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 FIRST QUARTER ENDED MARCH 31, 2017 AND AN UPDATE ON WEST ELLS PROGRESS

Sunshine Oilsands Ltd. is pleased to announce its financial results for the first quarter ended March 31, 2017 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, May 12, 2017 Calgary, May 11, 2017

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. Linna Liu and Ms. Xijuan Jiang as non- executive 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

Announcement of Results for the First Quarter ended March 31, 2017 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 first quarter ended March 31, 2017. The Corporation’s condensed consolidated interim financial statements, notes to the condensed consolidated interim 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

On March 1, 2017, the Corporation achieved a key milestone. The Project commenced commercial production. Hence, effective March 1, 2017, the Corporation started recording revenue, expenses and depletion of the West Ells Project in the Statement of Operations and Comprehensive Loss. For one month ended March 31, 2017, the average bitumen production was 1,796 barrels per day (“bbls/day”), steam to oil ratio (“SOR”) was 4.8 at this early stage of steam-assisted gravity drainage (“SAGD”) production. Diluent is blended at a 21% volumetric rate with the bitumen as part of the production process to create the marketable “Dilbit” blend product, and the average dilbit sales volume was 2,272 bbls/day.

Sunshine’s Capital Raising Activities

On January 17, 2017 the Corporation entered into a subscription agreement for a total of 60,000,000 class “A” common shares at a price of HKD $0.262 per share (approximately CAD $0.045 per common share), for gross proceeds of HKD $15.7 million (approximately CAD $2.7 million). On January 24, 2017 the Corporation completed the closing of this subscription agreement. In addition, a placing commission of HKD $117,900 (approximately CAD $0.02 million), was incurred in relation to the Closing.

On March 16, 2017 the Corporation entered into a subscription agreement for a total of 247,350,000 class “A” common shares at a price of HKD $0.283 per share (approximately CAD $0.050 per common share), for gross proceeds of HKD $70 million (approximately CAD $12.1 million). On March 24, 2017 the Corporation completed the closing of this subscription agreement. In addition, a placing commission of HKD $525,000 (approximately CAD $0.09 million), was incurred in relation to the Closing.

On December 28, 2016, the Corporation entered into a subscription agreement with Zhengwei International Investment and Management Co., Limited (“Zhengwei”) under which Zhengwei agreed to subscribe for a total of up to 150,000,000 Class “A” Common Voting Shares of the Corporation (“Common Shares”) at a price of HKD $0.29 per Common Share or approximately CAD $0.048 per Common Share, which in the aggregate amounts to gross proceeds of HKD $43.5 million (approximately CAD $7.6 million). On March 28, 2017, the Corporation completed the closing of 40,000,000 Common Shares HKD $0.29 (approximately CAD $0.050 per Common Share). The Corporation received total gross proceeds of HKD $11.6 million (approximately CAD $2.0 million). The subscription agreement expired on the March 28, 2017 and hence the time for the completion of the remaining 110,000,000 Common Shares has lapsed.

Subsequent to March 31, 2017, on April 5, 2017, the Corporation entered into a Debt Settlement Agreement with a creditor for CDN $5.9 million. On April 13, 2017 the Corporation completed the closing a total of 147,874,000 shares to the Creditor at an issue price of HKD $0.241 per Common Shares (approximately CAD $0.041 per Common Share) pursuant to the terms and conditions of the Debt Settlement Agreement. The issued Common Shares in this transaction are subject to a four months holding period.

Summary of Financial Figures

The Corporation’s external auditor has not performed a review of the condensed consolidated interim financial statements for the three months ended March 31, 2017. As at March 31, 2017 and December 31,

2016, the Corporation notes the following selected balance sheet figures.

(Canadian $000s)		March 31,	December 31,	December 31,
		2017		2016
Cash	$	12,876	$	13,635
Prepaid expense and deposits		2,259		5,054
Exploration and evaluation assets		292,237		291,716
Property, plant and equipment		688,488		684,531
Total liabilities		396,904		390,135
Shareholders’ equity		603,580		607,455

For the first quarter of 2017, the Corporation had a net loss of $21.2 million compared to $2.8 million for the same period in 2016, representing a net loss per share of $0.004 for the 2017 period and $0.001 for the 2016 period.

