Sunshine Oilsands Ltd. — Capital/Financing Update 2019

May 15, 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)

CONNECTED TRANSACTION

PAYMENT OF DIRECTOR FEE IN SHARES IN LIEU OF CASH UNDER GENERAL MANDATE AND

CHANGE OF REGISTERED OFFICE

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

Hong Kong, May 15, 2019 Calgary, May 15, 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, Mr. Hong Luo, Ms. Linna Liu and Ms. Xijuan Jiang as non-executive directors; and Mr. Raymond Shengti Fong, Ms. Joanne Yan and Mr. Yi He as independent non-executive directors.

*For identification purposes only

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Hong Kong (May 15, 2019) and Calgary, Alberta (May 15, 2019) - The Board of Directors (the “ Board ”) of Sunshine Oilsands Ltd. (the “ Corporation ” or “ Sunshine ”) (HKEX: 2012) wishes to announce the following:

The Board announces that it has on May 15, 2019 approved the payment of 100% of the director fee of directors stipulated below ( the “ Connected Directors ”) for the period from October 1, 2017 to April 30, 2019 in shares (“ Shares ”) in lieu of cash, subject to conditions and compliance with the reporting, announcement and Independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

An aggregate of 21,779,902 Shares are proposed to be issued to the Connected Directors. The new Shares to be issued and allotted by the Corporation pursuant to the aforesaid payment represent approximately 0.35% of the Corporation’s issued share capital as at the date of this announcement and approximately 0.35% of the Corporation’s enlarged issued share capital after the said payment issuance and allotment.

THE PROPOSED ISSUE OF SHARES IN LIEU OF DIRECTOR FEE

The key terms and details of the proposed issue of Shares for payment of director fee of the Connected Directors in lieu of cash are set out below.

I. Non-Executive Directors

Name of Directors	1. Mr. Michael J Hibberd **(“Mr. Hibberd”)2 **	2. Mr. Hong Luo (“Mr. Luo”)	3. Ms. Xijuan Jiang (“Ms. Jiang”)
Number of new Shares to be conditionally issued: (assuming no change in the total number of issued shares between the date of this announcement and the date of issue of all Shares)	3,524,371 Shares, representing approximately 0.06% of the existing total issued Shares and 0.06% of the total issued Shares as enlarged by the proposed issue of the Shares.	4,687,337 Shares, representing approximately 0.08% of the existing total issued Shares and 0.08% of the total issued Shares as enlarged by the proposed issue of the Shares	4,940,707 Shares, representing approximately 0.08% of the existing total issued Shares and 0.08% of the total issued Shares as enlarged by the proposed issue of the Shares
Value of Shares:	Approximately HK$ 324,242.101 (CAD 55,640 equivalent)	Approximately HK$ 431,235.001 (CAD 74,000 equivalent)	Approximately HK$ 454,545.001 (CAD 78,000 equivalent)

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II. Independent Non-Executive Directors

Name of Directors	4. Ms. Joanne Yan (“Ms. **Yan ”)2 **	5. Mr. Yi He (“Mr. He”)
Number of new Shares to be conditionally issued: (assuming no change in the total number of issued shares between the date of this announcement and the date of issue of all Shares)	3,243,384 Shares, representing approximately 0.05% of the existing total issued Shares and 0.05% of the total issued Shares as enlarged by the issue of the proposed issue Shares	5,384,103 Shares, representing approximately 0.09% of the existing total issued Shares and 0.09% of the total issued Shares as enlarged by the issue of proposed issue Shares
Value of Shares:	Approximately HK$ 298,391.311(CAD 51,204 equivalent)	Approximately HK$ 495,337.501(CAD 85,000 equivalent)

Notes:

1. Based on the Bank of Canada's nominal noon exchange rate (as at May 14, 2019) of CDN$1.00 =HK$5.8275.

2. For Mr. Hibberd and Ms. Yan, the amount of the director fees for the period from 1 October 2017 to 30 April 2019 and therefore the number of Shares to be issued for payment of such director fees are calculated net of Canadian withholding tax.

All Shares are to be issued at the closing price of the date of this announcement (“ Issue Date ”) of HK$0.092 per share, representing:

• (i) a discount of approximately 2.95% as to the average closing price of HK$0.0948 per Share as quoted on the Hong Kong Stock Exchange for the last five consecutive trading days immediately prior to and including May 14, 2019; and

• (ii) at par with the closing price of HK$0.092 per Share as quoted on the Hong Kong Stock Exchange on May 15, 2019.

Up to the date of this announcement, the Board has allotted and issued 156,688,452 shares under the General Mandate.

The proposed issuance Shares have no nominal value and, if and when issued and fully paid, will be free and clear of all liens, encumbrances, equities or other third parties rights and will rank pari passu in all respects among themselves and with all other Class “A” Common Voting Shares in issue at the time, with the right to receive all dividends and other distributions on the Shares declared, made or paid on or after the date of allotment, and the Shares to be issued are not subject to any vesting condition. The Connected Directors will have the right to dispose these Shares and/or exercise the rights underlying thereof in accordance with their own wishes once these Shares are issued and allotted to them.

