Sunshine Oilsands Ltd.

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)

ANNOUNCEMENT OF RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2016 AND AN UPDATE ON WEST ELLS PROGRESS

Sunshine Oilsands Ltd. is pleased to announce its financial results for the third quarter ended September 30, 2016 and an update on West Ells progress. Please see the attached announcement for further information.

By Order of the Board of Sunshine Oilsands Ltd.

Sun Kwok Ping Executive Chairman

Hong Kong, November 10, 2016 Calgary, November 9, 2016

As at the date of this announcement, the Board consists of Mr. Kwok Ping Sun, Mr. Hong Luo, Dr. Qi Jiang and Mr. Qiping Men as executive directors; Mr. Michael John Hibberd, Mr. Jianzhong Chen and Ms. Xijuan Jiang as nonexecutive directors; and Mr. Raymond Shengti Fong, Mr. Gerald Franklin Stevenson, Ms. Joanne Yan and Mr. Yi He as independent non-executive directors.

* For identification purposes only

Sunshine Oilsands Ltd. Announcement of Results for the Third Quarter Ended September 30, 2016 and an Update on West Ells Progress

CALGARY/HONG KONG – Sunshine Oilsands Ltd. (the “ Corporation ” or “ Sunshine ”) (HKEX: 2012) today announced its financial results for the third quarter ended September 30, 2016. The Corporation’s consolidated financial statements, notes to the consolidated financial statements and management’s discussion and analysis have been filed on SEDAR (www.sedar.com) and with The Stock Exchange of Hong Kong Limited (the “ Hong Kong Stock Exchange ”) (www.hkexnews.hk) and are available on the Corporation’s website (www.sunshineoilsands.com). All figures used in this release are in Canadian dollars unless otherwise stated.

MESSAGE TO SHAREHOLDERS

During the three month ended September 30, 2016, the Corporation made progress in the following areas:

Full operations of all central plant and well pad facilities were resumed successfully after the Fort McMurray forest fire;
All eight West Ells Phase I well pairs have been placed on steam injection. Five well pairs were converted to production mode. Due to the low commodity price environment, only one well pair has been operating in continuous production;
The installation of downhole pumps for the remaining three well pairs are expected to be completed in November;
The Corporation has received its certificate from the Pressure Equipment Safety Authority in Alberta, for Sunshine’s total asset integrity management system.

With continuous steam injection into the formation and delayed production, additional amounts of mobile bitumen have been accumulated near the producing wellbores. As a result, the reservoir and wellbores are well conditioned for faster ramped up oil production in the future. With the current schedule of downhole pump installation for the remaining three wells, all Phase I wells are expected to be on production in December.

Sunshine’s Capital Raising Activities

On September 12, 2016, the Corporation and noteholders representing 96% of the outstanding Notes (the “Forbearing Holders”) entered into a long-term forbearance agreement in respect of the Notes (the “Agreement”). The principal terms of the Agreement include: (a) payment on October 17, 2016 of the yield maintenance premium payment due on August 1, 2016; (b) payment of the coupon interest accruing on the Notes and repurchase of US$22.5 million in principal amount of the Notes on February 1, 2017; (c) payment of the principal of the Notes and the coupon interest on the Notes on August 1, 2017; (d) payment of forbearance fees accruing at 2.50% on the principal amount of the Notes held by the Forbearing Holders; (e) payment of a fee equal to 7.298% of the outstanding principal amount of the Notes held by the Forbearing Holders on August 1, 2017 and proportionately smaller fees if the Notes are repurchased or redeemed prior to that date; (f) covenants relating to minimum liquidity to be maintained by the Corporation for specified periods; (g) board of director observation rights for certain significant noteholders; (h) use of proceeds restrictions for the proceeds of any asset sales completed by the Corporation; (i) budget approval rights; and (j) requirements that the Corporation raise additional capital and provide additional security for the Notes.

the forbearing holders about altering the timing and the form of payment of the yield maintenance premium. As such, the Company has not paid the yield maintenance premium to the forbearing holders as required by the Agreement. While this constitutes a termination event under the Agreement and entitles the forbearing holders to exercise their rights and remedies under the Agreement, the forbearing holders have not taken steps to terminate the Agreement or exercise such rights and they have not, at this time, advised of any intention to do so. In addition, the Company has been in discussions with the forbearing holders to achieve payment terms for the yield maintenance premium that are mutually acceptable to the forbearing holders and the Company.

General mandate

Reference is made to the announcements of the Corporation dated March 16, 2016, April 28, 2016, May 16, 2016, June 22, 2016, July 4, 2016, September 1, 2016, October 24, 2016 and October 31, 2016 (all Hong Kong time) (collectively, the “ Bright Hope Announcements ”) in relation to the proposed issue of a total of 558,823,500 new Class “A” Common Voting Shares of the Corporation (“ Common Shares ”) to Bright Hope Global Investments Limited (" Bright Hope ") under the General Mandate.

On March 15, 2016, the Corporation entered into a subscription agreement with Bright Hope under which Bright Hope agreed to subscribe for a total of 558,823,500 Common Shares at a price of HK$0.34 per Common Share or approximately CDN$0.055 per Common Share, which in the aggregate amounts to gross proceeds of HK$190.0 million (approximately CDN$30.9 million) (the “ Bright Hope Placement ”).

Subsequent to September 30, 2016, the Corporation completed the closing of 161,470,588 Common Shares (the “ Bright Hope Partial Closing ”) under the General Mandate at a price of HK$0.34 per Common Share (approximately CDN$0.06 per Common Share). Under the Bright Hope Partial Closing, the Corporation received total gross proceeds of HK$54,900,000 (approximately CDN$9.43 million). The remaining 250,247,912 Common Shares (HK$85,084,290 or CDN $14.69 million) subscribed for by Bright Hope will be closed in one or more tranches.

On October 31, 2016, the Corporation announced an extension of the remaining 250,247,912 Common Shares (approximately HK $85,084,290 or CDN $14.69 million) subscribed for by Bright Hope to be closed in one or more remaining tranches, with the last tranche closing no later than January 31, 2017. The Corporation believes that the extension is in the best interests of the Corporation and Shareholders.

The Company intends to apply the net proceeds from the above issued shares (i) for general working capital of the Company and (ii) as funds for future development of the existing business of the Company, including funding the operation costs of the West Ells project.

Specific mandate

Reference is made to the announcements of the Corporation dated June 1, 2015, July 28, 2015 , August 21, 2015, October 1, 2015, November 2, 2015, December 6, 2015, March 2, 2016, May 3, 2016, June 3, 2016, June 23, 2016, July 21, 2016, August 1, 2016, August 4, 2016 and October 24 (all Hong Kong time) (collectively, the “ Prime Union Announcement ”) and the circular of the Corporation dated June 22, 2015 (the “ Circular ”) in relation to, among other matters, the proposed issue of new Common Shares under the Specific Mandate (as defined in the Prime Union Announcement) and the connected transactions involving subscriptions for new Common Shares by connected persons. Unless the context requires otherwise, terms use herein shall have the same meanings as those defined in the Prime Union Announcement and the Circular.

During the three months ended September 30, 2016, the Corporation issued 248,400,000 Common Shares and subsequently issued 248,400,000 Common Shares subscribed by Prime Union Enterprises Limited (“ Prime Union ”) under a subscription agreement between, amongst others, Prime Union and the Corporation dated May 31, 2015 (the “ Prime Union Placement ”) for aggregate gross proceeds of HK$186,300,000 (approximately CDN 31.4 million). Prime Union is a Corporation directly wholly owned by Mr. Kwok Ping Sun who is a substantial shareholder and the Executive Chairman of the Corporation.

Subsequent to September 30, the Corporation completed the closing of 13,333,333 Common Shares (the “ Prime Union Partial Closing ”) under the Specific Mandate at a price of HK$0.75 per Common Share (approximately CDN$0.13 per Common Share). Under the Prime Union Partial Closing, the Corporation received total gross proceeds of HK$10,000,000 (approximately CDN$1.72 million). The remaining 98,453,334 Common Shares (HK$73,840,000 or CDN$12.68 million) subscribed for by Prime Union will be closed in one or more tranches. An announcement will be issued when the Corporation completes the closing of the remaining 98,453,334 Common Shares subscribed for by Prime Union.

The Company intends to apply the net proceeds from the Issued Shares (i) for general working capital of the Company and (ii) as funds for future development of the existing business of the Company, including funding the operation costs of the West Ells project.

Summary of Financial Figures

The Company’s external auditor has not performed a review of the condensed consolidated interim financial statements for the three and nine month periods ended September 30, 2016. As at September 30, 2016 and December 31, 2015, the Corporation notes the following selected balance sheet figures.

(Canadian $000s)	September 30,	December 31,
	2016	2015
Cash	$ 615	$ 6,545
Current restricted cash and cash equivalents	-	14,389
Non-current restricted cash and cash equivalents	-	8,119
Exploration and evaluation assets	292,877	290,945
Property, plant and equipment	683,186	650,930
Total liabilities	381,926	369,083
Shareholders’ equity	603,348	604,098

For the third quarter of 2016, the Corporation had a net loss of $26.5 million compared to $30.4 million for the same period in 2015, representing a net loss per share of $0.01 for the 2016 period and $0.01 for the 2015 period.

2016 Outlook

As at the date of this release, all eight West Ells Phase I well pairs are on steam injection, with five well pairs converted to production. The Corporation is fully committed to advancing its corporate initiatives and expects to operate the plant to prove the reservoir performance.

Hong Luo Chief Executive Officer

Qiping Men

President & Chief Operating Officer

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 was also listed on the Toronto Stock Exchange from November 16, 2012 to September 30, 2015, when it chose to voluntarily delist. 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 is operational and has an initial production target rate of 5,000 barrels per day.

For further enquiries, please contact:

Mr. Hong Luo Chief Executive Officer Tel: (1) (403) 930-5677

Qiping Men President & Chief Operating Officer Tel: (1) (403) 984-5142

Email: [email protected] 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 closing of each of the Bright Hope Placement and the Prime Union Placement and the timing thereof; and (b) 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 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 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 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 the Corporation’s annual information form for the year ended December 31, 2015 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 the Corporation’s website at www.sunshineoilsands.com.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three and nine month periods ended September 30, 2016

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Management's Discussion and Analysis

This Management's Discussion and Analysis ("MD&A") of the financial condition and performance of Sunshine Oilsands Ltd. (" Sunshine " or the "Company") for the three and nine months ended September 30, 2016 is dated November 9, 2016. This MD&A should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements and notes thereto for the three and nine month periods ended September 30, 2016 and with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015. All amounts and tabular amounts are stated in thousands of Canadian dollars unless indicated otherwise.

Forward‐Looking Information

Certain statements in this MD&A are forward-looking statements that are, by their nature, subject to significant risks and uncertainties and the Company hereby cautions investors about important factors that could cause the Company’s actual results to differ materially from those projected in a forward-looking statement. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will”, “expect”, “anticipate”, “estimate”, “believe”, “going forward”, “ought to”, “may”, “seek”, “should”, “intend”, “plan”, “projection”, “could”, “vision”, “goals”, “objective”, “target”, “schedules” and “outlook”) are not historical facts, are forward-looking and may involve estimates and assumptions and are subject to risks (including the risk factors detailed in this MD&A), uncertainties and other factors some of which are beyond the Company’s control and which are difficult to predict. Accordingly, these factors could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

Since actual results or outcomes could differ materially from those expressed in any forward-looking statements, the Company strongly cautions investors against placing undue reliance on any such forward-looking statements. Statements relating to “reserves” or “resources” are deemed to be forward-looking statements, as they involve the implied assessment, based on estimates and assumptions that the resources and reserves described can be profitably produced in the future. Further, any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

All forward-looking statements in this MD&A are expressly qualified by reference to this cautionary statement.

Overview

Sunshine is a major holder and a developer of Athabasca region oil sands resources with approximately 1.4 billion barrels of risked best estimate contingent resources. The Company’s un-risked best estimate contingent resources at December 31, 2015 was approximately 2.5 billion barrels, which was unchanged from the December 31, 2014 resource evaluation. The Company also has 422 million barrels of proved plus probable (“2P”) reserves and 602 million barrels of proved plus probable plus possible (“3P”) in the Cretaceous Sandstone formations as evaluated at December 31, 2015. The Company did not conduct an evaluation of its Carbonate assets given the low commodity price environment and the introduction of risk factors to the contingent resources, which would deem the Carbonates to be uneconomic. With more than 1 million acres of oil sands and P&NG leases, the Company has significant commercial development potential. Phase 1 (5,000 barrels) of the West Ells 10,000 barrels thermal commercial project is on production and is ramping up to meet the designed plant capacity. The Athabasca region is the most prolific oil sands region in the Province of Alberta, Canada. Canada’s oil sands represent the largest oil resource found in a stable political environment located in the western hemisphere and the third largest oil resource in the world, with an estimated 166 billion barrels of recoverable resource. Canadian oil sands represent the largest single source of supply of oil imported into the United States.

The Company’s focus is on evaluating and developing its oil sands assets with the first significant project targeting a production rate of 10,000 barrels per day at West Ells after completion of Phase 1 and Phase 2. Phase 1 is designed for 5,000 barrels per day while Phase 2 will add an additional 5,000 barrels per day.

As at September 30, 2016, the Company had invested approximately $1.2 billion in oil sands leases, drilling operations, project engineering, procurement and construction, operation start-up, regulatory application processing and other assets. As at September 30, 2016, the Company had $0.6 million in cash and $6.8 million in prepaid expenses and deposits. Subsequent to September 30, 2016, the Company raised gross equity proceeds of $11.2 million.

The Company relies on its ability to obtain various forms of financing and cash flow from operations to fund administration expenses and future exploration and development cost of its projects. The Company’s ability to continue as a going concern is dependent on achieving profitable operations and the ability to refinance current debt and access

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SUNSHINE OILSANDS LTD.

Overview (Continued)

immediate additional financing. There can be no assurance that the steps management will take will be successful. As such, there is significant doubt and there can be no assurance the Company will be able to continue as a going concern.

On September 30, 2015, the Company completed a voluntary delisting from the Toronto Stock Exchange. The Company’s shares continue to be listed for trading on the Stock Exchange of Hong Kong Limited (“SEHK”), and trades under the trading symbol “2012”.

Operational Update

West Ells

During the three month ended September 30, 2016, the Company made progress in the following areas:

Full operations of all central plant and well pad facilities were resumed successfully after the Fort McMurray forest fire;
All eight West Ells Phase I well pairs have been placed on steam injection. Five well pairs were converted to production mode. Due to the low commodity price environment, only one well pair has been operating in continuous production;
The installation of downhole pumps for the remaining three well pairs are expected to be completed in November;
The Company has received its certificate from the Pressure Equipment Safety Authority in Alberta, for Sunshine’s total asset integrity management system.

Thickwood and Legend

The Thickwood and Legend projects are each planned for initial phase one production of 10,000 barrels per day. Regulatory approval for Thickwood was received in the third quarter of 2013 while Legend approval is expected in 2016. Once the Thickwood and Legend projects are sanctioned for development and construction, additional financing will need to be secured to proceed.

Muskwa and Godin Clastics Operations (Non-Operated 50% working interest)

A thermal single well pilot project application was submitted in July 2014, and approved on January 26, 2015. During the final quarter of 2014, Muskwa cold production wells were suspended due to low oil prices.

Non-IFRS Financial Measures

This MD&A includes references to financial measures commonly used in the oil and natural gas industry, such as cash flow from operations. The MD&A also includes disclosure required under the Hong Kong Listing Rules, such as debt to asset ratio. These financial measures are not defined by International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and, therefore, are referred to as non-IFRS measures. The non-IFRS measures used by the Company may not be comparable to similar measures presented by other companies. The Company uses these non-IFRS measures to help evaluate its performance. Management uses cash flow from operations to measure the Company's ability to generate funds to finance capital expenditures and repay debt.