2017 Outlook

Due to the extensive damage associated with the disastrous wild fire in Fort McMurray in May 2016, start up at West Ells was interrupted and delayed. Significant progress has been achieved since then. On March 1, 2017, the West Ells Phase I project commenced commercial production. The West Ells Phase I project is expected to ramp up to its Phase I design capacity of 5,000 bbls/day. The Corporation continues to focus on carefully improving production performance and developing SAGD chambers, which will increase production at West Ells.

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 plans and expectations of the Corporation; and (c) the anticipated closings of the current private placements and the timing thereof. Such forward-looking information is subject to various risks, uncertainties and other factors. All statements other than statements and information of historical fact are forward-looking statements. The use of words such as “estimate”, “forecast”, “expect”, “project”, “plan”, “target”, “vision”, “goal”, “outlook”, “may”, “will”, “should”, “believe”, “intend”, “anticipate”, “potential”, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on Sunshine’s experience, current beliefs, assumptions, information and perception of historical trends available to Sunshine, and are subject to a variety of risks and uncertainties including, but not limited to, those associated with resource definition and expected reserves and contingent and prospective resources estimates, unanticipated costs and expenses, regulatory approval, fluctuating oil and gas prices, expected future production, the ability to access sufficient capital to finance future development and credit risks, changes in Alberta’s regulatory framework, including changes to regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations and the impact thereof and the costs associated with compliance. Although Sunshine believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this announcement are not exhaustive and readers are not to place undue reliance on forward-looking statements as the Corporation’s actual results may differ materially from those expressed or implied. Sunshine disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this announcement, except as required under applicable securities legislation. The forward-looking statements speak only as at the date of this announcement and are expressly qualified by these cautionary statements. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. For a full discussion of the Corporation’s material risk factors, see the Corporation’s annual information form for the year ended December 31, 2016 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 months period ended March 31, 2017

SUNSHINE OILSANDS LTD.

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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 months ended March 31, 2017 is dated May 11, 2017. This MD&A should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements and notes thereto for the three months period ended March 31, 2017 and with the audited consolidated financial statements and notes thereto for the year ended December 31, 2016. All amounts and tabular amounts are stated in thousands of Canadian dollars unless indicated otherwise.

Overview

Sunshine is a major holder and a developer of Athabasca region oil sands resources with approximately 1.35 billion barrels of risked best estimate contingent resources. The Company’s un-risked best estimate contingent resources at December 31, 2016 was approximately 2.21 billion barrels, a 0.31 billion barrels decrease from the December 31, 2015 resource evaluation. The Company also has 276 million barrels of proved plus probable (“2P”) reserves and 379 million barrels of proved plus probable plus possible (“3P”) in the Cretaceous Sandstone formations as evaluated at December 31, 2016. The Company did not conduct an evaluation of its Carbonate assets given the current commodity price and the introduction of risk factors to the contingent resources, which would deem the Carbonates to be uneconomic. With approximately 1 million acres of oil sands and P&NG leases, the Company has significant commercial development potential. Phase I (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 completion and operation of the 5,000 bbls/day Phase I commercial West Ells (the “Project”). When financing is available, the Company is planning to add an additional 5,000 barrels per day Phase II to the Project. On March 1, 2017, the West Ells Phase I commenced commercial production.

As at March 31, 2017, the Company had invested approximately $1.26 billion in oil sands leases, drilling operations, project engineering, procurement and construction, operation start-up, regulatory application processing and other assets. As at March 31, 2017, the Company had $12.9 million in cash.

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 continuing operations and development in West Ells, marketing bitumen blends at favorable price, achieving profitable operations and the ability to refinance current debt and access immediate additional financing. There can be no assurance that 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 TSX. The Company’s shares continue to be listed for trading on the Stock Exchange of Hong Kong Limited (“SEHK”).

Operational Update

West Ells

On March 1, 2017, the Company achieved a key milestone. The Project commenced commercial production. Hence, effective March 1, 2017, the Company started recording revenue, expenses and depletion of the West Ells Project. For one month ended March 31, 2017, the average bitumen production was 1,796 barrels per day (“bbls/day”), steam to oil ratio (“SOR”) was 4.8 at this early stage of steam-assisted gravity drainage (“SAGD”) production. Diluent is blended at a 21% volumetric rate with the bitumen as part of the production process to create the marketable “Dilbit” blend product, and the average dilbit sales volume for March was 2,272 bbls/day.

