Sunshine Oilsands Ltd. — Capital/Financing Update 2021

Aug 16, 2021

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.

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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)

BUSINESS UPDATE

This announcement is made by the board of directors (the “ Board ”) of Sunshine Oilsands Ltd. (the “ Corporation ”, together with its subsidiaries, the “ Group ”) on a voluntary basis. This announcement is to provide the shareholders and other potential investors of the Corporation with the information on the latest business development of the Group.

REASONS FOR DEFERRAL OF OPERATION RESUMPTION BEYOUND THE INITIAL PERIOD OF 90 DAYS

The Corporation has announced a temporary suspension of production for 90 days on March 31, 2020 owing to the volatility in the international crude oil market, severe decline in crude oil prices, and having considered the fact that the Corporation’s production equipment and road need repair, coupled with the outbreak of COVID-19 in Canada. The initial period of 90 days was an estimate made back then with a view that (i) the curing of the pandemic and recovery of oil price would happen fairly quickly and (ii) the repair work can be completed during 2020 summer. Since then, the above external factors continued to be in effect, causing deferral of the Corporation’s plan for resumption, such factors/events include:

1. COVID-19 continued to spread and resurged a few times in Canada and the Alberta/Calgary government has declared state of local emergency from March 2020 to June 2020, November 2020 to March 2021, and recently again in May 2021 to June

*For identification purposes only

1. Various measures were imposed including city lockdown, isolation requirements, people are required to work from home (in effect people in Alberta has been working from home since March 2020 as it has been a recommended practice by the government even when the state of local emergency was lifted in between periods), etc. Though the Alberta/Calgary government uplifted the state of local emergency in March 2021, most people in Alberta in fact has been working from home since March 2020 until now as it was highly recommended practice by the government to work from home and to keep social isolation even when the state of local emergency has been uplifted. Therefore, one major impact is that many of the repair related service vendors have not restarted or fully resumed their service activities and service orders backlog have piled up. As such the Company was not able to draw up repair and production resumption plan yet.

On the other hand, the Corporation’s project site is located in a remote area and members of the operation team are from different provinces areas. The production operation requires a full team working on shift to maintain 24/7 continuous operations. Therefore, at any time if a small number of employees in the team needs to work from home or any of the Corporation’s supplier failure to deliver supplies needed for the operation as they have not resumed full operation, the production operations and resumption plan will be affected.

1. International oil price has not recovered to pre-COVID-19 price level until December 2020 and only stabilized at a sustainable price level in 1Q2021.

2. The snowy bad weather during winter in 2020/2021 has eventually caused the Corporation’s road more muddy and difficult to repair. Due to the extreme poor weather condition in Calgary in 2020/2021, the road surrounding the Corporation’s operation site has deteriorated seriously so that trucking transportation was obstructed.

3. Without the road being properly repaired, many service providers for equipment repair were not willing to travel to site. Note that most repair work needs to be carried before winter whereby 24/7 continuous heating of equipment may not be required and the road is not covered by snow or frost.

4. Some of the Corporation’s production equipment including pumps have broken down. Other equipment e.g. turbines have already been running towards the end of their economic life, and frequently trips as it run and therefore cannot operate continuously.

CURRENT OPERATING STATUS

Regarding the suspension, the production activities have been suspended whilst workforce arrangement and maintenance of facilities remained operating. Commercial liaison with potential customers remained active. As discussed in our last reply letter, while waiting for the resumption plan to kick off, the management has been diligently (i) getting updates with service providers for their availabilities and discussing possible steps for repair; and (ii) introducing measures to further reduce cost so that when the operation resumes, the Corporation is in a better profitability and

cashflow profile. These include e.g. negotiation with new customers nearby the site so that transportation costs can be reduced, implementation of process improvement to reduce energy consumption, etc.

ESTIMATED RESUMPTION TIMETABLE

Based on the management’s assessment, with the increasing community vaccination, most of the restrictive measures shall be uplifted in August-September 2021 and most service vendors shall resume normal operations thereafter, in that case, based on the best estimate, the resumption timetable shall be as follows:-

timetable shall be as follows:-
Steps / Items that need to beperformed	Estimated time /period
Road repair	6 September 2021 – 24 September 2021
Equipment repair	1 October 2021 – 31 October 2021
Preparation work before inspection by government regulatory body e.g. equipment cleaning	4 October 2021 – 18 October 2021
Inspection by governmental regulatory body and certification	20 October 2021 – 10 November 2021
Test-running	11 November 2021 – 5 December 2021
Steamingof theground	5 December 2021 – 5 January2022

The operation team is now actively liaising with service vendors as in when they will be able to assist with repair work, equipment cleaning, trucking, etc. so that when the government uplifts the restrictive measures in relation to COVID-19 in August/September 2021, the service vendors will be ready and the Corporation can kick-off with the plan for resumption.

ESTIMATED FINANCIAL IMPACT FOR 2021

In terms of financial impact, management estimate that revenue will remain at a low level for 2021. However, net loss position has in fact been improved when compared to the period before the temporary production suspension, due to the fact that oil price has fallen to historical low level when oil demand severely declined due to COVID-19 and the market was shocked.

Regarding the impairment of assets, the Corporation has recorded an impairment of its assets for 2019. For 2021, the management has yet to performed its annual impairment assessment in order to ascertain whether further impairment is required. However, based on the current oil price level, and that the Corporations level of reserves have not significantly changed, it is anticipated that there should not be any significant level of asset impairment for FY2021.

Currently, the Corporation has no inventory available for sale. Management expects that it will start recording revenue again once its production resumes

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

Hong Kong, August 16, 2021 Calgary, August 16, 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 non-executive directors.

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:

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 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.