These non-IFRS measures should not be considered as an alternative to or more meaningful than net income or net cash used in operating activities, as determined in accordance with IFRS. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The non ‐ IFRS measure of cash flow from operations can be reconciled to net cash used in

SUNSHINE OILSANDS LTD.

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Non-IFRS Financial Measures (Continued)

operating activities, as determined in accordance with IFRS. Cash flow used in operations is a non-GAAP measure that adjusts a GAAP measure (net cash used in operating activities) for changes in non-cash working capital (deficiency).

Operational and Financial Highlights

The following table summarizes selected financial information of the Company for the periods presented:

		For the three months	For the three months	ended		For the nine	months ended,	months ended,
		September 30,				September		30
Financial Highlights		2016		2015		2016		2015
Other income	$	12	$	1,023	$	40	$	869
Finance costs		18,606		10,641		48,619		29,686
Net loss		26,564		30,413		50,073		80,374
Basic and diluted loss per share		0.01		0.01		0.01		0.02
Payments for exploration and evaluation
assets		348		592		1,157		1,231
Payments forproperty, plant and equipment		11,690		36,512		27,642		124,688

For the three and nine month periods ended September 30, 2016, the Company had a net loss of $26.6 million and $50.1 million compared to $30.4 million and $80.4 million for the same period in 2015, respectively. The net loss for the respective three and nine month periods ended September 30, 2016 were primarily affected by finance costs of $18.6 million and $48.6 million, general administration costs of $3.0 million and $10.3 million, a foreign exchange loss of $1.9 million and gain of $12.1 million, $3.0 million and $2.8 million for share-based payment expense. The net loss for the respective three and nine month periods ended September 30, 2015 were primarily affected by a foreign exchange loss of $15.0 million and $28.3 million, finance costs of $10.6 million and $29.7 million, general administration costs of $5.4 million and $14.9 million, $0.3 million and $1.3 million for share-based payment expense and offset by a gain of $1.0 million and $0.2 million on the fair value adjustment on share purchase warrants.

	September	30, 2016	December	31, 2015
Cash and cash equivalents	$	615	$	6,545
Current restricted cash and cash equivalents		-		14,389
Working capital deficiency		314,853		286,121
Total assets		985,274		973,181
Total liabilities		381,926		369,083

At September 30, 2016, the Company had a cash balance of $0.6 million, including restricted cash, compared to $20.9 million at December 31, 2015. The decrease of $5.9 million in the cash balance (excluding restricted cash), was primarily attributed to payments of $27.6 million for property, plant and equipment, $1.2 million for exploration and evaluation assets, $2.9 million used in corporate operating activities and $37.7 million for payment for finance cost. These amounts are offset by the release of $14.4 million in restricted cash to fund long-term debt interest payments and $46.2 million in proceeds net of $0.1 million in costs from the issuance of common shares.

At September 30, 2016, the Company’s working capital deficiency was $314.9 million, including the $262.3 million current portion of senior secured notes (the “Notes”) compared to a working capital deficiency of $286.1 million at December 31, 2015. The Notes bear interest at a rate of 10% and have a potential maturity date of August 1, 2017.

If by February 1, 2016, the Company had not: (1) received at least US$50.0 million of net cash proceeds from one or more equity offerings; and (2) deposited, or caused to be deposited, cash in an amount sufficient to pay: (a) one year of interest payments on the aggregate principal amount of Notes outstanding on February 1, 2016; and (b) the yield premium, then the final maturity date of the Notes would be August 1, 2016. The Company did not meet the requirements listed above by February 1, 2016, and as a result the final maturity date of the Notes was August 1, 2016, but was extended to August 1, 2017 under the Terms of a Forbearance Agreement dated on September 12, 2016. The

SUNSHINE OILSANDS LTD.

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Operational and Financial Highlights (Continued)

Company has presented the Notes as a current liability on the Condensed Interim Consolidated Statements of Financial Position as at September 30, 2016.

On September 12, 2016, the Company and noteholders representing 96% of the outstanding Notes (the “Forbearing Holders”) entered into a long-term forbearance agreement in respect of the Notes (the “Agreement”). The principal terms of the Agreement include: (a) payment on October 17, 2016 of the yield maintenance premium payment due on August 1, 2016; (b) payment of the coupon interest accruing on the Notes and repurchase of US$22.5 million in principal amount of the Notes on February 1, 2017; (c) payment of the principal of the Notes and the coupon interest on the Notes on August 1, 2017; (d) payment of forbearance fees accruing at 2.50% on the principal amount of the Notes held by the Forbearing Holders; (e) payment of a fee equal to 7.298% of the outstanding principal amount of the Notes held by the Forbearing Holders on August 1, 2017 and proportionately smaller fees if the Notes are repurchased or redeemed prior to that date; (f) covenants relating to minimum liquidity to be maintained by the Corporation for specified periods; (g) board of director observation rights for certain significant noteholders; (h) use of proceeds restrictions for the proceeds of any asset sales completed by the Corporation; (i) budget approval rights; and (j) requirements that the Corporation raise additional capital and provide additional security for the Notes.

The Board believed the entering into of the Agreement was in the best interests of the Company and its shareholders as a whole as the Agreement provides the Company with additional time to repay or refinance the indebtedness owed by the Company to the noteholders under the Notes.

In relation to the Agreement, the Company is required to maintain a cash balance of US$3.0 million as of November 1, 2016 until January 31, 2017 and thereafter, a cash balance no less than US$10.0 million.

On October 31, 2016, the Company updated the status of the Agreement. In view of the importance of supporting active operations at West Ells while it examines the potential to progress the Memorandum of Understanding with Nobao Energy Holding (China) Company Limited to definitive terms and agreements, the Company initiated discussions with the Forbearing Holders about altering the timing and the form of payment of the yield maintenance premium. As such, the Company has not paid the yield maintenance premium to the Forbearing Holders as required by the Agreement. While this constitutes a termination event under the Agreement and entitles the Forbearing Holders to exercise their rights and remedies under the Agreement, the Forbearing Holders have not taken steps to terminate the Agreement or exercise such rights and they have not, at this time, advised of any intention to do so. In addition, the Company has been in discussions with the Forbearing Holders to achieve payment terms for the yield maintenance premium that are mutually acceptable to the Forbearing Holders and the Company.

The following table summarizes the Company’s cash flow used in operations:

	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Net loss Finance costs Unrealized foreign exchange loss/ (gain) Contract provision expense Interest income Gain on sale of assets Fair value adjustment on share purchase warrants Depreciation Share-based payment expense Employee share savings plan Cash flow used in operations	$ (26,564) $ (30,413) $ (50,073) $ (80,374) 18,606 10,641 48,619 29,686 2,200 14,374 (12,407) 26,541 - 75 6,600 (12) (36) (35) (446) - - (2) (174) - (987) (3) (249) 129 157 421 434 2,949 322 2,792 1,276 - 89 - 356
	$ (2,692) $ (5,853) $ (10,613) $ (16,350)

Non-IFRS measurements are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The above table reconciles the non-

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SUNSHINE OILSANDS LTD.

Operational and Financial Highlights (Continued)

IFRS measurements “Cash flow used in operations” from “Net loss”, the nearest IFRS measure. Cash flow used in operations is defined as net loss as reported, add back or deduct non-cash items including finance costs, share-based compensation, unrealized portion of foreign exchange adjustments, depreciation and impairment, interest income, fair value adjustment on share purchase warrants and employee share savings plan. Cash flow used in operations reconciles to “Net cash used in operating activities” from the Condensed Interim Consolidated Statements of Cash Flows after taking into account movements in non-cash working capital.

Cash flow used in operations in the three and nine month periods ended September 30, 2016 totalled $2.7 million and $10.6 million compared to $5.9 million and $16.4 million for the same period in 2015. For the three month period ended September 30, 2016, the decrease of $3.2 million compared to the same period in 2015, is due to a decrease of $2.0 million in salaries, $0.2 million decrease in legal and audit, and $0.8 million decrease in the realized foreign exchange loss. For the nine month period ended September 30, 2016, the decrease in cash flow used in operations of $5.7 million is primarily due to a decrease of $3.4 million in salaries, $1.3 million decrease in other general and administrative costs, and $1.5 million decrease in the realized foreign exchange losses.

Summary of Quarterly Results

The following table summarizes selected unaudited financial information for the Company for the last eight quarters:

(‘000s except for per share
amounts)	Q3 2016	Q2 2016	Q1 2016	Q4 2015	Q3 2015	Q2 2015	Q1 2015	Q4 2014
Other income	12	10	18	155	1,023	(840)	686	5,464
Finance costs	18,606	15,415	14,598	17,857	10,641	9,891	9,154	8,735
Net loss for the period	26,564	20,736	2,773	325,761	30,413	19,122	30,839	12,280
Loss per share	0.01	0.00	0.00	0.08	0.01	0.00	0.01	0.00
Capital investments	12,038	11,028	1,169	19,051	31,100	51,422	44,018	27,510

Results of Operations

Finance Costs

Finance Costs
	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Interest expense on senior notes Interest expense on shareholder’s loan Amortization of financing transaction costs and discount Redemption/yield maintenance premium Financing related costs/(recovery) Unwinding of discounts on provisions	$ 7,788 $ 6,547 $ 20,402 $ 18,899 - - 136 - 2,962 3,781 10,046 10,006 5,078 34 14,319 (11) 2,415 1 2,843 1 363 278 873 791
	$ 18,606 $ 10,641 $ 48,619 $ 29,686

For the three month period ended September 30, 2016, finance costs increased by $8.0 million primarily as a result of $1.2 million of interest expense on senior notes, $5.0 million for the redemption premium costs on the Notes, $2.4 million on financing related costs, partially offset by a decrease of $0.8 million on amortization of financing costs on the Notes, compared to the same period in 2015. Finance costs for the nine month period ended September 30, 2016 increased by $18.9 million primarily as a result of $1.5 million of interest expense on senior notes, $14.3 million for the accrued redemption premium on the Notes, an increase of $0.1 million on interest expense on shareholder’s loan and $2.8 million on financing related cost compared to the same period in 2015.

SUNSHINE OILSANDS LTD.

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General and Administrative Costs

	For the three months ended September 30, 2016 2015
	Total Capitalized Expensed Total Capitalized Expensed
Salaries, consulting and benefits Rent Legal and audit Other	$ 1,676 $ 516 $ 1,160 $ 4,498 1,370 3,128 479 164 315 612 231 381 620 - 620 803 - 803 883 19 864 1,089 35 1,054
	$ 3,658 $699 $2,959 $ 7,002 1,636 5,366

	For the nine months ended September 30, 2016 2015
	Total Capitalized Expensed Total Capitalized Expensed
Salaries, consulting and benefits Rent Legal and audit Other	$ 6,620 $ 1,918 $ 4,702 $ 12,181 4,116 8,065 1,550 542 1,008 1,769 697 1,072 1,755 - 1,755 1,752 - 1,752 2,850 59 2,791 4,156 105 4,051
	$ 12,775 $2,519 $10,256 $ 19,858 4,918 14,940

General and administrative expense, which include salaries, consulting and benefits, rent, legal and audit, and other general administrative costs, for the three month period ended September 30, 2016 decreased by $2.4 million to $3.0 million compared to $5.4 million for the same period in 2015. The decrease is primarily a result of a decrease in salaries, consulting and benefits of $2.0 million, legal and audit cost of $0.2 million, and other general and administration cost of $0.2 million compared to the same period in 2015. For the nine month period ended September 30, 2015, general and administrative expense decreased by $4.7 million to $10.3 million compared to $14.9 million for the same period in 2015. The decrease is primarily a result of a decrease in salaries, consulting and benefits of $3.4 million, and other general and administration cost of $1.3 million compared to the same period in 2015.

During the three and nine month periods ended September 30, 2016, the Company capitalized salaries, consulting and benefits, rent and other general administrative costs related to capital investment of $0.7 million and $2.5 million compared to $1.6 million and $4.9 million for the same period in 2015, respectively.

Contract Provision

As at September 30, 2016, the Company had fully recognized a liability provision related to obligations under a drilling rig contract of $6.8 million (December 31, 2015 - $6.6 million). The $6.8 million represents the maximum obligation required if the drilling rig is not utilized over the remaining term of the contract, which ends in the fourth quarter of 2016. At September 30, 2016, this obligation is broken into a $2.6 million payable and a $3.6 million provision (December 31, 2015 - $3.1 million payable and $3.5 million provision). For the three and nine month periods ended September 30, 2016, the Company paid $0.6 million against the obligation. Based on current market conditions and low utilization rates for drilling rigs, management concluded the future benefits of the contract are not currently quantifiable to offset its obligations under the contract. In future periods, if the drilling rig is utilized the provision will be adjusted accordingly.

Share-based Compensation

Share-based Compensation
		For the	three months	ended September 30,
		2016			2015
	Total	Capitalized		Total	Capitalized
	amount	portion	Expensed	amount	portion	Expensed
Share-based compensation	$ 3,293	$ 344	$2,949	$ 349	$27	$ 322

SUNSHINE OILSANDS LTD.

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Share-based Compensation (Continued)

		For the nine months	For the nine months	ended September	30,
		2016			2015
	Total	Capitalized		Total	Capitalized
	amount	portion	Expensed	amount	portion	Expensed
Share-based compensation	$3,269	$477	$2,792	$1,938	$662	$1,276

Share-based compensation expense for the three and nine month periods ended September 30, 2016 was $2.9 million and $2.8 million compared to $0.3 million and $1.3 million for the same period in 2015, respectively. The fair value of share-based payments associated with the granting of stock options is recognized by the Company in its consolidated ‐ financial statements. Fair value is determined using the Black Scholes option pricing model.

‐ The Company capitalized a portion of the share based compensation expense using the same methodology as the in comparable periods of 2015.

Other Income

Other Income
	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Interest income Gain on sale of assets Fair value adjustment on share purchase warrants (loss)/gain	$ 12 $ 36 $ 35 $ 446 - - 2 174 - 987 3 249
	$ 12 $ 1,023 $ 40 $ 869

Other income for the three and nine month periods ended September 30, 2016 decreased by $1.0 million and $0.8 million respectively. The change was primarily due to the absence of any gains on sale of assets, offset by a fair value adjustment on share purchase warrants for the same periods in 2015.

Depreciation and Impairment

Depreciation cost for the three and nine month periods ended September 30, 2016 remained relatively consistent with the comparable periods in 2015. Depreciation expense was $0.1 million and $0.2 million for the three month period ended September 30, 2016 and 2015 respectively, and depreciation expense was $0.4 million for the nine month periods ended September 30, 2016 and 2015. Since the Company is in a development stage, its oil assets are not yet ready for use and therefore, not subject to depletion and depreciation.

As at September 30, 2016, the Company did not identify any indicators of further impairment (or reversal of the original impairment recorded at December 31, 2015) of the exploration and evaluation (“E&E”) Assets or the West Ells cash generating unit (“CGU”).

Income Taxes

The Company did not recognize any deferred income tax assets, which relate primarily to unrecognized tax losses, for the three and nine month periods ended September 30, 2016 and 2015. Recognition of tax losses is based on the Company’s consideration of its internal development plan for its asset base and the assumption as to whether or not these tax losses will be utilized before their expiry dates. At September 30, 2016, the Company had total available tax deductions of approximately $1.4 billion, with unrecognized tax losses that expire between 2028 and 2036.

SUNSHINE OILSANDS LTD.

