Sunshine Oilsands Ltd. — Capital/Financing Update 2019

Oct 11, 2019

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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement appears for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of Sunshine Oilsands Ltd.

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SUNSHINE OILSANDS LTD. 陽光油砂有限公司 *

(a corporation incorporated under the Business Corporations Act of the Province of Alberta, Canada with limited liability)

(HKEX: 2012)

ISSUE OF SHARES UNDER GENERAL MANDATE

FOR SETTLEMENT OF TRADE CREDITOR

By Order of the Board of Sunshine Oilsands Ltd. Kwok Ping Sun Executive Chairman

Hong Kong, October 11, 2019 Calgary, October 11, 2019

As at the date of this announcement, the Board consists of Mr. Kwok Ping Sun and Ms. Gloria Pui Yun Ho as executive directors; Mr. Michael John Hibberd, Ms. Linna Liu and Ms. Xijuan Jiang as non-executive directors; and Mr. Yi He, Mr. Alfa Li and Mr. Guangzhong Xing as independent non-executive directors.

*For identification purposes only

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Hong Kong (October 11, 2019) / Calgary, Alberta (October 11, 2019) - The Board of Directors (the “ Board ”) of Sunshine Oilsands Ltd. (the “ Corporation ” or “ Sunshine ”) (HKEX: 2012) wishes to announce the following:

ISSUE OF SHARES UNDER GENERAL MANDATE FOR SETTLEMENT OF TRADE CREDITOR

On Hong Kong (October 11, 2019) / Calgary, Alberta (October 11, 2019), the Corporation entered into the Settlement Agreement with the Trade Creditor, being an Independent Third Party and a trade creditor to the Corporation, pursuant to which the Corporation will allot and issue the Relevant Shares to the Trade Creditor as full and final settlement of the Partial Trade Payable.

The Issue Price is HK$0.063, which represents

• (i) a discount of approximately 9.22% as to the average closing price of HK$0.0694 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days immediately prior to and including October 10, 2019; and

• (ii) a discount of approximately 10.00% to the closing price of HK$0.070 per Share as quoted on the Hong Kong Stock Exchange on October 11, 2019.

The Relevant Shares, which shall rank pari passu in all respect with the existing Shares, will be allotted and issued under the General Mandate. The Corporation will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in the Relevant Shares. Up to the date of this announcement, the Board has allotted and issued 158,590,480 Shares under the General Mandate. No shareholders’ approval is required for the allotment and issue of the Relevant Shares.

Shareholders and potential investors should note that completion of the Issuance is subject to fulfilment of the conditions under the Settlement Agreement. As the Issuance may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

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ISSUANCE OF RELEVANT SHARES

Pursuant to the Settlement Agreement entered into between the Corporation and the Trade Creditor on Hong Kong (October 11, 2019) / Calgary, Alberta (October 11, 2019), the Corporation will allot and issue the Relevant Shares at the Issue Price to the Trade Creditor as full and final settlement of the Partial Trade Payable .

THE RELEVANT SHARES

Assuming no further issue of new Shares or repurchase of Shares (other than those failing to be issued upon full exercise of the share options), the Relevant Shares represent (i) approximately 0.60% of the existing issued share capital of the Corporation as at the date of this announcement; and (ii) approximately 0.59% of the total enlarged issued share capital of the Corporation immediately following completion of the Issuance.

ISSUE PRICE

The Issue Price is HK$0.063, which represents

(i) a discount of approximately 9.22% as to the average closing price of HK$0.0694 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days immediately prior to and including October 10, 2019; and

(ii) a discount of approximately 10.00% to the closing price of HK$0.070 per Share as quoted on the Hong Kong Stock Exchange on October 11, 2019.

It was arrived after arm’s length negotiation between the Corporation and the Trade Creditor with reference to the market condition and the prevailing market price of the Shares.

GENERAL MANDATE TO ISSUE THE RELEVANT SHARES

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 1,227,169,324 Shares. Up to the date of this announcement, the Board has allotted and issued 158,590,480 Shares under the General Mandate. No shareholders’ approval is required for the allotment and issue of the Relevant Shares.

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RANKING AND APPLICATION FOR LISTING

The Relevant Shares will be issued under the General Mandate and will rank pari passu in all respects among themselves and with the existing Shares in issue on the Completion Date. Application will be made to the Stock Exchange for the grant of the listing of, and permission to deal in the Relevant Shares.

CONDITIONS

Completion of the Settlement Agreement shall be subject to and conditional upon the following:

• (i) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in the Relevant Shares; and

• (ii) all relevant approvals and consents from governmental or other competent authority or in accordance with applicable laws having been obtained, if necessary.

None of the above conditions are capable of being waived. In the event that the conditions of the Issuance are not fulfilled on or before October 25, 2019 (or such other time and date as may be agreed between the parties to the Settlement Agreement), the Settlement Agreement shall cease and determine and neither the Corporation nor the Trade Creditor shall have any obligations and liabilities under the Settlement Agreement.