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LISTING RULES IMPLICATIONS

Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He, being Directors, are connected persons of the Corporation. Accordingly, the proposed issue of Shares for payment of director fee in lieu of cash is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The proposed issue of Shares is therefore subject to the following conditions :-

1. Independent Shareholders approving the issue of the Shares for payment of Director Fee in lieu of cash; and

2. the Stock Exchange granting the listing of and permission to deal in the proposed issue Shares.

An SGM will be convened at which Independent Shareholders will consider and vote by way of poll on the proposed issue of Shares to each of Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He for payment of Director fee in lieu of cash. Each of Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He and their respective associates, are required to abstain from voting on the relevant resolution in respect of the proposed issue of Shares for payment of Director fee in lieu of cash.

The Special Board Committee comprising Mr. Raymond S. Fong, the only independent non-executive Director who is not a Connected Director, has been formed to advise the Independent Shareholders on the issue of Shares for payment of director fees in lieu of cash.

Donvex Capital Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (as amended from time to time), has been appointed as the independent financial advisor to advise the Special Board Committee and the Independent Shareholders in respect of the issuance of Shares for payment of director fee in lieu of cash described therein.

The Connected Directors are considered as having material interests in the proposed issuance and therefore, have to abstain from voting on the Board resolutions approving this issuance.

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Shares to be issued to the Connected Directors.

A circular containing, among other things, further details of the issuance and allotment of Shares for payment of Director fee for Connected Directors, a letter of advice from the Special Board Committee to the Independent Shareholders, a letter of advice from Donvex Capital to the Special Board Committee and the Independent Shareholders in respect of the issuance of Shares as payment for Director fee in lieu of cash for the period from October 1, 2017 to April 30, 2019, and the notice convening the SGM will be dispatched to the Shareholders on or before May 31, 2019.

REASONS FOR THE ISSUE OF SHARES FOR PAYMENT OF DIRECTOR FEE IN LIEU OF CASH

The Corporation is engaged in the evaluation and the development of oil properties for the future production of bitumen in the Athabasca oilsands region in Alberta, Canada.

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Currently, the Board comprises of nine Directors, of which four are non-executive Directors and three are independent non-executive Directors.

The Directors each receive annual retainer fees in the amount of CDN$40,000 (the “Base Retainer Fee”). In addition, the Directors will receive fee for each Board meeting for their participation. The Base Retainer Fees together with the fee for directors’ participation in the Board meeting were approved by the Board which believes that the quantum was fair and reasonable in light of industry standards and were in normal market terms which commensurate with the remuneration packages of directors of other comparable companies.

The Board is of the view that the proposed issue of Shares as payment of Director fee in lieu of cash provides an alternative form of remunerating the Directors for their service to the Company while reducing actual cash outflow by the Company. It also helps to align the interests of the Connected Directors to the Shareholders through ownership of Shares.

The Board (excluding the respective Connected Directors) is of the view that the terms of issue of Shares for payment of Director fee in lieu of cash to the respective Connected Director is fair and reasonable and in the interests of the Corporation and its Shareholders as a whole.

DEFINITIONS

The following terms in this announcement have the meanings as set out below opposite to them:

“associate(s)”	has the same meaning as ascribed to it under the Listing
	Rules
“Board"	the board of Directors of the Corporation
“Corporation”	Sunshine Oilsands Ltd., a corporation incorporated under
	the Business Corporations Act of the Province of Alberta,
	Canada with limited liability
"Connected	Mr. Hibberd, Mr. Luo, Ms. Jiang, Ms. Yan and Mr. He
Director(s)"
“connected	has the same meaning as ascribed to it under the Listing
person(s)”	Rules
“Director(s)”	director(s) of the Corporation
“Group”	the Corporation and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

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"HK" the Hong Kong Special Administrative Region of the People’s Republic of China “Special Board the Special board committee comprising Mr. Raymond S. Committee” Fong, the only independent non-executive Director who is not a Connected Director, formed for the purpose of advising the Independent Shareholders in respect of the issue of Shares for payment of Director fee in lieu of cash “Independent Donvex Capital Limited, a corporation licensed to carry Financial Adviser type 6 (advising on corporate finance) regulated activities as defined under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), being the independent financial adviser which has been appointed to advise the Special Board Committee and the Independent Shareholders in respect of the issue of Shares for payment of director fee in lieu of cash.

• “Independent all Shareholders other than the Connected Directors and Shareholders their respective associates “Issue Date” May 15, 2019, being the date on which Shares are conditionally issued to Connected Directors

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Share(s)” ordinary share “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” the Stock Exchange of Hong Kong Limited “%” per cent

CHANGE OF REGISTERED OFFICE

The Board further announces that with effect from May 15, 2019, the registered office of the Corporation will be changed to Suite 1100, 700 - 6th Ave SW, Calgary, AB, T2P 0T8, Canada.

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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: 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

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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.