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Liquidity and Capital Resources

Liquidity and Capital Resources
	September 30, 2016 December 31, 2015
Working capital deficit1, 2 Shareholders’ equity	$ 314,853 $ 286,121 603,348 604,098
	$ 918,201 $ 890,219

Included in working capital deficit at September 30, 2016, is restricted cash of Nil (December 31, 2015, $14.4 million). Refer to Note 4 “cash and cash equivalents” in the condensed interim consolidated financial statements for additional disclosure on restricted cash.
Senior secured notes are considered current as at September 30, 2016 and have been included in the working capital deficit as the conditions to extend the maturity date to August 1, 2017 on September 12, 2017.

On August 8, 2014, the Company completed an offering of US$200 million senior secured notes (the “Notes”) at an offering price of US$938.01 per US$1,000 principal amount. The Notes bear interest at a rate of 10% per annum and had a potential maturity date of August 1, 2017, if certain conditions were met as explained below. Interest payments are payable semi-annually on February 1 and August 1 of each year.

If by February 1, 2016, the Company had not: (1) received at least US$50 million of net cash proceeds from one or more equity offerings; and (2) deposited, or caused to be deposited, cash in an amount sufficient to pay: (a) one year of interest payments on the aggregate principal amount of Notes outstanding on February 1, 2016; and (b) the yield premium, then the final maturity date of the Notes would be August 1, 2016. The Company did not meet the requirements listed above by February 1, 2016, and as a result the final maturity date of the Notes was August 1, 2016. The Company has presented the Notes as a current liability on the Condensed Interim Consolidated Statements of Financial Position as at September 30, 2016.

The Notes contain various non-financial covenants which, among other things, restrict the Company with respect to certain capital expenditures and payments, making investments and loans, incurrence of additional debt and issuance of certain preferred stock, paying dividends, altering the nature of the business and undertaking certain corporate transactions. A reporting covenant also exists which requires standard reporting in line with a reporting issuer under Canadian Securities Legislation and includes timely reporting of material changes.

SUNSHINE OILSANDS LTD.

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Liquidity and Capital Resources (Continued)

At September 30, 2016, the Company had incurred $8.9 million (US$6.8 million equivalent using the period end exchange rate) in liens during the ordinary course of business. There is a basket for permitted liens not to exceed US$5.0 million, but the Company was in excess of this US$5.0 million limit as at September 30, 2016. The Note Indenture also permits liens incurred in the ordinary course of business that are imposed by law. It is possible that the US$6.8 million in liens existing as at September 30, 2016 may be sheltered by one or both of these exceptions, but there is also a possibility that the Company is not in compliance with these exceptions as At September 30, 2016. In any event, no Event of Default (as defined in the Note Indenture) has occurred. From time to time, the Company receives liens or claims on accounts payable balances. The Company continues to work toward resolution of any liens or claims.

The Notes are translated into Canadian dollars at the period end exchange rate of $1US = 1.3117CDN.

The Company’s strategy is to access sufficient capital, through equity issuances, monetization, joint ventures and the utilization of debt, in order to maintain a capital base that properly supports the objectives of maintaining financial flexibility and of sustaining future development of the business. The Company manages its capital structure in order to continue as a going concern and makes adjustments relative to changes in economic conditions and the Company’s risk profile. In order to manage risk, the Company may from time to time issue shares and adjust its capital spending to manage current working capital deficiency levels. The Company’s liquidity may be adversely affected if the Company’s access to the capital markets is hindered because of financial market conditions generally, or as a result of conditions specific to the Company.

For the three and nine month periods ended September 30, 2016, the Company reported a net loss of $26.6 million and $50.1 million respectively. At September 30, 2016, the Company had a working capital deficiency of $314.9 million including the $262.3 million current portion of the senior secured notes and an accumulated shareholders’ deficit of $683.9 million.

The Company’s trade payables total $27.6 million at September 30, 2016. Included in trade payables are $21.5 million payable that are greater than 60 days. Subsequent to September 30, 2016, the Company raised gross equity proceeds of $11.2 million.

The Company’s ability to continue as a going concern is dependent on achieving profitable operations and the ability to refinance current debt and access immediate additional financing. As such there is significant doubt and there can be no assurance the Company will be able to continue as a going concern.

The Company’s debt-to-asset ratio, measured based on total liabilities divided by total assets was 39% as at September 30, 2016 and 38% as at December 31, 2015, respectively.

For the three and nine month periods ended September 30, 2016, the Company had a foreign exchange loss of $2.0 million and a gain of $12.1 million compared to a $15.0 million and $28.3 million loss in the same period in 2015 respectively. The $13.0 million decrease in foreign exchange loss for three month periods ended September 30, 2016, was primarily due to a decrease of $16.7 million unrealized loss on translation of the US denominated senior secured notes offset by $4.2 million unrealized loss on US denominated cash balances. The $40.0 million of increase in foreign exchange gain for nine month periods ended September 30, 2016, was primarily due to $47.7 million increase in unrealized gain on translation of the US denominated senior secured notes, and partially offset by $8.5 million decrease in unrealized gain on US denominated cash balances.

The Company manages foreign exchange risk by monitoring foreign exchange rates and evaluating their effects on using Canadian or U.S. vendors as well as timing of transactions. The Company had no forward exchange rate contracts in place as at or during the three and nine month periods ended September 30, 2016. If exchange rates to convert from US dollars to Canadian dollars had been one percent higher or lower with all other variables held constant, foreign cash and restricted cash held at September 30, 2016 would have been impacted by $Nil . At September 30, 2016, the Company held approximately US $Nil of restricted cash and US$0.1 million or $0.1 million of cash, using the September 30, 2016 exchange rate of 1.3117, as cash, restricted cash and cash equivalents in the Company’s US bank account.

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SUNSHINE OILSANDS LTD.

Liquidity and Capital Resources (Continued)

The Company also owes US$200.0 million or $262.3 million in Notes using the exchange rate of 1.3117 at September 30, 2016. If exchange rates to convert from US dollars to Canadian dollars had been one percent higher or lower with all other variables held constant, the carrying value of the current portion of the long-term debt at September 30, 2016, would have been impacted by approximately $2.6 million.

For Hong Kong dollar amounts, exchange rates to convert from HK dollars to Canadian dollars had been one percent higher or lower with all other variables held constant, foreign cash held at September 30, 2016 would have been impacted by HK$0.1 million. At September 30, 2016, the Company held approximately HK$1.4 million or $0.2 million using the September 30, 2016 exchange rate of 5.9127 as cash in the Company’s HK$ bank account.

The Company had $5.1 million deposit with the Alberta Energy Regulator to achieve compliance with the License Liability Program managed by the regulatory authority (on October 13, 2016, $1.3 million was refunded). When the accumulative bitumen production from West Ells surpasses 7,800 cubic meters, the Company will apply to have the entire deposit returned. The remaining deposits include ordinary business deposits of $0.8 million.

Cash Flows Summary

Cash Flows Summary
		For the three	months	ended		For the nine	months ended
		September 30,				September		30,
		2016		2015		2016		2015
Cash provided (used) in operating activities	$	1,610	$	(6,991)	$	(2,878)	$	(16,352)
Cash provided (used) in investing activities		(14,176)		(19,555)		(11,959)		(104,504)
Cash provided (used) by financing activities		9,983		10,355		10,316		(507)
Effect of exchange rate changes on cash and
cash equivalents held in foreign currency		(1,308)		2,882		(1,409)		7,136
Net (decrease) / increase in cash		(3,891)		(13,309)		(5,930)		(114,227)
Cash and cash equivalents, beginning of period		4,506		35,179		6,545		136,097
Cash and cash equivalents,end ofperiod	$	615	$	21,870	$	615	$	21,870

Operating Activities

Net cash provided (used) for operating activities for the three and nine month periods ended September 30, 2016 was $1.6 million and $(2.9) million compared to cash used of $(7.0) million and $(16.4) million for the same periods in 2015, a change of $8.5 million and $13.5 million, respectively. Net cash used for operating activities includes movement in working capital of $4.3 million and $7.7 million for the three and nine month periods ended September 30, 2016 compared to movement of $(1.1) million and $(0.1) million for the same period in 2015.

Investing Activities

Net cash used for investing activities for the three month period ended September 30, 2016 decreased by $5.4 million to $14.2 million compared to $19.6 million for the three month ended September 30, 2015. The decrease was primarily due to the decreases of property, plant and equipment spending for the three month ended September 30, 2015 of $16.7 million, related to the West Ells project in 2015, partially offset by the movements in restricted cash of $11.5 million. For the nine month period ended September 30, 2016 net cash used for investing activities decreased by $92.5 million to $12.0 million compared to $104.5 million for the nine month period in 2015. The decrease was primarily due to the changes of property, plant and equipment for the nine month ended September 30, 2015 of $100.1 million, related to the West Ells project in 2015, partially offset by a change in restricted cash of $6.7 million due to the first interest payment on the Notes.

Financing Activities

Net cash generated for financing activities for the three month periods ended September 30, 2016 totalled $10.0 million, which consisted of proceeds from issue of common shares of $31.3 million, partially offset by finance costs of $15.3 million and the repayment of $6.9 million of the shareholder’s loan. Financing activities for the nine month periods ended September 30, 2016 generated $10.3 million, which consisted of proceeds from issue of common shares of $46.2 million, partially offset by finance costs of $37.7 million.

SUNSHINE OILSANDS LTD.

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Commitments and Contingencies

Information presented in the table below reflects management's estimate of the contractual maturities of the Company's obligations. These estimated maturities may differ significantly from the actual maturities of these obligations. As at September 30, 2016, the Company’s estimated commitments are as follows:

	Total 2016 2017 2018 2019 Thereafter
Repayment of long-term debt1 Interest payments on long-term debt2 Redemption premium3 Drilling, other equipment and contracts Lease rentals4 Office leases	$ 262,340 - 262,340 - - - 32,530 - 32,530 - - - 19,146 - 19,146 - - - 6,600 6,294 224 82 - - 8,399 301 1,250 1,250 1,243 4,355 6,898 780 2,893 2,580 645 -
	$ 335,913 7,375 318,383 3,912 1,888 4,355

Principal amount of Notes based on the period end exchange rate of $1US=1.3117CDN and a maturity date of August 1, 2017.
Based on 10% on principal amount and 2.5% on the principal amount of the notes held by the Forbearing Holders per annum and a maturity date of August 1, 2017, at the period end exchange rate of $1US=1.3117CDN.
The redemption premium is based on the maximum premium paid if the Notes mature on August 1, 2017. This premium (Yield Maintenance Premium) percentage is 7.298% of the aggregate principal amount of the Notes outstanding on August 1, 2017. Using the period end exchange rate of $1US=1.3117CDN this premium amounts to $19,1 million. At September 30, 2016, the Company had the option to redeem the Notes at 0.583% of the aggregate principal amount of the Notes outstanding which amounts to $1.5 million using the period end exchange rate. The Company can redeem the Notes at any time up to the August 1, 2017 maturity date, following the optional redemption schedule set out in the Notes indenture.
The Company has an annual obligation for oil sands mineral lease rentals and surface lease rentals.

The Company has been named as a Defendant in Court of Queen’s Bench of Alberta Judicial District of Calgary, commenced by a shareholder of the Company (the “Claimant”) by Statement of Claim (the “Action”) filed January 2, 2014. The Claimant alleges that, pursuant to a share subscription agreement entered into in January 2011, it is entitled to require Sunshine to repurchase 4,132,232 shares (prior to the 20:1 share split that occurred prior to the Company’s IPO) of the Company that the Claimant acquired pursuant to the share subscription agreement. This constitutes a claim for $40 million plus interest at 15% per annum since the date of the share subscription agreement. The Company’s Statement of Defence was filed on April 2, 2014. The Claimant’s application for summary judgment was heard on February 2 and 3, 2016. The summary judgment application was dismissed on February 3, 2016. No amounts have been accrued in the consolidated financial statements for the three and nine month periods ended September 30, 2016 as the ultimate resolution is undeterminable at this time. The Company will record a provision if it believes that the outcome of the contingency becomes probable and can be reasonably estimated. In the normal conduct of operations, there are other pending claims by and against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance.

Transactions with Related Parties

Balances and transactions between the Company and its subsidiaries, who are related parties, have been eliminated on consolidation.

The Company’s Executive Chairman, Mr. Kwok Ping Sun, has purchased securities of the Company (Note 13.1) , and he has also loaned the Company funds on an unsecured basis.

On January 19, 2016 the Company signed an unsecured loan agreement (the “Loan”) with Tai Feng Investments Limited (“Tai Feng”). Tai Feng is 100% owned by Mr. Kwok Ping Sun, the Company’s Executive Chairman. The Loan is considered Permitted Debt under the Company’s Notes as long as it does not exceed US$5.0 million. The Loan has an interest rate of 6.0% per annum, can be drawn up to HK$38.0 million and requires repayment in full within nine months from the date of the receipt of the Loan.

A second loan agreement (“Second Loan”) was signed effective April 14, 2016 with Tai Feng. This Second Loan has the same interest rate and repayment terms as the Loan, except it requires repayment in full within three months from the date of the receipt of the Loan.

On July 31, 2016, the Loan and Second Loan, (principle and interest) were converted into the equity through private placements. As at September 30, 2016, both the Loan and Second Loan balance are Nil.

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SUNSHINE OILSANDS LTD.

Transactions with Related Parties (Continued)

The company has signed a non-binding memorandum of understanding (the “MOU”) with its Executive Chairman, Mr. Sun Kwok Ping, and two corporations controlled by Mr. Sun Kwok Ping (collectively, the “Vendors“) in relation to the potential acquisition (the “Potential Acquisition”), by the Company of a 51% shareholding interest in Nobao Energy Holding (China) Company Limited (“Nobao”), a Hong Kong corporation. It is anticipated that Nobao will become a subsidiary of the Company upon completion of the Potential Acquisition. Nobao and its operating subsidiaries (collectively, the “Nobao Group”) are active in the ground source heat pump energy industry.

The consideration to be paid by the Company is expected to be cash and/or common shares of the Company. The amount of consideration to be paid to the Vendors has not yet been determined. Other than the parties’ obligations in relation to announcements, confidentiality, legal jurisdiction and costs and expenses, the MOU is not legally binding.

Off-balance Sheet Arrangements

The Company has certain lease agreements which are reflected in the table above under the heading “Commitments and contingences”. No asset or liability value was assigned to these agreements on the Company’s balance sheet. As at September 30, 2016, the Company did not have any other off-balance sheet arrangements.

Subsequent Events

On October 13, 2016, as a deposit refund $1.3 million was received from the Alberta Energy Regulator for the Licensee Liability Rating Program (Note 6).

On October 24, 2016, the Company completed the closing of 13,333,333 Common Shares (the “Prime Union Partial Closing”) under the Specific Mandate at a price of HK$0.75 per Common Share (approximately CDN$0.13 per Common Share). Under the Prime Union Partial Closing, the Corporation received total gross proceeds of HK$10,000,000 (approximately CDN$1.72 million). The remaining 98,453,334 Common Shares (HK$73,840,000 or CDN$12.68 million) subscribed for by Prime Union will be closed in one or more tranches.

On October 24, 2016, the Company completed the closing of 137,941,176 Common Shares (the “Bright Hope Partial Closing”) under the General Mandate at a price of HK$0.34 per Common Share (approximately CDN$0.06 per Common Share). Under the Bright Hope Partial Closing, the Corporation received total gross proceeds of HK$46,900,000 (approximately CDN$8.05 million). An introduction fee of HK$937,995.40 (approximately CDN$160,927.03) being 2% of the gross proceeds of the Bright Hope Partial Closing has been incurred in relation to the Bright Hope Partial Closing. The remaining 273,777,324 Common Shares (HK$93,084,290 or CDN$15.97 million) subscribed for by Bright Hope will be closed in one or more tranches.