Thickwood and Legend

The Thickwood and Legend projects are each planned for initial phase one production of 10,000 bbls/day. Regulatory approval for Thickwood was received in the third quarter of 2013 while Legend approval is expected in 2017. Once the Thickwood and Legend Lake’s projects are sanctioned for development and construction, additional significant financing will need to be secured to proceed.

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SUNSHINE OILSANDS LTD.

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 by the joint venture partner due to low oil prices.

OUTLOOK

Due to the extensive damage associated with the disastrous wild fire in Fort McMurray in May 2016, start up at West Ells was interrupted and delayed. Significant progress has been achieved since then. On March 1, 2017, the West Ells Phase I project commenced commercial production. The West Ells Phase I project is expected to ramp up to its Phase I design capacity of 5,000 bbls/day. The Company continues to focus on carefully improving production performance and developing SAGD chambers, which will increase production at West Ells.

The oil and gas industry in North America continues to operate in a challenging commodity price environment. Due to market, instability and volatile commodity prices that have trended lower over past months. Sunshine continues to remain optimistic about long –term outlook for oil and gas commodity prices.

FINANCIAL AND OPERATRIONAL RESULTS

Production Volume

Production Volume	Production Volume
For the three months ended March 31, (bbls/day) 2017 2016
Bitumenproduction(1) 1,582	-
Production Volume for the month of March 2017
(bbls/day) 2017	2016
Bitumenproduction1 1,796	-

Bitumen produced at oil sands projects is mixed with diluent and sold as “dilbit”. Diluent volumes have been deducted in calculating bitumen production volumes

Bitumen production from West Ells for the one month and three months ended March 31, 2017 averaged 1,796 bbls/day and 1,582 bbls/day respectively. First Bitumen production from West Ells Project occurred in December 2015. Initial sales, royalties and expenses were capitalized during the start-up phase of the project which continued until February 28, 2017. Effective March 1, 2017 the project achieved commerciality. As a result, for March 2017 the related sales, royalties, diluent, transportation, and operating expenses together with depletion are now being recorded in the statement of comprehensive loss for the three months ended March 31, 2017.

Operating Netbacks

Operating Netbacks
	For the three months ended March 31,
($ thousands)	2017	2016
Realized Bitumen revenue1	1,915	-
Transportation	(1,153)	-
Royalties	(20)	-
Net bitumen revenues	742	-
Operating costs	(2,216)	-
Operatingnetback2	(1,474)	-

Blend sales net of diluent costs for the month of March 2017 only.
Operating netback is a non-GAAP measure which is defined in the Advisory section of the MD&A.

The Operating netback for the three month ended March 31, 2017 was net loss of $1.5 million. The main contributing factors to the loss are the transportation and operating costs. Future transportation and operating costs should be reduced as production continues to ramp up at West Ells.

SUNSHINE OILSANDS LTD.

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Bitumen Revenue

Bitumen Revenue
	For the three months ended March 31,
($ thousands)	2017	2016
Dilbit Revenue	3,005	-
Diluent blended1	(1,090)	-
Realized bitumen revenue2	1,915	-

At West Ells purchased diluent was blended at a 21% volumetric rate with the produced bitumen for the three months ended March 31 2017.
Realized bitumen revenue is used to calculate realized bitumen revenues per barrel and operating netbacks.

Diluent is blended with the bitumen as part of the production process to create a marketable dilbit blend product at West Ells. During the three months ended March 31, 2017, the Company’s dilbit revenue was $3.0 million, which included $1.1 million of added diluent and resulted in realized bitumen revenue of $1.9 million The first quarter of 2017 is the first quarter in which the Company recorded the dilbit revenue from West Ells Phase I project.

Royalties

Royalties
	For the three months ended March 31,
($ thousands)	2017	2016
Royalties	20	-
Percentage of realized bitumen sales	1%	-

The royalty rate at West Ells is based on price sensitive royalty rates set by the Government of Alberta. The current royalty rate at West Ells is based on pre-payout oils sands operations which is calculated and paid monthly at a rate of 1% of the project’s gross revenue from bitumen sales; and increases for every dollar that WTI crude oil price in Canadian dollars is priced above $55 per barrel, to a maximum of 9% when WTI Crude oil price is $120 per barrel or higher. The average royalty rate for West Ells was 1% for three month ended March 31, 2017.

