3. any act or thing done by or omission of any member of the Group otherwise than in the ordinary course of business whereby any of the warranties given by the Corporation would not be true in any material respect if given at that time;
2. if there develops, occurs, or comes into effect the occurrence of any event, development or change (whether or not local, national or international or forming part of a series of events, developments or changes occurring after the date of the CB Placing Agreement) and including an event or change in relation to or a development of an existing state of affairs of a political, military, industrial, financial, economic, fiscal, regulatory or other nature, whether or not sui generis with any of the foregoing, resulting in a material adverse change in, or which might be expected to result in a material adverse change in, political, economic, fiscal, financial, regulatory or stock market conditions and which in the reasonable opinion of the Placing Agent would materially prejudice the consummation of the Placing; or
3. if there is introduction of any new law or regulation or any change in existing laws or regulations or change in the interpretation or application thereof which materially and adversely affects the business or financial performance of the Corporation or any member of the Group.

As the CB Placing is subject to the satisfaction of certain conditions precedent and as the Placing Agent is entitled to rescind the CB Placing Agreement under certain circumstances, the CB Placing may or may not proceed, Shareholders and prospective investors of the Corporation are advised to exercise caution when dealing in the Shares.

CONVERSION PRICE

The initial Conversion Price of HK$0.207 per Conversion Share represents:

1. a premium of approximately 5.61% to the closing price of HK$0.196 per Share as quoted on the Stock Exchange on September 27, 2018 (being the market close price of the last trading date immediately prior to the signing of the CB Placing Agreement); and
2. a premium of approximately 6.15% to the average closing price of HK$0.195 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including September 26, 2018.

GENERAL MANDATE

The Relevant Shares will be allotted and issued pursuant to the General Mandate and the issue of the Relevant Shares is not subject to Shareholders’ approval. The maximum number of Shares that can be issued under the General Mandate is 1,195,831,634 Shares. The General Mandate is sufficient for the allotment and the issue of the Conversion Shares.

REASONS FOR THE CB PLACING

The Board has considered various ways of raising funds to develop the businesses of the Group and considers that the CB Placing represents a suitable opportunity to raise funds having considered the recent market conditions which represent an opportunity for the Corporation to enhance its working capital, strengthen its capital base and financial position and broaden the shareholders’ base.

The Directors (including the independent non-executive Directors) consider that the terms and conditions of the CB Placing Agreement, which were arrived at after arm’s length negotiations between the Corporation and the Placing Agent, are on normal commercial terms, fair and reasonable and are in the interests of the Corporation and the Shareholders as a whole.

USE OF PROCEEDS

The estimated net proceeds from the CB Placing, after deduction of expenses payable in connection therewith, are expected to be HK$ 10,945,000. The Corporation intends to use the net proceeds from the issue of the Convertible Placing CB as follows:

1. as to 50% for general working capital of the Corporation; and
2. as to the remaining 50% for future development of the existing business of the Corporation.

Notes

1. Based on the Bank of Canada's nominal noon exchange rate (as at October 17, 2017) of CDN$1.00 =HK$6.2223
2. Based on the Bank of Canada's nominal noon exchange rate (as at December 19, 2017) of CDN$1.00 =HK$6.0667
3. Based on the Bank of Canada's nominal noon exchange rate (as at January 21, 2018) of CDN$1.00 =HK$6.2972
4. Based on the Bank of Canada's nominal noon exchange rate (as at February 12, 2018) of CDN$1.00 =HK$6.2035
5. Based on the Bank of Canada's nominal noon exchange rate (as at March 13, 2018) of CDN$1.00 =HK$6.0716
6. Based on the Bank of Canada's nominal noon exchange rate (as at June 14, 2018) of CDN$1.00 =HK$6.013
7. Based on the Bank of Canada's nominal noon exchange rate (as at July 4, 2018) of CDN$1.00 =HK$5.967
8. Based on the Bank of Canada's nominal noon exchange rate (as at July 13, 2018) of CDN$1.00 =HK$5.959
9. Based on the Bank of Canada's nominal noon exchange rate (as at September 19, 2018) of CDN$1.00 =HK$6.061
10. Based on the Bank of Canada's nominal noon exchange rate (as at September 20, 2018) of CDN$1.00 =HK$6.079

Save as disclosed above, the Corporation has not conducted any funds raising activities in the past twelve months before the date of this announcement.