On October 31, 2016, the Company completed the closing of 23,529,412 Common Shares (the “Bright Hope Partial Closing”) under the General Mandate at a price of HK$0.34 per Common Share (approximately CDN$0.06 per Common Share). Under the Bright Hope Partial Closing, the Corporation received total gross proceeds of HK$8,000,000 (approximately CDN$1.38 million). An introduction fee of HK$160,000 (approximately CDN$27,619) being 2% of the gross proceeds of the Bright Hope Partial Closing has been incurred in relation to the Bright Hope Partial Closing. The remaining 250,247,912 Common Shares (HK$85,084,290 or CDN$14.69 million) subscribed for by Bright Hope will be closed in one or more tranches.

On October 31, 2016, the Company announced an extension of the remaining 250,247,912 Common Shares (approximately HK$85,084,290 or CDN$14.69 million) subscribed for by Bright Hope to be closed in one or more remaining tranches, with the last tranche closing no later than January 31, 2017. The Company believes that the extension is in the best interests of the Company and Shareholders.

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SUNSHINE OILSANDS LTD.

Changes in Accounting Policies

For the three and nine month periods ended September 30, 2016, there has been no change in accounting policy from the policies adopted by the Company in the Consolidated Financial Statements for the year ended December 31, 2015.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty

In the application of the Company’s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgments, apart from those involving estimations, that management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Going Concern

These condensed interim consolidated financial statements have been prepared in accordance with IFRS on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. Management uses judgment to assess the Company’s ability to continue as a going concern and the existence of conditions that cast doubt upon the going concern assumption.

Joint Control

Judgment is required to determine when the Company has joint control over an arrangement, which requires an assessment of the capital and operating activities of the projects it undertakes with partners and when the decisions in relation to those activities require unanimous consent.

Oil and Gas Reserves

The process of estimating quantities of reserves is inherently uncertain and complex. It requires significant judgments and decisions based on available geological, geophysical, engineering and economic data. These estimates may change substantially as additional data from ongoing development activities and production performance becomes available and as economic conditions impacting oil and gas prices and costs change. Reserve estimates are based on, among other things, forecasts of production, prices, cost estimates and economic conditions.

Reserve estimates are critical to many accounting estimates including:

determining whether or not an exploratory well has found proved and probable reserves. Such determinations involve the commitment of additional capital to develop the field based on current estimates of production forecasts, prices and other economic conditions;
calculating unit-of-production depletion rates. Proved plus probable reserves are used to determine rates that are applied to each unit-of-production in calculating depletion expense; and
assessing development and production assets for impairment. Estimated future net cash flows used to assess impairment of the Company’s development and production assets are determined using proved plus probable reserves.

Independent qualified reserve evaluators prepare reserve estimates for each property at least annually and issue a report thereon. The reserve estimates are reviewed by the Company’s engineers and operational management familiar with the property. Judgment is used in order to determine if a project classified as E&E is technically feasible and commercially viable and should be transferred from E&E to property, plant and equipment.

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SUNSHINE OILSANDS LTD.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty (Continued)

Impairment of Non-financial Assets

The recoverable amounts of cash generating units (“CGU”) and individual assets have been determined based on the higher of value-in-use calculations and fair value less costs to sell. These calculations require the use of estimates and assumptions. Oil and gas development and production properties are evaluated for impairment by reference to proved and probable reserves determined in accordance with the Society of Petroleum Engineers rules. It is possible that oil and gas price assumptions may change which may then impact the estimated life of fields and may then require a material adjustment to the carrying value of E&E assets and property, plant and equipment. The Company monitors internal and external indicators of impairment relating to its tangible and intangible assets.

Recoverability of Exploration and Evaluation costs

E&E assets are capitalized as exploration and evaluation assets by CGU and are assessed for impairment when circumstances suggest that the carrying amount may exceed recoverable value. This assessment involves judgment as to: (i) the likely future commerciality of the asset and when such commerciality should be determined; (ii) future revenues based on forecasted oil and gas prices; (iii) future development costs and production expenses; (iv) the discount rate to be applied to such revenues and costs for the purpose of deriving a recoverable value; and (v) potential value to future E&E activities of any geological and geophysical data acquired.

Decommissioning Costs

A provision is required to be recognised for the future retirement obligations associated with the Company’s assets. The decommissioning provision is based on estimated costs, taking into account the anticipated method and extent of restoration consistent with legal, regulatory and construction requirements, technological advances and the possible use of the site. Since these estimates are specific to the sites involved, there are many individual assumptions underlying the amount provided. These individual assumptions can be subject to change based on actual experience and a change in one or more of these assumptions could result in a materially different amount.

Share Purchase Warrants

The Company recognises a liability for share purchase warrants with an exercise price in a currency other than the functional currency of the Company, which is remeasured at each reporting date. The initial recognition and subsequent remeasurement of the share purchase warrants is based on the estimated fair value of each share purchase at its grant date and each reporting date, the estimation of which requires management to make assumptions about future volatility of the Company’s stock price, future interest rates and the timing with respect to exercise of the instruments. The effects of a change in one or more of these variables could result in a materially different fair value.

Share-based Compensation

The Company recognises compensation expense on options. Compensation expense is based on the estimated fair value of each option and stock appreciation right at its grant date, the estimation of which requires management to make assumptions about future volatility of the Company’s stock price, future interest rates, future forfeiture rates and the timing with respect to exercise of the instruments. The effects of a change in one or more of these variables could result in a materially different fair value.

Fair Value Measurement

The estimated fair value of financial instruments is reliant upon a number of estimated variables including foreign exchange rates and interest rates, volatility curves and risk of non-performance. A change in any one of these factors could result in a change to the overall estimated valuation of the instrument.

Deferred Income Taxes

The calculation of deferred income taxes is based on a number of assumptions, including estimating the future periods in which temporary differences, tax losses and other tax credits will reverse. Tax interpretations, regulations, and legislation in the various jurisdictions in which the Company and its subsidiaries operate are subject to change.

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SUNSHINE OILSANDS LTD.

Risk Factors

The business of resource exploration, development and extraction involves a high degree of risk. Material risks and uncertainties affecting the Company, their potential impact and the Company’s principal risk management strategies are substantially unchanged from those disclosed in the Company’s MD&A for the year ended December 31, 2015, which is available at www.sedar.com. The 2015 annual report of the Company is available at the Company’s website at www.sunshineoilsands.com, and the website of the SEHK, www.hkexnews.hk. The Company’s 2015 Annual Information Form is available at www.sedar.com.

Disclosure Controls and Procedures

Hong Luo, Executive Director of the Board and Chief Executive Officer, and Gloria Ho, Chief Financial Officer, have designed, or caused to be designed under their supervision, disclosure controls and procedures (“DC&P”) to provide reasonable assurance that: (i) material information relating to the Company is made known to the Company's CEO and CFO by others, particularly during the period in which the annual and quarterly filings are being prepared; and (ii) information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time period specified in securities legislation.

Internal Controls over Financial Reporting

Hong Luo, Executive Director of the Board and Chief Executive Officer, and Gloria Ho, Chief Financial Officer, have designed, or caused to be designed under their supervision, internal controls over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Furthermore, the Company used the criteria established in “Internal Control – Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Internal Controls over Financial Reporting

No material changes in the Company's ICFR were identified during the three and nine month periods ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR. It should be noted that a control system, including the Company's disclosure and internal controls and procedures, no matter how well conceived, can provide only reasonable, but not absolute, assurance that the objectives of the control system will be met and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud. In reaching a reasonable level of assurance, management necessarily is required to apply its judgment in evaluating the cost/benefit relationship of possible controls and procedures.

Additional Stock Exchange Information

Additional information required by the SEHK and not shown elsewhere in this announcement is as follows:

Code of Corporate Governance Practice (the “Code”)

The Company is committed to maintaining high standards of corporate governance. The Company recognizes that corporate governance practices are fundamental to the effective and transparent operation of a company and its ability to protect the rights of its shareholders and enhance shareholder value.

The Company confirms that the Code, as set out in Appendix 14 to the Rules Governing the Listing of Securities on the SEHK (the “Hong Kong Listing Rules”), has been complied with following its public listing, save that the Company has not entered into formal letters of appointment with its directors and therefore will deviate from Code Provision D.1.4 of the Code. The Company will deviate from Code Provision D.1.4 of the Code since each of the Directors will be appointed on an annual basis by the shareholders of the Company at each annual general meeting, which is consistent with the market practice in Canada.

Compliance with the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”)

The Company confirms that it has adopted the Model Code, as set out in Appendix 10 to the Hong Kong Listing Rules, following its public listing. Having made specific enquiry with all directors, the directors have confirmed and compiled with the required standard set out in the Model Code and its code of conduct regarding directors’ securities transactions.

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SUNSHINE OILSANDS LTD.

Purchase, Sale or Redemption of Sunshine’s Listed Securities

Class “A” Common Shares

General mandate

On March 15, 2016, the Company entered into a subscription agreement (the "Subscription Agreement") with Bright Hope Global Investments Limited (“Bright Hope”) under which Bright Hope agreed to subscribe for a total of 558,823,500 Class “A” Common Voting Shares of the Company (“Common Shares”) at a price of HK$0.34 per Common Share or approximately CDN$0.055 per Common Share, which in the aggregate amounts to gross proceeds of HK$189,999,990 (approximately CDN$30,902,347) (the “Bright Hope Placement”).

Completion of the Placement is subject to the fulfillment (or waiver) of certain regulatory conditions, which have been met.

Completion of the Placement would have to take place on or before May 14, 2016 (or such other date as the Company may choose) (the “Closing Date”). In the event that (i) the Company suffers a material adverse change in the management, business, properties, financial condition, prospects, shareholders' equity or results of operation of the Company shall have occurred or been announced since the date of the Subscription Agreement; or (ii) any adverse change in the oil price and/or general market conditions and/or the share price of the Company takes place after the date of the Subscription Agreement, the Subscription Agreement may be terminated by the Subscriber by written notice, and in which case, the obligations of the Company and the Subscriber under the Subscription Agreement shall immediately and unconditionally cease and be null and void. There can be no assurance that the Placement will close as described.

On April 27, 2016, the Company completed the closing of 88,234,000 Common Shares at a price of HK$0.34 per Common Share (approximately CDN$0.055 per Common Share). Upon the Partial Closing, the Company received total gross proceeds of HK$29,999,560 (approximately CDN$4.9 million). In addition, an introduction fee of HK$599,991 (approximately CDN$0.1 million) being 2% of the gross proceeds of the Partial Closing, has been incurred in relation to the Partial Closing. The remaining 470,589,500 Common Shares (HK$160,000,430 or CDN$26.0 million) subscribed for by Bright Hope be closed in one or more remaining tranches, with the last tranche closing no later than May 14, 2016.

On May 16, 2016, the Company announced an extension of the remaining 470,589,500 Common Shares (HK$160,000,430 or CDN$26.0 million) subscribed for by Bright Hope to be closed in one or more remaining tranches, with the last tranche closing no later than June 30, 2016.

On June 22, 2016, the Company completed the closing of 58,871,000 Common Shares at a price of HK$0.34 per Common Share (approximately CDN$0.056 per Common Share). Upon the Partial Closing, the Company received total gross proceeds of HK$20,016,140 (approximately CDN$3.3 million). In addition, an introduction fee of HK$400,323 (approximately CDN$0.1 million) being 2% of the gross proceeds of the Partial Closing, has been incurred in relation to the Partial Closing. The remaining 411,718,500 Common Shares (HK$139,984,290 or CDN$23.1 million) subscribed for by Bright Hope to be closed in one or more remaining tranches, with the last tranche closing no later than June 30, 2016.

On July 4, 2016, the Company announced an extension of the remaining 411,718,500 Common shares (HK$139,984,290 or CDN$23.1 million) subscribed for by Bright Hope to be closed in one or more remaining tranches, with the last tranche closing no later than August 31, 2016.

On August 31, 2016, the Company announced an extension of the remaining 411,718,500 Common shares (HK$139,984,290 or CDN$23.1 million) subscribed for by Bright Hope to be closed in one or more remaining tranches, with the last tranche closing no later than October 31, 2016.

On October 24, 2016, the Company completed the closing of 137,941,176 Common Shares under the General Mandate at a price of HK$0.34 per Common Share (approximately CDN$0.06 per Common Share), under which the Corporation received total gross proceeds of HK$46,900,000 (approximately CDN$8.05 million).

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SUNSHINE OILSANDS LTD.

Purchase, Sale or Redemption of Sunshine’s Listed Securities (Continued)

On October 31, 2016, the Company completed the closing of 23,529,412 Common Shares under the General Mandate at a price of HK$0.34 per Common Share (approximately CDN$0.06 per Common Share) under which the Corporation received total gross proceeds of HK$8,000,000 (approximately CDN$1.38 million). An introduction fee of HK$160,000 (approximately CDN$27,619) being 2% of the gross proceeds of this partial closing has been incurred. The remaining 250,247,912 Common Shares (HK$93,084,290 or CDN$15.97 million) subscribed for by Bright Hope will be closed in one or more tranches.

Specific mandate

On May 2, 2016, the Board of Directors, having taken into account the current market conditions, consented to a further extension of the closing date for the remaining 413,520,000 Common Shares (HK$310,140,000 or approximately CDN$53.5 million) subscribed by Prime Union Enterprises Limited (“Prime Union”) (original subscription agreement was May 31, 2015) to August 2, 2016 from May 2, 2016. The remaining subscribed Common Shares can be closed in one or more tranches with the last tranche closing no later than August 2, 2016. Prime Union is a company directly wholly owned by Mr. Kwok Ping Sun who is a substantial shareholder and the Executive Chairman of the Company.

On June 3, 2016, the Company completed the closing of 13,333,333 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.126 per Common Share), under which, the Company received total gross proceeds of HK$10,000,000 (approximately CDN$1.68 million). The remaining 400,186,667 Common Shares (HK$300,140,000 or CDN$50.5 million) subscribed for by Prime Union will be closed in one or more tranches with the last tranche closing no later than August 2, 2016.

On June 23, 2016, the Company completed the closing of 40,000,000 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.124 per Common Share). Under which, the Company received total gross proceeds of HK$30,000,000 (approximately CDN$4.96 million). The remaining 360,186,667 Common Shares (HK$270,140,000 or approximately CDN$44.6 million) subscribed for by Prime Union, which will be closed in one or more tranches with the last tranche closing no later than August 2, 2016.

On July 21, 2016, the Company completed the closing of 96,400,000 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.126 per Common Share). Under which, the Company has received total gross proceeds of HK$72,300,000 (approximately CDN$12.2 million) which comprised of HK$30.0 million in cash and HK$42.3 million in repayment of the Loan and the Second Loan plus interest due at July 19, 2016.

On July 31, 2016, the Company completed the closing of 152,000,000 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.126 per Common Share), under which, the Company has received total gross proceeds of HK$114,000,000 (approximately CDN$19.2 million). The remaining 111,786,667 Common Shares (HK$83,840,000 or CDN$14.09 million) subscribed for by Prime Union will be closed in one or more tranches.

On August 3, 2016, the Company announced an extension, for the remaining 111,786,667 Common shares (HK$83,840,000 or CDN$14.1 million) subscribed for by Prime Union Limited to be closed in one or more remaining tranches, with the last tranche closing no later than December 1, 2016. Prime Union had advised Sunshine that it has been working diligently to obtain the regulatory approvals but requires additional time due to the complexity.

On October 24, 2016, the Company completed the closing of 13,333,333 Common Shares (under the Specific Mandate at a price of HK$0.75 per Common Share (approximately CDN$0.13 per Common Share), under which, the Corporation received total gross proceeds of HK$10,000,000 (approximately CDN$1.72 million). The remaining 98,453,334 Common Shares (HK$73,840,000 or CDN$12.68 million) subscribed for by Prime Union will be closed in one or more tranches.