Diluent

	For the three months ended March 31,	For the three months ended March 31,
($ thousands)	2017	2016
Diluent cost	1,090	-

At West Ells, diluent is blended at a 21% volumetric rate with the bitumen as part of the production process to create “Dilbit” blend product. For the three month ended March 31, 2017, the dilbit sold was blended with 14,739 barrels of diluent at a cost of $1.1 million.

Transportation

Transportation
	For the three months ended March 31,
($ thousands)	2017	2016
Transportation	1,153	-

The Company’s transportation expense in the three months ended March 31, 2017 was $1.2 million. Transportation cost includes trucking costs for dilbit and diluent, and pipeline terminals fees.

Operating Costs

Operating Costs	Operating Costs
For the three months ended March 31, ($ thousands) 2017 2016
Natural gas costs 508 Otheroperating costs 1,708	- -
Operatingcosts 2,216	-

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SUNSHINE OILSANDS LTD.

Operating Costs (continued)

The Company incurred operating cost of $2.2 million during three months ended March 31, 2017. A substantial amount for the operating cost is fixed costs. As a result, the operating cost at West Ells will be decrease as production ramps up.

General and Administrative Costs

				For the three	months ended	months ended	March 31,
			2017				2016
($thousands)		Total	Capitalized	Expensed		Total	Capitalized	Expensed
Salaries, consulting and benefits	$	2,618	232	2,386	$	2,905	776	2,129
Rent		615	151	464		551	202	349
Legal and audit		564	-	564		716	-	716
Other		919	17	902		651	18	633
Total	$	4,716	400	4,316	$	4,823	996	3,827

General and administrative expenses, which include salaries, consulting and benefits, rent, and other general and administrative costs, for the three-month period ended March 31, 2017 increased by $0.5 million from $3.8 million to $4.3 million compared to the same period in 2016. The increase is primarily the result of an increase in salaries, consulting and benefits of $0.3 million, and an increase in other costs of $0.3 million, offset by a decrease in legal and audit costs of $0.1 million.

The Company capitalized a portion of the general and administrative cost for the first two months of the quarter. Effective March 1, 2017. The Company ceased the capitalization of portions of the general and administrative cost.

Finance Costs

Finance Costs
($ thousands)	For the three months ended March 31, 2017 2016
Interest expense on senior secured notes Interest expense on shareholder loan Amortization of financing transaction costs and discount Redemption/yield maintenance premium Financing related costs Other interest expense Unwinding of discounts on provisions	$ 8,960 $ 6,240 - 37 - 3,665 4,722 4,347 505 46 6 3 274 260
	$ 14,467 $ 14,598

For the three months period ended March 31, 2017, finance costs decreased by $0.1 million compared to the same period in 2016, due to a decrease in the amortization of financing transaction costs on the Notes of $3.7 million, offset by a $2.7 million increase in interest expense, a $0.4 million increase in the yield maintenance premium, and a $0.5 million financing related costs.

Share-based Compensation

Share-based Compensation
		For	the three months	ended March	31,
		2017			2016
	Total	Capitalized		Total	Capitalized
($thousands)	amount	portion	Expensed	amount	portion	Expensed
Share-based compensation	996	17	979	252	91	161

Share-based compensation for the three months period ended March 31, 2017 was $1.0 million compared to $0.2 million for the same period in 2016. The fair value of share-based compensation 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.

SUNSHINE OILSANDS LTD.

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Share-based Compensation (continued)

The Company capitalizes a portion of the share-based compensation using the same methodology associated with capitalized salaries and benefits for the first two month of the quarter. Effective March 1, 2017, the Company ceased capitalization of portions of the share-based compensation.

Other Income

Other Income
		For the three months ended March 31,
($thousands)		2017		2016
Interest income	$	5	$	13
Gain on sale of assets		-		2
Fair value adjustment on share purchase
warrants		-		3
	$	5	$	18

Depreciation, Depletion and Impairment

Depreciation, Depletion and Impairment
	For the three months ended March 31,
($ thousands)	2017	2016
D&D for West Ells	1,743	-
D&D for Corporate Assets	123	151
Total	1,866	151

The Company commenced recording depletion of West Ells assets in the statement of comprehensive loss for the three months ended March 31, 2017. As at February 28, 2017, the West Ells assets of $687.1 million were not being depleted as the project was in start up phase.