EFFECTS ON SHAREHOLDING STRUCTURE OF THE CORPORATION

As at the date of this announcement, the Corporation has 6,316,217,006 Shares in issue. The shareholding structure of the Corporation as at the date of this announcement and immediately after completion of the Issuance (assuming that there are no other changes to the shareholding structure of the Corporation from the date of this announcement to the date of completion of the Issuance) are as follows:

Name of Shareholders Kwok Ping Sun Trade Creditor Other public shareholders (excluding the Trade Creditor) Total	As at the date of this announcement	As at the date of this announcement	Immediately after Completion of the Placing (assuming that there are no other changes to the shareholding structure of the Corporation from the date of this announcement to the date of completion of the Issuance)	Immediately after Completion of the Placing (assuming that there are no other changes to the shareholding structure of the Corporation from the date of this announcement to the date of completion of the Issuance)
	Number of Shares 1,762,527,000 - 4,553,690,006 6,316,217,006(1)	Approx. % of Shares 27.90% - 72.10% 100.00%	Number of Shares 1,762,527,000 37,728,000 4,553,690,006 6,353,945,006(1)	Approx. % of Shares 27.74% 0.59% 71.67%
				100.00%

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Note:

• (1) The above figure does not include 990,347,263 new Shares to be allotted and issued upon the full conversion of the CB pursuant to the Subscription Agreement per the announcement dated June 16, 2019 and supplemented by the announcement dated June 17, 2019.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SETTLEMENT AGREEMENT

As at the date of the Settlement Agreement, the Corporation has a Trade Payable balance of CDN$ 415,375.52 with the Trade Creditor, this Trade Payable will be settled by cash and the remaining balance of CDN$ 402,875.52 (approximately HK$2,376,846.73), being the Partial Trade Payable , will be fully settled by the Issuance.

The Directors are of the view that the settlement of the Partial Trade Payable by way of Issuance would not result in significant cash outflow of the Corporation while reducing the indebtedness of the Corporation. Accordingly, the Directors consider that the terms of the Settlement Agreement are fair and reasonable and the Issuance is in the interests of the Corporation and its Shareholders as a whole.

FUND RAISING ACTIVITIES OF THE CORPORATION IN THE PAST 12 MONTHS

Save as disclosed below, the Corporation has not conducted any other fundraising activities during the 12 months immediately preceding the date of this announcement.

Date	of	Fund		raising	Approximate net	Intended	Intended	use	of	Actual use of the net
announcement		activity			proceeds raised	the net proceeds				proceeds
October 5,	2018	Private		placement	HK$10,945,000	(i)	for	general		HK$10,945,000
		of	Convertible		(approximately	working capital			of	(approximately
		Bonds		under	CDN$ 1,801,547	the	Corporation;			CDN$ 1,801,547(1)) - for
		General		Mandate	(1))	and				general working capital of the
						(ii)	for	future		Corporation
						development			of
						the		existing
						business
November	16,	Private		placement	HK$4,793,472	For	settlement		of	CDN$808,179.38(2)) – there
2018		of		Common	(approximately	trade payable				is no actual cash inflow into
		Shares		under	CDN$808,179.38					the Corporation as the
		General		Mandate	(2))					issuance of shares was to
										offset the trade payable that
										Sunshine owes to its trade
										creditor
November	21,	Private		placement	HK$334,324	For	settlement		of	CDN$56,601.05(3)– there is
2018		of		Common	(approximately	trade	payable			no actual cash inflow into the
		Shares		under	CDN$56,601.05					Corporation as the issuance
		General		Mandate	(3))					of shares was to offset the
										trade payable that Sunshine
										owes to its trade creditor