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SUNSHINE OILSANDS LTD.

Purchase, Sale or Redemption of Sunshine’s Listed Securities (Continued)

Post-IPO stock option plan

For the nine month period ended September 30, 2016, the Company issued 241,666 Class “A” common shares, from the exercise of 241,666 stock options at a weighted price of CDN$0.064 per share for cash proceeds of CDN$ 0.02 million. During the year ended December 31, 2015, the Company issued 1,075,166 Class “A” common shares, from the exercise of 1,075,166 stock options at a weighted average price of CDN$0.10 per share for cash proceeds of CDN$0.1 million.

Shares Outstanding

As at November 9, 2016, the Company had 4,854,148,024 Common Shares issued and outstanding.

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SUNSHINE OILSANDS LTD.

Summary of Financial Statements and Notes

The Board of Directors of the Company announces the results of the Company and its wholly owned subsidiaries, for the three and nine month periods ended September 30, 2016, together with comparative figures for the appropriate periods in 2015 as follows:

Consolidated Statements of Financial Position

(Expressed in thousands of Canadian dollars)

	September 30, 2016 December 31, 2015
Assets Current assets Cash Restricted cash and cash equivalents Trade and other receivables Prepaid expenses and deposits Non-current assets Exploration and evaluation Property, plant and equipment Liabilities and Shareholders’ Equity Current liabilities Trade and accrued liabilities Provisions Share purchase warrants Current portion of long-term debt Non-current liabilities Provisions Net current assets Total assets less current liabilities Shareholders’ Equity Share capital Reserve for share-based compensation Deficit	$ 615 $ 6,545 - 14,389 1,846 2,253 6,750 8,119
	9,211 31,306
	292,877 290,945 683,186 650,930
	976,063 941,875
	$ 985,274 $ 973,181
	$ 58,158 $ 47,611 3,566 3,492 - 3 262,340 266,321
	324,064 317,427
	57,862 51,656
	381,926 369,083
	(314,853) (286,121)
	661,210 655,754
	1,221,051 1,174,987 66,169 62,910 (683,872) (633,799)
	603,348 604,098
	$ 985,274 $ 973,181

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SUNSHINE OILSANDS LTD.

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in thousands of Canadian dollars)

	For the three months ended September 30, For the nine months ended September 30,
	2016 2015 2016 2015
Other income Interest income Gain on sale of assets Fair value adjustment on share purchase warrants gains / (losses) Expenses Salaries, consulting and benefits Rent Legal and audit Depreciation Share-based payments Finance costs Foreign exchange (gains)/losses Contract provision expense Other Loss before income taxes Income taxes Net loss and comprehensive loss for the period attributable to equity holders of the Company Basic and diluted loss per share	$ 12 $ 36 $ 35 $ 446 - 2 174 - 987 3 249
	12 1,023 40 869
	1,160 3,128 4,702 8,065 315 381 1,008 1,072 620 803 1,755 1,752 129 157 421 434 2,949 322 2,792 1,276 18,606 10,641 48,619 29,686 1,933 14,950 (12,117) 28,307 - - 142 6,600 864 1,054 2,791 4,051
	$ 26,576 $ 31,436 $ 50,113 $ 81,243
	26,654 30,413 50,073 80,374 - - - -
	$ 26,654 $ 30,413 $ 50,073 $ 80,374
	$ 0.01 $ 0.01 $ 0.01 $ 0.02

Notes

1. Basis of Preparation

These condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The condensed interim consolidated financial statements also comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Hong Kong Listing Rules.

The condensed interim consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, measured at fair value. The consolidated financial statements are presented in Canadian Dollars (“$”), which is the functional currency of the Company.

The condensed interim consolidated financial statements incorporate the financial statements of the Company and the Company’s wholly owned subsidiary, Sunshine Oilsands (Hong Kong) Ltd. (“Sunshine Hong Kong”). Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries are included in the consolidated financial statements when control is achieved and until control is lost. All inter-company transactions, balances, revenues and expenses are eliminated in full on consolidation. On July 14, 2015, Boxian was incorporated in the British Virgin Islands and is a wholly-owned subsidiary of the Company. No activity has yet occurred in Boxian as at the date of this MD&A.

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SUNSHINE OILSANDS LTD.

Notes (Continued)

2. Segment Information

The Company has one business and geographical segment. Accordingly, no business and geographical segment information is presented.

3. Trade Receivables

The Company’s trade and accruals and other receivables mainly arise from reimbursable expenditures and goods and services tax receivables due from government taxation authorities. These are summarized as follows:

		September 30, 2016		December 31, 2015
Trade	$	1,514	$	1,184
Accruals and other receivables		5		56
Goods and services taxesreceivable		327		1,013
	$	1,846	$	2,253

The Company allows an average credit period of 30 days to its trade customers. The following is an aged analysis of trade receivables at the end of the reporting period:

		September 30, 2016		December 31, 2015
0 - 30 days	$	459	$	66
31 - 60 days		18		(2)
61 - 90 days		8		2
>90 days		1,361		1,118
	$	1,846	$	1,184

As at September 30, 2016, included in the Company’s trade receivables were debtors with an aggregate carrying amount of $1.5 million (December 31, 2015 - $1.2 million), which was past due as at the reporting date. The Company does not hold any collateral over these balances. Management believes the past due amounts will be collected.

4. Trade Payables

Trade payables and accrued liabilities mainly represent payables to subcontractors for development, engineering, procurement and construction services. The following is an aged analysis of trade payables based on dates of invoices at the end of the reporting period:

		September 30, 2016		December 31, 2015
Trade
0 - 30 days	$	2,360	$	11,093
31 - 60 days		3,790		6,284
61 - 90 days		3,055		3,131
>91days		18,415		2,210
		27,620		22,718
Accruedliabilities		30,538		24,893
	$	58,158	$	47,611

5. Dividends

The Company has not declared or paid any dividends in respect of the three and nine month periods ended September 30, 2016 (three and nine month periods ended September 30, 2015 - $Nil).

SUNSHINE OILSANDS LTD.

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Notes (Continued)

6. Income Taxes

The components of the net deferred income tax asset are as follows:

	September 30, 2016 December 31, 2015
Deferred tax assets (liabilities) Exploration and evaluation assets and property, plant and equipment Decommissioning liabilities Share issue costs Non-capital losses Deferred tax benefits not recognized	$ (119,366) $ (94,478) 15,623 13,947 3,030 6,790 222,146 194,902 (121,433) (121,161)
	$ - $ -

The Company’s non-capital losses of $822,762 (December 31, 2015 - $721,858), expire between 2028 and 2036.

The Company is subject to Canadian federal and provincial tax for the estimated assessable profit at a rate of 27.0%. The Company had no assessable profit in Canada for the three and nine month periods ended September 30, 2016. The Company files all required income tax returns and believes that it is in full compliance with the provisions, tax interpretations, regulations and legislation of the Income Tax Act (Canada) and all applicable provincial tax legislation. However, such returns are subject to reassessment by the applicable taxation authorities. In the event of a successful reassessment, such reassessment may have an impact on current and future taxes payable. The estimated tax deductions available to the Company in Canada are approximately $1.4 billion. The Company’s tax losses will begin expiring in 2028.

The Company’s subsidiary, Sunshine Hong Kong, is subject to Hong Kong profits tax at a rate of 16.5%. No Hong Kong profits tax was provided for as the Company had no assessable profit arising in or derived from Hong Kong for the three and nine month periods ended September 30, 2016.

Review of interim results

The condensed interim consolidated financial statements for the Company for the three and nine month periods ended September 30, 2016, were reviewed by the Audit Committee of the Company and approved by the Board.

Publication of Information

This annual results announcement is published on the websites of SEDAR (www.sedar.com), the SEHK (www.hkexnews.hk) and the Company's website at www.sunshineoilsands.com.

This announcement is prepared in both English and Chinese and in the event of inconsistency, the English text of this announcement shall prevail over the Chinese text.

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2016 (Unaudited)

SUNSHINE OILSANDS LTD.

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NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

SUNSHINE OILSANDS LTD.

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Consolidated Statements of Financial Position

(Expressed in thousands of Canadian dollars) (Unaudited)

	September 30, 2016 December 31, 2015
Assets Notes Current assets Cash 4 Restricted cash and cash equivalents 4 Trade and other receivables 5 Prepaid expenses and deposits 6 Non-current assets Exploration and evaluation 7 Property, plant and equipment 8 Liabilities and Shareholders’ Equity Current liabilities Trade and accrued liabilities 9 Provisions 11 Share purchase warrants 13.2 Current portion of long-term debt 10 Non-current liabilities Provisions 11 Shareholders’ Equity Share capital 13.1 Reserve for share-based compensation Deficit	$ 615 $ 6,545 - 14,389 1,846 2,253 6,750 8,119
	9,211 31,306
	292,877 290,945 683,186 650,930
	976,063 941,875
	$ 985,274 $ 973,181
	$ 58,158 $ 47,611 3,566 3,492 - 3 262,340 266,321
	324,064 317,427 57,862 51,656
	381,926 369,083
	1,221,051 1,174,987 66,169 62,910 (683,872) (633,799)
	603,348 604,098
	$ 985,274 $ 973,181

Going concern (Note 2) Commitments and contingencies (Note 20) Subsequent events (Note 22)

Approved by the Board

“Gerry Stevenson” Director

“Qiping Men” Executive Director

See accompanying notes to the condensed interim consolidated financial statements.

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SUNSHINE OILSANDS LTD.

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in thousands of Canadian dollars, except for per share amounts) (Unaudited)

Notes	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Other income Interest income Gain on sale of assets Fair value adjustment on share purchase warrants (losses)/gains 13.2 Expenses Salaries, consulting and benefits Rent Legal and audit Depreciation 8 Share-based payments 14.2 Finance costs 15 Foreign exchange (gains)/losses 17.6 Contract provision expense 11.2 Other Loss before income taxes Income taxes 12 Net loss and comprehensive loss for the period attributable to equity holders of the Company Basic and diluted loss per share 16	$ 12 $ 36 $ 35 $ 446 - - 2 174 - 987 3 249
	12 1,023 40 869
	1,160 3,128 4,702 8,065 315 381 1,008 1,072 620 803 1,755 1,752 129 157 421 434 2,949 322 2,792 1,276 18,606 10,641 48,619 29,686 1,933 14,950 (12,117) 28,307 - - 142 6,600 864 1,054 2,791 4,051
	$ 26,576 $ 31,436 $ 50,113 $ 81,243
	26,564 30,413 50,073 80,374 - - - -
	$ 26,564 $ 30,413 $ 50,073 $ 80,374
	$ 0.01 $ 0.01 $ 0.01 $ 0.02

See accompanying notes to the condensed interim consolidated financial statements.

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SUNSHINE OILSANDS LTD.

Consolidated Statements of Changes in Shareholders’ Equity (Expressed in thousands of Canadian dollars) (Unaudited)

(Unaudited)
Notes	Reserve for share based compensation Share capital Deficit Total
Balance, December 31, 2015 Net loss and comprehensive loss for the period Issue of common shares 13.1 Recognition of share-based payments 14.2 Issue of shares upon exercise of share options 13.1 Reserve transferred on exercise of share options 13.1 Share Issue costs, net of deferred tax($Nil) 13.1 Balance, September 30, 2016 Balance, December 31, 2014 Net loss and comprehensive loss for the period Issue of common shares Issue of shares under employee share savings plan 13.1 Recognition of share-based payments 14.2 Issue of shares upon exercise of share options 13.1 Reserve transferred on exercise of share options 13.1 Share issue costs, net of deferred tax ($Nil) Balance, September 30, 2015	$ 62,910 $ 1,174,987 $ (633,799) $ 604,098 - - (50,073) (50,073) - 46,136 - 46,136 3,269 - - 3,269 - 15 - 15 (10) 10 - - - (97) - (97)
	$ 66,169 $ 1,221,051 $ (683,872) $ 603,348
	$ 60,658 $ 1,139,022 $ (227,664) $ 972,016 - - (80,374) (80,374) - 22,726 - 22,726 - 711 - 711 1,938 - - 1,938 - 108 - 108 (55) 55 - - - (15) - (15)
	$ 62,541 $ 1,162,607 $ (308,038) $ 917,110

See accompanying notes to the condensed interim consolidated financial statements.

SUNSHINE OILSANDS LTD.

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Consolidated Statements of Cash Flows

(Expressed in thousands of Canadian dollars) (Unaudited)

Notes	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Cash flows from operating activities Net loss Finance costs 15 Unrealized foreign exchange losses/(gains) 17.6 Contract provision expense 11.2 Interest income Gain on sale of assets Fair value adjustment on share purchase warrants 13.2 Depreciation 8 Share-based payment expense 14.2 Employee share savings plan Movement in non-cash working capital 21 Net cash provided by (used in) operating activities Cash flows from investing activities Interest received Payments for exploration and evaluation assets 7 Proceeds from sale of assets 8 Payments for property, plant and equipment 8 Release of restricted cash to fund long-term debt interest payments 4 Movement in non-cash working capital 21 Net cash used in investing activities Cash flows from financing activities Proceeds from issue of common shares 13.1 Payment for share issue costs 13.1 Payment for finance costs 15 Shareholder’s loan repayment 18.1 Movement in non-cash working capital 21 Net cash provided by (used in) financing activities Effect of exchange rate changes on cash held in foreign currency 17.6 Net decrease in cash Cash and cash equivalents, beginning of period Cash and cash equivalents , end of period	$ (26,564) $ (30,413) $ (50,073) $ (80,374) 18,606 10,641 48,619 29,686 2,200 14,374 (12,407) 26,541 - - 75 6,600 (12) (36) (35) (446) - - (2) (174) - (987) (3) (249) 129 157 421 434 2,949 322 2,792 1,276 - 89 - 356 4,302 (1,138) 7,735 (2)
	1,610 (6,991) (2,878) (16,352)
	12 36 35 446 (348) (592) (1,157) (1,231) - - 2 447 (11,690) (36,512) (27,642) (124,688) - 11,509 14,389 21,143 (2,150) 6,004 2,414 (621)
	(14,176) (19,555) (11,959) (104,504)
	31,333 22,882 46,151 23,190 - (15) (97) (15) (15,281) (6,581) (37,700) (18,888) (6,941) - - - 872 (5,931) 1,962 (4,794)
	9,983 10,355 10,316 (507)
	(1,308) 2,882 (1,409) 7,136
	(3,891) (13,309) (5,930) (114,227) 4,506 35,179 6,545 136,097
	$ 615 $ 21,870 $ 615 $ 21,870

See accompanying notes to the condensed interim consolidated financial statements.

SUNSHINE OILSANDS LTD.

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Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine month period ended September 30, 2016 (Expressed in thousands of Canadian dollars, unless otherwise indicated) (Unaudited)

1. Company information

Sunshine Oilsands Ltd. (the “Company”) was incorporated under the laws of the Province of Alberta on February 22, 2007. The address of its principal place of business is 1020, 903 – 8th Avenue S.W., Calgary, Alberta, Canada T2P 0P7. The Company’s shares were listed on the Stock Exchange of Hong Kong Limited (“SEHK”) on March 1, 2012 pursuant to an initial public offering (“IPO”) and trades under the stock code symbol of “2012”. On November 16, 2012, the Company completed a listing of its common shares on the Toronto Stock Exchange (“TSX”) and traded under the symbol of “SUO”. On September 30, 2015, the Company completed a voluntary delisting from the TSX. The Company continues to be a reporting issuer in Canada.