In determining the Unit-of-production depletion charge on recoverable reserves, future development costs of $2,702 million were included in property, plant and equipment.

As at March 31, 2017, the Company did not identify any indicators of further impairment (or reversal of the original impairment recorded at the previous year end) of the E&E Assets or the West Ells CGU.

Income Taxes

The Company did not recognize any deferred income tax assets, which relate primarily to unrecognized tax losses, for the three month periods ended March 31, 2017 and 2016. 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 March 31, 2017, the Company had total available tax deductions of approximately $1.2 billion, with unrecognized tax losses that expire between 2028 and 2035.

Capital Expenditures

Capital Expenditures
	For the three months ended March 31,
($ thousands)	2017	2016
Exploration and evaluation	227	307
Property, plant and equipment
West Ells	4,166	9,530
Corporation	286	(15)
Total	4,679	9,822

For Capital expenditures made on exploration and evaluation assets and property, plant and equipment for three month ended March 31, 2017 are $4.7 million in total, including a $0.4 million for total capitalized general and administration and share based compensation, and $2.6 million for all the West Ells revenue and associated expenses capitalized in the first two months of the quarter For the three months ended March 31, 2016, total capital expenditures was $9.8 million including $5.7 million capitalized all West Ells associated expenses.

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SUNSHINE OILSANDS LTD.

Liquidity and Capital Resources

Liquidity and Capital Resources
		March 31,		December 31,
($thousands)		2017		2016
Working capital deficit1	$	325,736		319,304
Shareholders’equity		603,580		607,455
	$	929,316	$	926,759

Senior secured notes are considered current as at March 31, 2017 and have been included in the working capital deficit as the maturity date is August 1, 2017.

On August 8, 2014, the Company completed an offering of USD $200 million senior secured notes (the “Notes”) at an offering price of USD $938.01 per USD $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.

The conditions were if by February 1, 2016, the Company had not: (1) received at least USD $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 have been August 1, 2016. The Company did not meet these conditions by February 1, 2016, and as a result the final maturity date of the Notes was August 1, 2016 at which time the Company was negotiating with the noteholders.

On September 9, 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 USD $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 Company; (i) budget approval rights; and (j) requirements that the Company raise additional capital and provide additional security for the Notes.

On February 1, 2017, the payment of accrued interest and repurchase of USD $22.5 million were not met.

On March 21, 2017, the Company and the Forbearing Holders confirmed the signing of the Forbearance Reinstatement Agreement (the "FRA"). The principal payment terms of the FRA include: (i) Payment of 20% of the Yield Maintenance Premium (the "YMP") originally due on August 1, 2016 by cash; (ii) 80% of the YMP will be repaid on August 1, 2017 as the bond matures; (iii) Payment of 20% accrued interest and forbearance fees due on February 1, 2017 by cash and the remaining amount to be repaid on August 1, 2017 as the bond matures; and (iv) Regarding the USD $22.5 million of principal repayment which fell due on February 1, 2017, both parties agreed to defer the repayment as follows: USD $5.0 million and USD $10.0 million are to be repaid by the end of April 2017 and June 2017 respectively. The remaining amount shall be repaid on or before the maturity date of the bond, i.e. August 1, 2017. In addition, the Company and certain noteholders entered into a Note Exchange Agreement (the "NEA") whereby the Company agreed to repay bond principal of up to USD $8.9 million by issuance of shares.

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 reporting in line with a reporting issuer under Canadian Securities Legislation and includes timely reporting of material changes.

From time to time, the Company receives liens or claims on accounts payable balances, and the Company continues to work toward resolution of any liens or claims. At March 31, 2017, the Company had incurred $10.7million (USD $8.1 million equivalent using the period end exchange rate) in liens during the ordinary course of business.

The Notes are translated into Canadian dollars at the period end exchange rate of $1USD = $1.3322CAD.

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SUNSHINE OILSANDS LTD.

Liquidity and Capital Resources (continued)

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.

There is a material risk that the Company will be unable to meet its financing obligations including payments of outstanding interest and principal balances on its Senior Notes. Management continually monitors the Company’s financing requirements and is pursuing negotiations to refinance current debt and access immediate additional financing to fund its ongoing operations. Management is engaged in discussions with existing shareholders,creditors, and prospective investors on proposed transactions and agreements which would reduce anticipated cash outflows and provide the additional financing required to fund capital and operating expenditures, and to meet obligations as they fall due in the 12 months following March 31, 2017.