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November	29,	Private	placement	HK$144,072	For	settlement	of	CDN$24,492.24(4)– there is
2018		of	Common	(approximately	trade	payable		no actual cash inflow into the
		Shares	under	CDN$24,492.24				Corporation as the issuance
		General	Mandate	(4))				of shares was to offset the
								trade payable that Sunshine
								owes to its trade creditor
December	14,	Private	placement	HK$3,833,671	For	settlement	of	CDN$655,557.74(5)– there is
2018		of	Common	(approximately	trade	payable		no actual cash inflow into the
		Shares	under	CDN$655,557.74				Corporation as the issuance
		General	Mandate	(5))				of shares was to offset the
								trade payable that Sunshine
								owes to its trade creditor
December	28,	Private	placement	HK$778,648.5	For	settlement	of	CDN$135,640.57(6)– there is
2018		of	Common	(approximately	partial trade			no actual cash inflow into the
		Shares	under	CDN$135,640.57	payable			Corporation as the issuance
		General	Mandate	(6))				of shares was to offset the
								trade payable that Sunshine
								owes to its trade creditor
June 17, 2019		Private	placement	HK$ 81,406,545	For general			USD$ 10,450,000(7)– 100%
		of	convertible	(approximately	working capital and			for general working capital
		bonds General	under Mandate	USD 10,450,000 (7))	capital expenditure for West Ells			and capital expenditure for West Ells project
					project
July 11, 2019		Private	placement	HK$2,003,750.	For	payment	of	CDN$ 335,602.95(8)– there
		of	Common	(approximately	director fees		to	is no actual cash inflow into
		Shares	under	CDN$135,640.57	certain Directors			the Corporation as the
		General	Mandate	(8))				issuance of shares was to
								offset the entire Connected
								Director fee
August 16, 2019		Private	placement	HK$4,442,166.93	For	settlement	of	HK$4,442,166.93 – there is
		of	Common	(approximately	debt			no actual cash inflow into the
		Shares	under	CDN$754,724.16 )				Corporation as the issuance
		General	Mandate					of shares was to settle the
								debt
August 22, 2019		Private	placement	HK$7,088,040	For settlement with			CDN$1,200,000(9)– there is
		of	Common	(approximately	trade	creditor		no actual cash inflow into the
		Shares	under	CDN$1,200,000				Corporation as the issuance
		General	Mandate	(9))				of shares was to settle the
								trade payable

Notes

1. Based on the Bank of Canada's nominal noon exchange rate (as at October 4, 2018) of CDN$1.00 =HK$6.075

2. Based on the Bank of Canada's nominal noon exchange rate (as at November 15, 2018) of CDN$1.00 =HK$5.931

3. Based on the Bank of Canada's nominal noon exchange rate (as at November 20, 2018) of CDN$1.00 =HK$5.907

4. Based on the Bank of Canada's nominal noon exchange rate (as at November 28, 2018) of CDN$1.00 =HK$5.8824

5. Based on the Bank of Canada's nominal noon exchange rate (as at December 13, 2018) of CDN$1.00 =HK$5.8480

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6. Based on the Bank of Canada's nominal noon exchange rate (as at December 27, 2018) of CDN$1.00 =HK$5.7410

7. Based on the exchange rate quoted by The Hong Kong and Shanghai Banking Cooperation Limited on June 16, 2019

8. Based on the Bank of Canada's nominal noon exchange rate (as at July 10, 2019) of CDN$1.00 =HK$5.9706.

9. Based on the Bank of Canada's nominal noon exchange rate (as at August 21, 2019) of CDN$1.00 =HK$5.9067.

Shareholders and potential investors should note that completion of the Issuance is subject to fulfilment of the conditions under the Settlement Agreement. As the Issuance may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following words and expressions shall have the following meanings when used herein:

• “Completion” completion of the Issuance “Completion Date” the date of Completion “connected persons” has the meaning ascribed thereto in the Listing Rules “Trade Creditor” Prairie North Construction Ltd., a company incorporated in Canada with limited liability, an Independent Third Party and a trade creditor to the Corporation

• “Settlement Agreement” the agreement dated October 11, 2019 (Calgary time) and entered into by the Corporation with Trade Creditor, in relation to the settlement of trade payable due from the Corporation to Trade Creditor

• “Director(s)” the director(s) of the Corporation

“General Mandate” the general mandate obtained from the shareholders of the Corporation at the annual general meeting held on June 24, 2019 (Hong Kong time) and June 23, 2019 (Calgary time) of the Corporation authorizing the Directors to allot and issue up to 20% of the issued and outstanding shares of the Corporation as at the date of the annual general meeting

“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Independent Third Party” independent third party who is not a connected person (as defined in the Listing Rules) of the Corporation and is independent of and not connected with the connected persons of the Corporation

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“Issuance”	the allotment and issue of the Relevant Shares to the Trade
	Creditor in accordance with the terms and conditions of the
	Settlement Agreement
“Issue Price”	HK$0.063 per Relevant Share
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Partial Trade Payable ”	CDN$ 402,875.52 (approximately HK$ 2,376,864.73), being
	the amount of the Partial Trade Payable outstanding as at the
	date of the Settlement Agreement due from the Corporation to
	the Trade Creditor
“Relevant Share(s)”	37,728,000 new Shares, which represents the amount of
	Partial Trade Payable divided by the Issue Price to be allotted
	and issued by the Corporation to the Trade Creditor on
	Completion Date
“Shares” or “Common	the Class A common voting shares of the Corporation that is
Shares”	listed on the Stock Exchange
“Shareholder(s)”	holder(s) of the issued Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“CDN$”	Canadian dollars, the lawful currency of Canada
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	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

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Tel: (852) 3188 9298

Email: investorrelations@sunshineoilsands.com Website: www.sunshineoilsands.com

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 forwardlooking 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, 2018 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.