Sunshine Oilsands Ltd. — Capital/Financing Update 2021

Sep 24, 2021

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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)

SUPPLEMENTARY ANNOUNCEMENT

In relation to

ROYALTY AGREEMENT

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

Hong Kong, September 24, 2021 Calgary, September 24, 2021

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 nonexecutive directors.

*For identification purposes only

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Reference is made to the announcement issued by Sunshine Oilsands Ltd. (the “ Corporation ” or “ Sunshine ”) dated September 1, 2021, Hong Kong time (the “ Announcement ”), in relation to, among others, the Royalty Agreement. Unless defined otherwise, capitalized terms used herein shall have the same meanings as those defined in the Announcement. In relation thereto, the Board wishes to supplement the following information:

Under the Royalty Agreement, Sunshine granted a royalty interest to BEH in exchange for an aggregate consideration of CAD$20 million. The royalty interest entitled BEH to share a percentage of Sunshine’s produced oil of that month (the “ royalty share of bitumen ”) when average daily WCS of the month rise to US$60/bbl or above. The percentage that BEH can share from Sunshine’s produced oil of the month is calculated based on the following:

• a) When the WCS price is below US$60/bbl, the royalty rate is 0%;

• b) When the WCS price is US$60/bbl, the royalty rate is 2.5% and thereafter proportionally increases up to a maximum of 15%, when the WCS price rises to US$100/bbl or above.

The bitumen involved under the Royalty Agreement covered all royalty lands owned by Sunshine. Thus far, West Ells is the only project that has been put into operation.

Regarding the settlement of the royalty share of bitumen, BEH may: (i) elect to take delivery of the royalty share of bitumen; (ii) elect to appoint the Corporation as its agent, to dispose of the royalty share of bitumen on its behalf and account to BEH for the proceeds of sale, net of permitted charges (transportation fees and diluent costs); or (iii) elect to receive a royalty payment calculated as the royalty share of bitumen multiplied by a notional realized bitumen price, net of permitted charges.

In terms of accounting treatment, the royalty arrangement would be accounted for as a fair value through Profit and Loss (FVTPL) financial derivative. On initial measurement and for subsequent measurement, the Corporation will engage independent third-party valuation expert to assess the value of the financial derivative. Any fair value change would be recognized into the income statement of the Corporation.

The maximum amount of risk exposure under the Royalty Agreement to the Corporation would occur when the percentage of oil produced to be shared with BEH rises to 15% as WCS rise to US$100/bbl or above. In such scenario, the royalty payment would be 15% multiplied by the realized bitumen price, net of permitted charges (transportation fees and diluent costs).

Nevertheless, based on the historical WCS price data, from the year which data is available (i.e. 1983), there was only once in 2008 (May-July) during the financial crisis that the WCS price stood at US$100/bbl or above. Management estimated that when WCS is higher than US$55/bbl, it will be able to attain gross profit. Therefore, when WCS rise to

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US$100/bbl or above, the royalty payment would not be a significant burden to the Corporation’s financials as the Corporation would have been making significant profit at those price levels.

Given that the royalty arrangement does not involve any acquisition or disposal of assets of the Corporation, acquisition or disposal of securities through allotment of share capital by subsidiary of the Corporation, formation of joint venture, entering into finance or operating lease, grant of indemnity or guarantee, provision of financial assistance by the Corporation etc., or any title change in its properties, hence, the royalty arrangement is not considered as a notifiable transaction as defined under Chapter 14 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. However, the Corporation believes the royalty arrangement is considered as inside information.

ABOUT SUNSHINE OILSANDS LTD.

The Corporation is a Calgary based public corporation, listed on the Hong Kong Stock Exchange since May 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 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, (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

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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 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 or the Corporation’s website at www.sunshineoilsands.com.