Management has applied significant judgment in preparing forecasts supporting the going concern assumption. Specifically, management has made assumptions regarding projected oil sales volumes and pricing, scheduling of payments arising from various obligations as at March 31, 2017, the availability of additional financing, and the timing and extent of capital and operating expenditures.

The Condensed Consolidated Interim Financial Statements have been prepared on a basis which asserts that the Company will continue to have the ability to realize its assets and discharge its liabilities and commitments in a planned manner with consideration to expected possible outcomes. Conversely, if the assumption made by management is not appropriate and the Company is unable to meet its obligations as they fall due the preparation of these Financial Statements on a going concern basis may not be appropriate and adjustments to the carrying amounts of the Company’s assets, liabilities, revenues, expenses, and balance sheet classifications may be necessary and such adjustments could be material. Specifically, in the absence of additional financing and the restructuring of current debt (Note 10) the Company would be unlikely to be able to continue the development of the West Ells project and the Company would be required to consider divestiture of the West Ells project and other exploration assets. Such curtailment of activity would likely materially and negatively impact the Company’s assessment of the carrying values of assets and liabilities associated with the West Ells project.

The Company’s ability to continue as a going concern is dependent on its ability to realize forecasted revenues, achieve profitable operations, restructure projected cash outflows arising from existing arrangements, control the timing and extent of projected expenditures, and refinance current debt, access immediate additional financing and maintain compliance with all terms in debt and forbearance agreements. These uncertainties may cast significant doubt about the Group’s ability to continue as a going concern.

For the three months ended March 31, 2017, the Company reported a net loss of $21.6 million. At March 31, 2017, the Company had a working capital deficiency of $326.2 million including senior notes of $266.4 million and an accumulated deficit of $728.7 million.

The Company’s debt-to-asset ratio, measured on the basis of total liabilities divided by total assets was 40% as at March 31, 2017, compared to 39% as at December 31, 2016.

For the three months ended March 31, 2017, the Company had a foreign exchange gain of $1.9 million compared to a $16.1 million gain in the same period in 2016. The change in foreign exchange for the three months period ended March 31, 2017, was due to a $1.9 million unrealized gain associated primarily with the translation of the US denominated Notes.

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 months ended March 31, 2017. 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

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SUNSHINE OILSANDS LTD.

Liquidity and Capital Resources (continued)

restricted cash held at March 31, 2017 would have been impacted by $0.1 million and the carrying value of the senior notes at March 31, 2017 would have been impacted by $2.7 million. At March 31, 2017 the Company held approximately USD $1.6 million or $2.2 million of cash, using the March 31, 2017 exchange rate of $1USD = $1.3322CAD, as cash, cash equivalents in the Company’s US bank account.

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 and restricted cash held at March 31, 2017 would have been impacted by approximately $0.1 million. At March 31, 2017, the Company held, after recent equity closings, approximately HKD $39.1 million or $6.7 million using the March 31, 2017 exchange rate of $1CAD = $5.8337HKD, as cash in the Company’s HKD bank account.

Cash Flows Summary

Cash Flows Summary
($thousands)	For the three months ended March 31, 2017 2016
Cash provided by/ used in operating activities Cash provided by/used in investing activities Cash provided by/used in financing activities Effect of exchange rate changes on cash held in foreign currency Decrease in cash Cash and cash equivalents, beginning of period Cash and cash equivalents,end ofperiod	$ 8,460 $ (6,056) (15,155) 12,671 6,721 (11,637) (785) 37
	(759) (4,985) 13,635 6,545
	$ 12,876 $ 1,560

Operating Activities

Net cash provided by operating activities for the three months period ended March 31, 2017 was $8.5 million compared to cash used of $6.1 million in 2016, an increase of $14.5 million. Net cash used for operating activities included an increase in working capital deficiency of $14.3 million for the three months period ended March 31, 2017 compared to a decrease in working capital of $1.6 million for the same period in 2016.

Investing Activities

Net cash used in investing activities for the three months period ended March 31, 2017 primarily consisted of $4.7 million in capital investment and a $10.5 million decrease in the net change in non-cash investing working capital.

Net cash used in investing activities for the three months period ended March 31, 2016 primarily consisted of the release of restricted cash of $13.8 million, offset by payments for property, plant and equipment of $9.8 million, and an $8.7 million increase in the net change in non-cash investing working capital.