On May 4, 2012, Sunshine Oilsands (Hong Kong) Limited (“Sunshine Hong Kong”) was incorporated in Hong Kong and is a wholly-owned subsidiary of the Company. The address of the principal place of business for Sunshine Hong Kong is Unit 8504A, 85/F, International Commerce Centre 1 Austin Road West, Kowloon.

On July 14, 2015, Boxian Investments Limited (“Boxian”) was incorporated in the British Virgin Islands and is a whollyowned subsidiary of the Company. The address of the principal place of business for Boxian is P.O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. As of September 30, no activity has occurred in Boxian. The purpose of Boxian is to pursue new investment opportunities.

The Company 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. The Company is a development stage company. The continued existence of the Company is dependent on its ability to maintain capital funding for further development and to meet obligations. In the event that such capital is not available to the Company, it will be necessary to prioritize activities, which may result in delaying and potentially losing business opportunities and cause potential impairment to recorded assets.

2. Basis of preparation

Going Concern

These condensed interim consolidated financial statements have been prepared on a going concern basis. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. For the nine month period ended September 30, 2016, the Company reported a net loss of $50.1 million. At September 30, 2016, the Company had negative working capital of $314.9 million including the $262.3 million current portion of the senior secured notes (Note 10) and an accumulated shareholders’ deficit of $683.9 million. The Company’s trade payables total $27.6 million at September 30, 2016. Included in trade payables are $21.5 million of payables that are greater than 60 days. Subsequent to September 30, 2016, the Company raised gross equity proceeds of $11.2 million (Note 22).

The Company’s ability to continue as a going concern is dependent on achieving profitable operations and the ability to refinance current debt and access immediate additional financing. There can be no assurance that the steps management will take will be successful. As such there is significant doubt and there can be no assurance the Company will be able to continue as a going concern.

2.1 Statement of compliance

The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). The condensed interim consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value (Note 17.3). The financial statements have been prepared on the same basis and using the same accounting policies and methods as those used in the annual consolidated financial statements for the year ended December 31, 2015. The condensed interim consolidated financial statements are presented in Canadian Dollars (“$”), which is the functional currency of the Company.

SUNSHINE OILSANDS LTD.

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3. Changes in accounting policies

For the three and nine month period ended September 30, 2016 there has been no change in accounting policy from the policies adopted by the Company in the Consolidated Financial Statements for the year ended December 31, 2015.

4. Cash and cash equivalents

4. Cash and cash equivalents
	September 30, 2016 December 31, 2015
Current asset Cash1 Current restricted cash and cash equivalents2	$ 615 $ 6,545 - 14,389
	$ 615 $ 20,934

The Company’s cash consists of cash held in bank accounts that earn interest at varying interest rates of between 0.1% and 1.55%.
The US$200 million senior secured notes issued in August 2014 required US$30 million of proceeds to be held in a restricted escrow account to cover the first three semi-annual interest payments on the senior secured notes. On February 1, 2016, the third interest payment of US$10 million was paid from the restricted escrow account. There is Nil remaining in the restricted escrow account.

5. Trade and other receivables

5. Trade and other receivables
	September 30, 2016 December 31, 2015
Trade Accruals and other receivables Goods and Services Taxes receivable	$ 1,514 $ 1,184 5 56 327 1,013
	$ 1,846 $ 2,253

As at September 30, 2016, included in the Company’s trade receivables was an aggregate carrying amount of $1.5 million (December 31, 2015 - $1.2 million), which was past due as at the reporting date. The Company does not hold any collateral over these balances.

6. Prepaid expenses and deposits

6. Prepaid expenses and deposits
	September 30, 2016 December 31, 2015
Prepaid expenses Deposits	$ 889 $ 518 5,861 7,601
	$ 6,750 $ 8,119

As at September 30, 2016, the deposits include $5.1 million held with the Alberta Energy Regulator for the Licensee Liability Rating Program (on October 13, 2016, $1.3 million had been refunded). The remaining deposits include ordinary business deposits of $0.8 million.

7. Exploration and evaluation

Balance, December 31, 2014 Capital expenditures Non-cash expenditures1 Impairment Balance, December 31, 2015 Capital expenditures Non-cash expenditures1 Balance, September 30, 2016	$ 379,403 1,375 167 (90,000)
	$ 290,945
	1,157 775
	$ 292,877

Non-cash expenditures include capitalized share-based compensation and decommissioning obligations.

The Company is a development stage entity and, as a result, no depletion expense has been recorded for exploration and evaluation (“E&E”) assets for any period. As at September 30, 2016, the Company did not identify any indicators of further impairment (or reversal of the original impairment recorded at December 31, 2015) of the E&E Assets.

Exploration and evaluation costs (net of impairment) are comprised of the following:

SUNSHINE OILSANDS LTD.

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8. Property, plant and equipment

8. Property, plant and equipment
	Crude oil assets Corporate assets Total
Cost Balance, December 31, 2014 Capital expenditures Disposal of asset Non-cash expenditures1 Balance, December 31, 2015 Capital expenditures Non-cash expenditures1 Balance, September 30, 2016	$ 699,948 $ 3,748 $ 703,696 152,207 1,160 153,367 - (446) (446) 1,693 - 1,693
	$ 853,848 $ 4,462 $ 858,310 27,619 23 27,642 5,035 - 5,035
	$ 886,502 $ 4,485 $ 890,987
1. Non-cash expenditures include capitalized share-based compensation and decommissioning obligations.
	Crude oil assets Corporate assets Total
Accumulated depreciation and impairment Balance, December 31, 2014 Disposal Depreciation expense Impairment Balance, December 31, 2015 Depreciation expense Balance, September 30, 2016 Carrying value, December 31, 2015 Carrying value, September 30, 2016	$ - $ 1,960 $ 1,960 - (173) (173) - 593 593 205,000 - 205,000
	$ 205,000 $ 2,380 $ 207,380 - 421 421
	$ 205,000 $ 2,801 $ 207,801
	$ 648,848 $ 2,082 $ 650,930 $ 681,502 $ 1,684 $ 683,186

At September 30, 2016, the crude oil assets included in the above property, plant and equipment were not subject to depletion since they are not ready for use in the manner intended by management. As at September 30, 2016, the Company did not identify any indicators of further impairment (or reversal of the original impairment recorded at December 31, 2015) of the West Ells CGU.

During the nine month period ended September 30, 2016, the Company capitalized directly attributable costs including $0.5 million for share-based compensation and $2.5 million for general and administrative costs.

9. Trade and accrued liabilities

9. Trade and accrued liabilities
	September 30, 2016 December 31, 2015
Trade Accrued liabilities	$ 27,620 $ 22,718 30,538 24,893
	$ 58,158 $ 47,611
10. Long-term debt
	September 30, 2016 December 31, 2015
Senior secured notes (US$200,000,000) Discount on notes Financing transaction costs on notes Amortization of financing transaction costs and discount Balance, end ofperiod	$ 262,340 $ 276,800 (16,168) (17,159) (11,846) (11,846) 28,014 18,526
	$ 262,340 $ 266,321

SUNSHINE OILSANDS LTD.

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10. Long-term debt (Continued)

premium, then the final maturity date of the Notes would be August 1, 2016. The Company did not meet the requirements listed above by February 1, 2016, and as a result the final maturity date of the Notes was August 1, 2016. The Company has presented the Notes as a current liability on the Condensed Interim Consolidated Statements of Financial Position as at September 30, 2016.

On September 12, 2016, the Company and noteholders representing 96% of the outstanding Notes (the “Forbearing Holders”) entered into a long-term forbearance agreement in respect of the Notes (the “Agreement”). The principal terms of the Agreement include: (a) payment on October 17, 2016 of the yield maintenance premium payment of $19.1 million (Note 20) due on August 1, 2016; (b) payment of the coupon interest accruing on the Notes and repurchase of US$22.5 million in principal amount of the Notes on February 1, 2017; (c) payment of the principal of the Notes and the coupon interest on the Notes on August 1, 2017; (d) payment of forbearance fees accruing at 2.50% on the principal amount of the Notes held by the Forbearing Holders; (e) payment of a fee equal to 7.298% of the outstanding principal amount of the Notes held by the Forbearing Holders on August 1, 2017 and proportionately smaller fees if the Notes are repurchased or redeemed prior to that date; (f) covenants relating to minimum liquidity to be maintained by the Corporation for specified periods; (g) board of director observation rights for certain significant noteholders; (h) use of proceeds restrictions for the proceeds of any asset sales completed by the Corporation; (i) budget approval rights; and (j) requirements that the Corporation raise additional capital and provide additional security for the Notes.

On October 31, 2016, the Company updated the status of the Agreement. In view of the importance of supporting active operations at West Ells while it examines the potential to progress the Memorandum of Understanding with Nobao Energy Holding (China) Company Limited to definitive terms and agreements, the Company initiated discussions with the Forbearing Holders about altering the timing and the form of payment of the yield maintenance premium. As such, the Company has not yet paid the yield maintenance premium to the Forbearing Holders as required by the Agreement. While this constitutes a termination event under the Agreement and entitles the Forbearing Holders to exercise their rights and remedies under the Agreement, the Forbearing Holders have not taken steps to terminate the Agreement or exercise such rights and they have not, at this time, advised of any intention to do so. In addition, the Company has been in discussions with the Forbearing Holders to achieve payment terms for the yield maintenance premium that are mutually acceptable to the Forbearing Holders and the Company.

At September 30, 2016, the Company had incurred $8.9 million (US$6.8 million equivalent using the period end exchange rate) in liens during the ordinary course of business. There is a basket for permitted liens not to exceed US$5.0 million, but the Company was in excess of this US$5.0 million limit as at September 30, 2016. The Note Indenture also permits liens incurred in the ordinary course of business that are imposed by law. It is possible that the US$6.8 million in liens existing as at September 30, 2016 may be sheltered by one or both of these exceptions, but there is also a possibility that the Company is not in compliance with these exceptions as at September 30, 2016. In any event, no Event of Default (as defined in the Note Indenture) has occurred. From time to time, the Company receives liens or claims on accounts payable balances. The Company continues to work toward resolution of any liens or claims.

The Notes are translated into Canadian dollars at the period end exchange rate of $1US = 1.3117CDN.

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SUNSHINE OILSANDS LTD.

11. Provisions

11. Provisions
	September 30, 2016 December 31, 2015
Decommissioning obligations (Note 11.1) Contract provision (Note 11.2) Presented as: Provisions (current) Provisions (non-current)	$ 57,862 $ 51,656 3,566 3,492
	$ 61,428 $ 55,148 $ 3,566 $ 3,492 $ 57,862 $ 51,656

11.1 Decommissioning obligations

As at September 30, 2016, the Company’s share of the estimated total undiscounted cash flows required to settle asset decommissioning obligations was $80.1 million (December 31, 2015 - $81.8 million). Expenditures to settle asset decommissioning obligations are estimated to be incurred up to 2112. Decommissioning costs are based on estimated costs to reclaim and abandon crude oil properties and the estimated timing of the costs to be incurred in future years, discounted using an annual risk-free rate between 0.51% to 1.86% per annum and inflated using an inflation rate of 2.0% per annum.

	September 30, 2016 December 31, 2015
Balance, beginning of period Effect of changes in discount rate Unwinding of discount rate Current portion Balance,end ofperiod	$ 51,656 $ 49,484 5,333 1,117 873 1,055
	$ 57,862 $ 51,656 - -
	$ 57,862 $ 51,656

11.2 Contract provision

As at September 30, 2016, the Company had fully recognized a liability provision related to obligations under a drilling rig contract of $6.8 million (December 31, 2015 - $6.6 million). The $6.8 million represents the maximum obligation required if the drilling rig is not utilized over the remaining term of the contract, which ends in the fourth quarter of 2016. At September 30, 2016, this obligation is broken into a $2.6 million payable and a $3.6 million provision (December 31, 2015 - $3.1 million payable and $3.5 million provision). For the three and nine month period ended September 30, 2016, the Company paid $0.6 million against the obligation. Based on current market conditions and low utilization rates for drilling rigs, management concluded the future benefits of the contract are not currently quantifiable to offset its

12. Income taxes

12.1 Deferred tax balances

The components of the net deferred income tax asset are as follows:

	September 30, 2016 December 31, 2015
Deferred tax assets (liabilities) Exploration and evaluation assets and property, plant and equipment Decommissioning liabilities Share issue costs Non-capital losses Deferred tax benefits not recognized	$ (119,366) $ (94,478) 15,623 13,947 3,030 6,790 222,146 194,902 (121,433) (121,161)
	$ - $ -

SUNSHINE OILSANDS LTD.

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12.2 Tax pools

The following is a summary of the Company’s estimated tax pools:

	September 30, 2016 December 31, 2015
Canadian development expense Canadian exploration expense Undepreciated capital cost Non-capital losses Share issue costs	$ 38,892 $ 42,888 230,919 230,899 264,136 318,168 822,762 721,858 11,222 25,149
	$ 1,367,931 $ 1,338,962

The Company’s non-capital losses of $822,762 (December 31, 2015 - $721,858), expire between 2028 and 2036.

13. Share capital

The Company’s authorized share capital is as follows:

an unlimited number of Class “A” and Class “B” voting common shares without par value; and,
an unlimited number of Class “C”, Class “D”, Class “E” and Class “F” non-voting common shares without par value; and,
an unlimited number of Class “G” and Class “H” non-voting preferred shares.

Issued Capital

Issued Capital
		September 30, 2016		December 31, 2015
Commonshares	$	1,221,051	$	1,174,987

13.1 Common shares

	September 30, 2016 December 31, 2015
	Number of shares $ Number of shares $
Balance, beginning of period Private placements – general mandate Private placements – specific mandate Issue of shares under employee share savings plan Issue of shares under share option plan Share option reserve transferred on exercise of stock options Share issue costs, net of deferred tax ($Nil) Balance, end ofperiod	4,230,264,104 1,174,987 3,896,103,191 1,139,022 147,105,000 8,194 215,037,000 21,214 301,733,333 37,942 111,214,210 14,073 - - 6,834,537 711 241,666 15 1,075,166 108 - 10 - 55 - (97) - (196)
	4,679,344,103 1,221,051 4,230,264,104 1,174,987

Common shares consist of fully paid Class “A” and Class “B” common shares, which have no par value, carry one vote per share and carry a right to dividends.

General mandate

Completion of the Placement is subject to the fulfillment (or waiver) of certain regulatory conditions, which have been met.

SUNSHINE OILSANDS LTD.

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13. Share capital (Continued)

change in the oil price and/or general market conditions and/or the share price of the Company takes place after the date of the Subscription Agreement, the Subscription Agreement may be terminated by the Subscriber by written notice, and in which case, the obligations of the Company and the Subscriber under the Subscription Agreement shall immediately and unconditionally cease and be null and void. There can be no assurance that the Placement will close as described.

On May 16, 2016, the Company announced an extension of the remaining 470,589,500 Common Shares (HK$160,000,430 or CDN$26.0 million) subscribed for by Bright Hope Investments Limited to be closed in one or more remaining tranches, with the last tranche closing no later than June 30, 2016.

On July 4, 2016, the Company announced an extension of the remaining 411,718,500 Common shares (HK$139,984,290 or CDN$23.1 million) subscribed for by Bright Hope be closed in one or more remaining tranches, with the last tranche closing no later than August 31, 2016.

Specific mandate

On June 3, 2016, the Company completed the closing of 13,333,333 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.126 per Common Share). Under which, the Company received total gross proceeds of HK$10,000,000 (approximately CDN$1.68 million). The remaining 400,186,667 Common Shares (HK$300,140,000 or CDN$50.5 million) subscribed for by Prime Union will be closed in one or more tranches with the last tranche closing no later than August 2, 2016.