CHANGE IN SHAREHOLDING STRUCTURE

Assuming there is no change in the share capital of the Corporation from the date of this announcement up to Completion, the shareholding structure of the Corporation (a) as at the date of this announcement and (b) immediately after the allotment and issue of the Conversion Shares upon full conversion of the Placing CB at the Conversion Price is as follows:

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

“associate(s)” - has the meaning ascribed to this term under the Listing Rules
“Board” - the board of Directors
“Business Day” - any day (not being a Saturday, Sunday and public or statutory holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours
“CB Placing” - the issue and placing of the Placing CB pursuant to the CB Placing Agreement
“CB Placing Agreement” - the placing agreement dated September 28, 2018 and entered into between the Corporation and the Placing Agent in relation to the issue and placing of the Placing CB
“Completion” - completion of the issue of the CB Placing pursuant to the terms of the CB Placing Agreement
“Completion Date” - October 2, 2018 or such other date as agreed in writing by the Corporation and the Placing Agent, subject to the fulfilment of the conditions precedent in the CB Placing Agreement
“connected person(s)” - Has the meanings as ascribed thereto under the Listing Rules
“Conversion Price” - HK$0.207 per Share, subject to adjustments from time to time under the terms and conditions of the Placing CB
“Conversion Rights” - the rights attached to the Placing CB to convert the whole or part thereof into Conversion Shares
“Conversion Share(s)” - the Share(s) to be allotted and issued by the Corporation upon the exercise of the Conversion Rights
“Director(s)” - the Directors of the Corporation
“General Mandate” - the general mandate granted to the Directors to allot and issue up to 20% of the aggregate nominal amount of the share capital of the Corporation in issue on June 25, 2018, by a resolution of the Shareholders passed at the annual general meeting of the Corporation held on June 25, 2018
“Group” - the Corporation and its subsidiaries
“HK$” - Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” - the Hong Kong Special Administrative Region of the PRC
“Independent Third Party(ies)” - Independent third parties who is/are not connected person(s) of the Corporation and is/are independent of and not connected with the Corporation and its Directors, chief executive, and substantial shareholders of the Corporation or any of its subsidiaries or their respective associates
“Issue Date” - the date on which the Placing CB is issued pursuant to the CB Placing Agreement
“Listing Committee” - the listing sub-committee of the board of directors of the Stock Exchange
“Listing Rules” - the Rules Governing the Listing of Securities on the Stock Exchange
“Placees” - any institutional, professional and/or private investors procured by the Placing Agents to subscribe for any of the Placing CB pursuant to the CB Placing Agreement
“Placing Agent” - China Industrial Securities International Capital Limited, is a licensed corporation to carry out business in type 1 regulated activity (dealing in securities) and type 6 regulated activity (advising on corporate finance) under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Placing CB” - the convertible Placing CB in the principal amount of up to HK$ 11 million to be issued by the Corporation pursuant to the CB Placing Agreement
“Share(s)” - the Class “A” common voting share(s) in the issued share capital of the Corporation
“Shareholder(s)” - holder(s) of Share(s)
“Stock Exchange” - The Stock Exchange of Hong Kong Limited
“substantial shareholder” - has the meaning ascribed to it in the Listing Rules
“%” - per cent

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 leases in the Athabasca oil sands region. The Corporation owns interests in approximately one million acres of oil sands and petroleum and natural gas leases in the Athabasca region. The Corporation is currently focused on executing milestone undertakings in the West Ells project area. West Ells has an initial production target of 5,000 barrels per day.

For further enquiries, please contact:

Mr. Kwok Ping Sun
Executive Chairman
Tel: (852) 3188 9298
Email: [email protected]

FORWARD LOOKING INFORMATION

This announcement contains forward-looking information relating to, among other things, the plans and expectations of the Corporation. 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 the Corporation’s experience, current beliefs, assumptions, information and perception of historical trends available to the Corporation, 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 the Corporation 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. The Corporation 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 of 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 on the Corporation’s website at www.sunshineoilsands.com.