SUNSHINE OILSANDS LTD.

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13. Share capital (Continued)

On July 21, 2016, the Company completed the closing of 96,400,000 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.126 per Common Share). Upon which, the Company has received total gross proceeds of HK$72,300,000 (approximately CDN$12.2 million). The HK$72.3 million was comprised of HK$30.0 million in cash and HK$42.3 million in repayment of the Loan and the Second Loan plus interest due at July 19, 2016.

On July 31, 2016, the Company completed the closing of 152,000,000 Common Shares at a price of HK$0.75 per Common Share (approximately CDN$0.126 per Common Share). Under which, the Company has received total gross proceeds of HK$114,000,000 (approximately CDN$19.2 million). The remaining 111,786,667 Common Shares (HK$83,840,000 or CDN$14.09 million) subscribed for by Prime Union will be closed in one or more tranches.

Post-IPO stock option plan

13.2 Share purchase warrants

*13.2 Share purchase warrants*
	September 30, 2016	December 31, 2015
Balance, beginning of period Expired Balance, end of period Exercisable, end ofperiod	Number of warrants Weighted average exercise price $ 132,910,941 0.34 (132,910,941) 0.34 - - - -	Number of warrants Weighted average exercise price $ 211,230,941 0.28 (78,320,000) 0.34 132,910,941 0.34 132,910,941 0.34

During the nine month period ended September 30, 2016, 132,910,941 remaining share purchase warrants expired. As at September 30, 2016, the share purchase warrants outstanding had a weighted average remaining contractual life of Nil years (December 31, 2015 – 0.12 years).

The table below details the fair value of warrants during the periods noted:

	September 30, 2016 December 31, 2015
Balance, beginning of period Fair value adjustment Balance, end ofperiod	$ 3 $ 382 (3) (379)
	$ - $ 3

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SUNSHINE OILSANDS LTD.

14. Share-based compensation

14.1 Movements in stock options

The following reconciles the stock options outstanding at the beginning and end of each period:

	Nine months ended Year ended September 30, 2016 December 31, 2015
Balance, beginning of period Granted Exercised Forfeited Expired Balance, end of period Exercisable,end ofperiod	Number of options Weighted average exercise price $ Number of options Weighted average exercise price $ 95,554,786 0.31 135,727,289 0.30 208,906,966 0.09 9,065,387 0.12 (241,666) 0.06 (1,075,166) 0.10 (29,363,784) 0.39 (20,121,953) 0.20 (8,341,672) 0.39 (28,040,771) 0.28
	266,514,630 0.13 95,554,786 0.31
	121,032,949 0.16 71,686,715 0.35

As at September 30, 2016, stock options outstanding had a weighted average remaining contractual life of 4.4 years (December 31, 2015 – 2.9 years).

The table below details the input variables used in the Black-Scholes model to determine the fair value of options granted in the year for share-based compensation:

	Nine months ended	Year Ended
Input Variables	September 30,2016	December 31, 2015
Grant date share price ($)	0.058-0.10	0.10-0.14
Exercise Price ($)	0.058-0.10	0.10-0.14
Expected volatility (%)	66.36-69.46	67.01-73.99
Option life (years)	3.76-4.07	4.10-4.11
Dividend yield (%)	-	-
Risk-free interest rate (%)	0.56-0.70	0.68-0.90
Expected forfeitures(%)	13.39-14.61	11.01-11.51

14.2 Share-based compensation

Share-based compensation has been recorded in the condensed interim consolidated financial statements for the periods presented as follows:

		Three months ended		Three months ended
		September 30, 2016		September 30, 2015
	Expensed	Capitalized Total	Expensed	Capitalized Total
Stock options	$ 2,949	$ 344 $ 3,293	$ 322	$ 27 $ 349

		Nine months ended		Nine months ended
		September 30, 2016		September 30, 2015
	Expensed	Capitalized Total	Expensed	Capitalized Total
Stock options	$2,792	$477 $3,269	$1,276	$662$1,938

SUNSHINE OILSANDS LTD.

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15. Finance costs

15. Finance costs
	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Interest expense on senior notes Interest expense on shareholder’s loan Amortization of financing transaction costs and discount Redemption/yield maintenance premium Financing related costs Unwinding of discounts on provisions	$ 7,788 $ 6,547 $ 20,402 $ 18,899 - - 136 - 2,962 3,781 10,046 10,006 5,078 34 14,319 (11) 2,415 1 2,843 1 363 278 873 791
	$ 18,606 $ 10,641 $ 48,619 $ 29,686

16. Loss per share

The weighted average number for basic Class “A” common shares for the periods presented is in the following table. Other than Class “A” common shares, all equity instruments have been excluded in calculating the diluted loss per share as they were anti-dilutive, considering the Company was in a loss position for the periods presented.

	For the three months ended	For the three months ended	For the nine months ended	For the nine months ended
		September 30,		September 30,
	2016	2015	2016	2015
Basic and Diluted – Class “A” common
shares	4,383,034,931	3,952,611,155	4,684,808,125	3,916,769,065

17. Financial instruments

17.1 Capital risk management

The Company can be exposed to financial risks on its financial instruments and in the way that it finances its capital requirements. The Company manages these financial and capital structure risks by operating in a manner that minimizes its exposure to volatility.

The Company’s strategy is to access sufficient capital, through equity issuances, joint ventures, asset sales and the utilization of debt, in order to maintain a capital base for the objectives of maintaining financial flexibility and to sustain the future development of the business. The Company manages its capital structure in order to continue as a going concern and makes adjustments relative to changes in economic conditions and the Company’s risk profile. In order to manage risk, the Company may from time to time issue shares and adjust its capital spending to manage current working capital levels. The Company expects its current capital resources will not be sufficient to complete its development plans through the next twelve months and will be required to raise additional funds through future equity or debt financings, a joint venture or a sale of assets. The Company’s ability to continue as a going concern is dependent on achieving profitable operations and the ability to refinance current debt and access immediate additional financing.

The Company’s capital structure currently includes shareholders’ equity and working capital deficiency as follows:

	September 30, 2016 December 31, 2015
Working capital deficiency Shareholders’ equity	$ 314,853 $ 286,121 603,348 604,098
	$ 918,201 $ 890,219

The working capital deficiency of $314.9 million at September 30, 2016 (December 31, 2015 – $286.1 million), includes the $262.3 million (December 31, 2015 - $266.3 million) current portion of the Notes. There was no change in the Company’s objectives and strategies of capital management for the nine month period ended September 30, 2016.

SUNSHINE OILSANDS LTD.

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17.2 Categories of financial instruments

*7.2 Categories of financial instruments*
	September 30, 2016		December 31, 2015
	Carrying	Fair value	Carrying	Fair value
	amount		amount
Financial assets
Cash, restricted cash and cash
equivalents, deposits and other
receivables	$ 8,322	$ 8,322	$ 30,788	$ 30,788
Financial liabilities
Other liabilities	58,158	58,158	47,611	47,611
Share purchase warrants (Note 13.2)	-	-	3	3
Long-term debt (current portion)	262,340	262,340	266,321	228,025

17.3 Fair value of financial instruments

Level 1 fair value measurements are based on quoted prices in active markets. Level 2 fair value measurements are based on valuation models and techniques where the significant inputs are derived from quoted prices or indices. Level 3 fair value measurements are based on unobservable information.

The fair value of cash, restricted cash and cash equivalents, deposits, trade and other receivables, trade and accrued liabilities and the shareholder loan approximate their carrying values due to their short term maturity and were assessed on a level 1 fair value measurement.

The fair value of share purchase warrants and long term debt have been assessed on a level 2 fair value measurement.

17.4 Financial risk management

Financial risks include market risk (including currency risk, interest rate risk, and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Company does not use any derivative financial instruments to mitigate these risk exposures. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

17.5 Market risk

Market risk is the risk that changes in market prices will affect the Company’s net loss. The objective of market risk management is to manage and control market risk exposures within acceptable limits. There have been no changes over the prior year to the Company’s objectives, policies or processes to manage market risks.

Commodity price risk is the risk that the value of future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for petroleum are impacted by world economic events that dictate the levels of supply and demand. The Company has not attempted to mitigate commodity price risk through the use of various financial derivative or physical delivery sales contracts.

17.6 Currency risk

The Company is exposed to risks arising from fluctuations in foreign currency exchange rates. Thus, exchange rate fluctuations can affect the fair value of future cash flows. This exposure primarily relates to certain expenditure commitments, deposits, accounts payable and long term debt which are denominated in US dollars and/or HK dollars. The Company manages this risk by monitoring foreign exchange rates and evaluating their effects on using Canadian or U.S. vendors as well as timing of transactions. The Company had no forward exchange rate contracts in place as at or during the three and nine month periods ended September 30, 2016. If exchange rates to convert from US dollars to Canadian dollars had been one percent higher or lower with all other variables held constant, foreign cash and restricted cash held at September 30, 2016 would have been impacted by $Nil and the carrying value of the long term debt at September 30, 2016 would have been impacted by approximately $2.6 million. At September 30, 2016, the Company held approximately US $Nil of restricted cash and US$0.1 million or $0.1 million of cash, using the September 30, 2016 exchange rate of 1.3117, as cash, restricted cash and cash equivalents in the Company’s US bank account.

SUNSHINE OILSANDS LTD.

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17.6 Currency risk

The following table summarizes the components of the Company’s foreign exchange (gains)/losses:

For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Unrealized foreign exchange loss (gain) on translation of:
U.S. denominated senior secured notes	$ 541 $ 17,259 $ (14,028) $ 33,637
H.K. denominated shareholder loan	335 - - -
Foreign currency denominated cash balances	1,308 (2,882) 1,409 (7,136)
Foreign currency denominated accounts payable
balances 16 (3) 212 40
	2,200 14,374 (12,407) 26,541
Realized foreign exchange loss(gain)	(267) 576 290 1,766
Total foreign exchange loss (gain)	$ 1,933 14,950 $ (12,117) 28,307

17.7 Interest rate risk management

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. As at September 30, 2016, the Company does not have any floating rate debt.

The Company’s cash consists of cash held in bank accounts that earn interest at varying interest rates. Future cash flows from interest income on cash will be affected by interest rate fluctuations. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have a significant impact on estimated fair values or result in material interest rate risk. The Company manages interest rate risk by maintaining an investment policy that focuses primarily on preservation of capital and liquidity. For the three and nine month periods ended September 30, 2016, the interest rate earned on cash was between 0.1% and 1.55%.

17.8 Credit risk management

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s cash, deposits and receivables and GST receivables. As at September 30, 2016, the Company’s receivables consisted of 18% from Goods and Services Tax receivable, 58% joint interest billing receivable and 24% from other receivables (December 31, 2015 – 45% from Goods and Services Tax receivable, 39% from joint interest billing receivable and 16% from other receivables).

The Company's unrestricted cash as at September 30, 2016, is held in accounts with third party financial institutions and consists of invested cash and cash in the Company's operating accounts.

At September 30, 2016, there was no allowance for doubtful accounts receivable and the Company did not provide for any doubtful accounts nor was it required to write-off any receivables, as no receivables were considered impaired (December 31, 2015 - $Nil). The Company considers any amounts outstanding in excess of 30 days past due.

17.9 Liquidity risk management

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to plan that it will have sufficient liquidity to meet its liabilities when due, using either equity or debt proceeds. At September 30, 2016, the Company had negative working capital of $314.9 million and an accumulated deficit of $683.9 million. The Company’s ability to continue as a going concern is dependent on achieving profitable operations and the ability to refinance current debt and access additional financing.

The Company utilizes authorizations for expenditures to manage its planned capital expenditures and actual expenditures are regularly monitored and modified as considered necessary.

SUNSHINE OILSANDS LTD.

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17.9 Liquidity risk management (Continued)

The timing of cash outflows (excluding interest) relating to financial liabilities as at September 30, 2016, are as follows:

		Total		90 days		Less than 1year
Trade and accrued liabilities	$	58,158	$	23,238	$	34,920
Debt1		262,340		-		262,340
	$	320,498	$	23,238	$	297,260

Principal amount of Notes based on the period end exchange rate of $1 US = 1.3117CDN

18. Related party transactions

Balances and transactions between the Company and its subsidiaries, who are related parties, have been eliminated on consolidation.

18.1 Trading transactions

The Company’s Executive Chairman, Mr. Kwok Ping Sun, has purchased securities of the Company (Note 13.1) , and he has also loaned the Company funds on an unsecured basis.

On July 31, 2016, the Loan and Second loan, (principle and interest) were converted into the equity through private placements (Note 13). As at September 30, 2016, both the Loan and Second loan balance are Nil.

18.2 Compensation of key management personnel and directors

The remuneration of the directors and key management executives is determined by the Compensation Committee and consists of the following amounts:

	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Directors’ fees1 Salaries and allowances Share-based payments	$ 172 $ 185 $ 513 $ 348 428 1,308 2,048 2,662 2,772 242 2,872 722
	$ 3,372 $ 1,735 $ 5,433 $ 3,732

Refer to appendix A2 for additional director fees disclosure.

SUNSHINE OILSANDS LTD.

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19. Operating lease arrangements

Payments recognised as an expense

		For the three	months ended			For the nine	months	ended
		September 30,				September 30,
		2016		2015		2016		2015
Minimum leasepayments	$	467	$	595	$	1,507	$	1,720

20. Commitments and contingencies

As at September 30, 2016, the Company’s commitments are as follows:

	Total 2016 2017 2018 2019 Thereafter
Repayment of long-term debt1 Interest payments on long-term debt2 Redemption premium3 Drilling, other equipment and contracts Lease rentals4 Office leases	$ 262,340 - 262,340 - - - 32,530 - 32,530 - - - 19,146 - 19,146 - - - 6,600 6,294 224 82 - - 8,399 301 1,250 1,250 1,243 4,355 6,898 780 2,893 2,580 645 -
	$ 335,913 7,375 318,383 3,912 1,888 4,355

Principal amount of Notes based on the period end exchange rate of $1US=1.3117CDN and a maturity date of August 1, 2017.
Based on 10% on principal amount and 2.5% on the principal amount of the notes held by the Forbearing Holders per annum and a maturity date of August 1, 2017, at the period end exchange rate of $1US=1.3117CDN.
The redemption premium is based on the maximum premium paid if the Notes mature on August 1, 2017. This premium (Yield Maintenance Premium) percentage is 7.298% of the aggregate principal amount of the Notes outstanding on August 1, 2017. Using the period end exchange rate of $1US=1.3117CDN this premium amounts to $19,146. At September 30, 2016, the Company had the option to redeem the Notes at 0.583% of the aggregate principal amount of the Notes outstanding which amounts to $1,529 using the period end exchange rate. The Company can redeem the Notes at any time up to the August 1, 2017 maturity date, following the optional redemption schedule set out in the Notes indenture.
The Company has an annual obligation for oil sands mineral lease rentals and surface lease rentals.

The Company has been named as a Defendant in Court of Queen’s Bench of Alberta Judicial District of Calgary, commenced by a shareholder of the Company (the “Claimant”) by Statement of Claim (the “Action”) filed January 2, 2014. The Claimant alleges that, pursuant to a share subscription agreement entered into in January 2011, it is entitled to require the Company to repurchase 4,132,232 shares (prior to the 20:1 share split that occurred prior to the Company’s IPO) of the Company that the Claimant acquired pursuant to the Share Subscription Agreement. This constitutes a claim for $40 million plus interest at 15% per annum since the date of the share subscription agreement. The Company’s Statement of Defence was filed on April 2, 2014. The Claimant’s application for summary judgment was heard on February 2 and 3, 2016. The summary judgment application was dismissed on February 3, 2016. No amounts have been accrued in the consolidated financial statements for the three and nine month period ended September 30, 2016 as the ultimate resolution is undeterminable at this time. The Company will record a provision if it believes that the outcome of the contingency becomes probable and can be reasonably estimated.

In the normal conduct of operations, there are other pending claims by and against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance.

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SUNSHINE OILSANDS LTD.

21. Supplemental cash flow disclosures

Non-cash transactions

For the three and nine month periods ended September 30, 2016 and September 30, 2015, the Company had the following non-cash transactions:

 Capitalized general and administrative costs including share-based compensation and finance costs (Notes 7 and 8).

	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Cash provided by (used in): Trade and other receivables Prepaid expenses and deposits Trade and other payables Changes in non-cash working capital relating to: Operating activities Trade and other receivables Prepaid expenses and deposits Trade and other payables Investing activities Exploration and evaluation Property, plant and equipment Financing activities Share issue costs and finance costs	$ (428) $ 805 $ 407 $ (89) (398) (1,984) 1,369 (1,858) 3,850 114 10,335 (3,470)
	$ 3,024 $ (1,065) $ 12,111 $ (5,417)
	$ (212) $ 80 $ (142) $ (168) (398) (1,984) 1,369 (1,858) 4,912 766 6,508 2,024
	$ 4,302 $ (1,138) $ 7,735 $ (2)
	$ - $ - $ - $ - (2,150) 6,004 2,414 (621)
	$ (2,150) $ 6,004 $ 2,414 $ (621)
	$ 872 $ (5,931) $ 1,962 $ (4,794)
	$ 3,024 $ (1,065) $ 12,111 $ (5,417)

22. Subsequent events

On October 13, 2016, as a deposit refund $1.3 million was received from the Alberta Energy Regulator for the Licensee Liability Rating Program (Note 6).

SUNSHINE OILSANDS LTD.

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22. Subsequent events (Continued)

On October 31, 2016, the Company announced an extension of the remaining 250,247,912 Common Shares (approximately HK$85,084,290 or CDN$14.69 million) subscribed for by Bright Hope Investments Limited to be closed in one or more remaining tranches, with the last tranche closing no later than January 31, 2017. The Company believes that the extension is in the best interests of the Company and Shareholders.

On October 31, 2016, the Company updated the status of the long term forbearance agreement with its note holders dated September 9, 2016 (the “Agreement”). In view of the importance of supporting active operations at West Ells while it examines the potential to progress the Memorandum of Understanding with Nobao Energy Holding (China) Company Limited to definitive terms and agreements, the Company initiated discussions with the forbearing holders about altering the timing and the form of payment of the yield maintenance premium. As such, the Company has not paid the yield maintenance premium to the forbearing holders as required by the Agreement. While this constitutes a termination event under the Agreement and entitles the forbearing holders to exercise their rights and remedies under the Agreement, the forbearing holders have not taken steps to terminate the Agreement or exercise such rights and they have not, at this time, advised of any intention to do so. In addition, the Company has been in discussions with the forbearing holders to achieve payment terms for the yield maintenance premium that are mutually acceptable to the forbearing holders and the Company.

23. Approval of consolidated financial statements

The condensed interim consolidated financial statements were approved by the Board of Directors and authorized for issue on November 9, 2016.

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SUNSHINE OILSANDS LTD.

Appendix to the condensed interim consolidated financial statements (Unaudited)

Additional Stock Exchange Information

Additional information required by the SEHK and not shown elsewhere in these condensed interim consolidated financial statements is as follows:

A1. Sunshine Oilsands Ltd. Non-Consolidated Statement of Financial Position

The Company’s statement of financial position is on a non-consolidated basis which excludes the Company’s wholly owned subsidiaries Sunshine Hong Kong and Boxian.

	September 30, 2016 December 31, 2015
Non-current assets Property, plant and equipment Exploration and evaluation assets Amounts due from subsidiary Current assets Trade and other receivables Prepaid expenses and deposits Cash Restricted cash and cash equivalents Current liabilities Trade and other payables Provisions Share purchase warrants Amount due to subsidiary Debt Net current assets Total assets less current liabilities Non-current liabilities Provisions Net assets Capital and reserves Share capital Reserve for share-based compensation Deficit	$ 683,185 $ 650,929 292,877 290,945 4,167 3,650
	980,229 945,524
	1,846 2,253 6,750 8,119 401 5,559 - 14,389
	8,997 30,320
	58,141 47,575 3,566 3,492 - 3 3,057 2,692 262,340 266,321
	327,104 320,083
	(318,107) (289,763)
	662,122 655,761
	57,862 51,656
	$ 604,260 $ 604,105
	$ 1,221,051 $ 1,174,987 66,169 62,910 (682,960) (633,792)
	$ 604,260 $ 604,105

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SUNSHINE OILSANDS LTD.

A2. Directors’ emoluments and other staff costs

The Directors’ emoluments and other staff costs are broken down as follows:

	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Directors’ emoluments Directors’ fees Salaries and allowances Share-based payments Other staff costs Salaries and other benefits Contribution to retirement benefit scheme Share-based payments Total staff costs, including directors’ emoluments Less: staff costs capitalized to qualifying assets	$ 172 $ 185 $ 513 $ 348 388 709 1,843 1,584 2,787 184 2,872 530
	3,347 1,078 5,228 2,462
	1,090 3,573 4,045 9,966 26 31 219 283 507 165 397 1,408
	1,623 3,769 4,661 11,657

	4,970 4,847 9,889 14,119
	(861) (1,397) (2,395) (4,778)
	$ 4,109 $ 3,450 $ 7,494 $ 9,341

A3. Directors’ emoluments

Details of the Directors’ emoluments are as follows:

	For the three months ended September 30, 2016
Name of Director	Directors’ fees Salaries and allowances Contribution to retirement benefits scheme Share-based compensation Performance related incentive payments Total
Kwok Ping Sun Michael Hibberd Hong Luo Qi Jiang Qiping Men Tseung Hok Ming Jianzong Chen Jimmy Hu Zhefei Song Robert Herdman Gerald Stevenson Raymond Fong Yi He Joanne Yan Xijuan Jiang	$ 22 $ - $ - $ 806 $ - $ 828 20 - - 836 - 856 13 129 - 351 - 493 14 136 - 366 - 516 14 123 - 352 - 489 - - - - - - 10 - - 12 - 22 - - - - - - - - - - - - - - - - - - 19 - - 14 - 33 15 - - 14 - 29 16 - - 12 - 28 15 - - 12 - 27 14 - - 12 - 26
	$172 $388 $- $2,787 $- $3,347

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SUNSHINE OILSANDS LTD.

A3. Directors’ emoluments (Continued)

	For the three months ended September 30, 2015
Name of Director	Directors’ fees Salaries and allowances Contribution to retirement benefits scheme Share-based compensation1 Performance related incentive payments Total
Michael Hibberd Tseung Hok Ming Tingan Liu Haotian Li Raymond Fong Robert Herdman Gerald Stevenson Jimmy Hu Zhefei Song Hong Luo Qi Jiang Kwok Ping Sun	$ 22 $ 75 $ - $ 79 $ - $ 176 15 - - 6 - 21 - - - - - - 12 - - 6 - 18 16 - - 6 - 22 19 - - 6 - 25 18 - - 6 - 24 13 - - - - 13 17 - - - - 17 16 107 - 17 - 140 16 527 - 58 - 601 21 - - - - 21
	$ 185 $ 709 $ - $ 184 $ - $ 1,078

	For the nine months ended September 30, 2016
Name of Director	Directors’ fees Salaries and allowances Contribution to retirement benefits scheme Share-based compensation Performance related incentive payments Total
Kwok Ping Sun Michael Hibberd Hong Luo Qi Jiang Qiping Men Tseung Hok Ming Jianzong Chen Jimmy Hu Zhefei Song Robert Herdman Gerald Stevenson Raymond Fong Yi He Joanne Yan Xijuan Jiang	$ 60 $ - $ - $ 806 $ - $ 866 60 - - 895 - 955 39 397 - 364 - 800 45 1,059 - 407 - 1,511 14 387 - 368 - 769 26 - - (26) - - 30 - - 12 - 42 22 - - - - 22 30 - - - - 30 38 - - (26) - 12 54 - - 18 - 72 50 - - 18 - 68 16 - - 12 - 28 15 - - 12 - 27 14 - - 12 - 26
	$ 513 $1,843 $- $2,872 $- $ 5,228

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SUNSHINE OILSANDS LTD.

A3. Directors’ emoluments (Continued)

	For	the nine months ended September 30, 2015	the nine months ended September 30, 2015	the nine months ended September 30, 2015	the nine months ended September 30, 2015
			Contribution			Performance
		Salaries and	to retirement	Share-based		related
Name of Director	Directors’	allowances	benefits	compensation2		incentive	Total
	fees		scheme			payments
Michael Hibberd	$ 67	$ 298	$ -	$	231	$ -	$ 596
Tseung Hok Ming	45	-	-		18	-	63
Tingan Liu1	(178)	-	-		-	-	(178)
Haotian Li	36	-	-		18	-	54
Raymond Fong	52	-	-		18	-	70
Robert Herdman	60	-	-		18	-	78
Gerald Stevenson	59	-	-		18	-	77
Jimmy Hu	37	-	-		-	-	37
Zhefei Song	48	-	-		-	-	48
Hong Luo	46	107	-		48	-	201
Qi Jiang	49	1,179	-		161	-	1,389
Kwok PingSun	27	-	-		-	-	27
	$ 348	$ 1,584	$ -	$	530	$ -	$ 2,462

Upon receipt of a waiver from Mr. Liu, all prior period director entitlement accruals were reversed.

A4. Five highest paid individuals

The five highest paid individuals were within the following emolument bands:

	For the three months	ended	For the nine months	ended
	September 30,		September 30,
	2016	2015	2016	2015
HK$ nil to HK$1,000,000	1	2	-	-
HK$1,000,001 to HK$1,500,000	-	1	1	-
HK$1,500,001 to HK$2,000,000	-	-	-	2
HK$2,000,001 to HK$2,500,000	-	-	-	-
HK$2,500,001 to HK$3,000,000	2	1	-	-
HK$3,000,001 to HK$3,500,000	1	-	-	-
HK$3,500,001 to HK$4,000,000	-	1	-	1
HK$4,000,001 to HK$4,500,000	-	-	-	1
HK$4,500,001 to HK$5,000,000	1	-	2	-
HK$5,000,001 to HK$5,500,000	-	-	1	-
HK$5,500,001 to HK$6,000,000	-	-	-	-
HK$6,000,001 to HK$6,500,000	-	-	-	-
HK$6,500,001 to HK$7,000,000	-	-	-	-
> HK$7,000,000	-	-	1	1

For the three and nine month periods ended September 30, 2016, respectively, the conversion factor used in the above table is 1C$ = 5.94 HK$ and 1C$ = 5.88 HK$ (three and nine month periods ended September 30, 2015 1C$ = 5.92 HK$ and 1C$ = 6.15 HK$)

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SUNSHINE OILSANDS LTD.

A4. Five highest paid individuals (Continued)

The five highest paid individuals includes four directors of the Company and one key management executives of the Company for the three and nine month periods ended September 30, 2016 (three and nine month periods ended September 30, 2015– two directors and three officers). Since the directors’ emoluments are disclosed above, the compensation of the one key management executives for the Company is as follows:

	For the three months ended September 30, For the nine months ended September 30, 2016 2015 2016 2015
Salaries and other benefits Contributions to retirement benefits scheme Share-based payments	$ 40 $ 599 $ 205 $ 1,073 - - - 5 (15) 58 - 192
	$ 25 $ 657 $ 205 $ 1,270

A5. Senior management remuneration by band

The emoluments fell within the following bands:

	For the three months	ended	For the nine months	ended
	September 30,		September 30,
	2016	2015	2016	2015
HK$ nil to HK$1,000,000	1	6	-	3
HK$1,000,001 to HK$1,500,000	-	2	1	3
HK$1,500,001 to HK$2,000,000	-	-	-	-
HK$2,000,001 to HK$2,500,000	-	-	-	-
HK$2,500,001 to HK$3,000,000	2	-	-	1
HK$3,000,001 to HK$3,500,000	1	-	-	-
HK$3,500,001 to HK$4,000,000	-	-	-	-
HK$4,000,001 to HK$4,500,000	-	-	-	-
HK$4,500,001 to HK$5,000,000	1	-	2	-
HK$5,000,001 to HK$5,500,000	-	-	1	-
HK$5,500,001 to HK$6,000,000	-	-	-	-
HK$6,000,001 to HK$6,500,000	-	-	-	-
HK$6,500,001 to HK$7,000,000	-	-	-	-
> HK$7,000,000	-	-	1	-

The table above includes the remuneration for the executive directors and executive officers of the Company. As at September 30, 2016, $0.7 million (2015 - $0.6 million) was the total payable to five members (2015- five members) of senior management and included in trade and accrued liabilities.

AI assistant

Sunshine Oilsands Ltd. — Interim / Quarterly Report 2016

50340_rns_2016-11-10_f4789287-acbc-4837-8448-fe83747d52a4.pdf

SUNSHINE OILSANDS LTD. 陽光油砂有限公司 *

ANNOUNCEMENT OF RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2016 AND AN UPDATE ON WEST ELLS PROGRESS

Sunshine Oilsands Ltd. Announcement of Results for the Third Quarter Ended September 30, 2016 and an Update on West Ells Progress

MESSAGE TO SHAREHOLDERS

Sunshine’s Capital Raising Activities

General mandate

Specific mandate

Summary of Financial Figures

2016 Outlook

Qiping Men

ABOUT SUNSHINE OILSANDS LTD.

FORWARD LOOKING INFORMATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

SUNSHINE OILSANDS LTD.

Management's Discussion and Analysis

Forward‐Looking Information

Overview

SUNSHINE OILSANDS LTD.

Overview (Continued)

Operational Update

West Ells

Thickwood and Legend

Muskwa and Godin Clastics Operations (Non-Operated 50% working interest)

Non-IFRS Financial Measures

Non-IFRS Financial Measures (Continued)

Operational and Financial Highlights

Operational and Financial Highlights (Continued)

SUNSHINE OILSANDS LTD.

Operational and Financial Highlights (Continued)

Summary of Quarterly Results

Results of Operations

Finance Costs

General and Administrative Costs

Contract Provision

Share-based Compensation

Share-based Compensation (Continued)

Other Income

Depreciation and Impairment

Income Taxes

Liquidity and Capital Resources

Liquidity and Capital Resources (Continued)

SUNSHINE OILSANDS LTD.

Liquidity and Capital Resources (Continued)

Cash Flows Summary

Operating Activities

Investing Activities

Financing Activities

Commitments and Contingencies

Transactions with Related Parties

SUNSHINE OILSANDS LTD.

Transactions with Related Parties (Continued)

Off-balance Sheet Arrangements

Subsequent Events

SUNSHINE OILSANDS LTD.

Changes in Accounting Policies

Critical Accounting Judgments and Key Sources of Estimation Uncertainty

Going Concern

Joint Control

Oil and Gas Reserves

SUNSHINE OILSANDS LTD.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty (Continued)

Impairment of Non-financial Assets

Recoverability of Exploration and Evaluation costs

Decommissioning Costs

Share Purchase Warrants

Share-based Compensation

Fair Value Measurement

Deferred Income Taxes

SUNSHINE OILSANDS LTD.

Risk Factors

Disclosure Controls and Procedures

Internal Controls over Financial Reporting

Internal Controls over Financial Reporting

Additional Stock Exchange Information

Code of Corporate Governance Practice (the “Code”)

Compliance with the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”)

SUNSHINE OILSANDS LTD.

Sunshine Oilsands Ltd. Interim / Quarterly Report 2016