Financing Activities

Net cash provided by financing activities for the three months period ended March 31, 2017 totalled $6.7million, which consisted of proceeds from the issuance of common shares of $16.7 million less the payment of $0.4 million in share issue cost, offset by finance costs of $14.2 million, and an increase $4.6 million in the net change in non-cash financing activities.

Net cash used in financing activities for the three months period ended March 31, 2016 totalled $11.6 million, which consisted of proceeds from a loan from a shareholder of $5.8 million, less finance costs of $10.7 million, and an decrease $ 6.8 million in the net change in non-cash financing activities.

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 March 31, 2017, the Company’s estimated commitments are as follows:

($ thousands)	Total 2016 2017 2018 2019 Thereafter
Repayment of long-term debt1 Interest payments on long-term debt2 Redemption premium3 Shareholder loan Drilling, other equipment and contracts Lease rentals4 Office leases	$ 266,440 266,440 - - - - 16,519 16,519 - - - - 19,445 19,445 - - - - 3,397 3,312 85 - - - 9,038 1,205 1,402 1,414 1,414 3,603 5,374 2,149 2,580 645 - -
	$ 320,213 309,070 4,067 2,059 1,414 3,603

Principal amount of Notes based on the period end exchange rate of $1USD = $1.3322CAD 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 $1USD = $1.3322CAD.
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 $1USD = $1.3322CAD this premium amounts to $19,445. At March 31, 2017, the Company had the option to redeem the Notes at 4.084% of the aggregate principal amount of the Notes outstanding which amounts to $6,265 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 condensed consolidated interim financial statements for the three months period ended March 31, 2017 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

For the three months ended March 31, 2017, a consulting company, to which a director of Sunshine is related, charged the Company $0.1 million (the three months ended March 31, 2016 - Nil) for management and advisory services.

In 2016, the Company’s Executive Chairman, Mr. Kwok Ping Sun, has purchased securities of the Company 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 was considered Permitted Debt under the Company’s Notes as long as it did not exceed USD $5.0 million. The Loan had an interest rate of 6.0% per annum, can be drawn up to HKD $38.0 million and required 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 had the same interest rate and repayment terms as the Loan, except it required 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 (Note 13). As at December 31, 2016 and March 31, 2017, both the Loan and Second loan balances were Nil.

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SUNSHINE OILSANDS LTD.

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 March 31, 2017, the Company did not have any other off-balance sheet arrangements.

Subsequent Events

On April 5, 2017, the Company entered into a Debt Settlement Agreement with a creditor for CDN $5,861,054.36. On April 13, 2017 the Company completed the closing a total of 147,874,000 shares to the Creditor at an issue price of HKD $0.241 per Common Shares (approximately CAD $0.041 per Common Share) pursuant to the terms and conditions of the Debt Settlement Agreement. The issued Common Shares in this transaction are subject to a four months holding period

Summary of Quarterly Results

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

($ thousands except
pershare)	Q1 2017	Q4 2016	Q3 2016	Q2 2016	Q1 2016	Q4 2015	Q3 2015	Q2 2015
Bitumen Production (bbl/d)1	1,796	-	-	-	-	-	-	-
Petroleum sales net of royalties	3,005	-	-	-	-	-	-	-
Royalties	20	-	-	-	-	-	-	-
Transportation	1,153	-	-	-	-	-	-	-
Operating costs	2,216	-	-	-	-	-	-	-
Finance cost	14,467	13,901	18,606	15,415	14,598	17,857	10,641	9,891
Cash flow from operations2	(5,800)	(2,959)	(2,692)	(3,464)	(4,457)	(4,644)	(5,853)	4,152
Net loss	21,169	23,237	26,564	20,736	2,773	325,761	30,413	19,122
Per share - basic and diluted	0.00	0.00	0.01	0.00	0.00	0.08	0.01	0.00
Capital expenditures3	4,679	8,690	12,038	6,939	9,822	28,823	37,104	39,322
Total Assets	1,000,484	997,590	985,274	974,881	964,751	973,181	1,253,525	1,238,559
Working Capital Deficiency4	325,736	319,304	314,853	311,024	298,144	286,121	240,191	195,087
Shareholder’ equity	603,580	607,455	603,348	595,286	601,577	604,098	917,110	924,219

Bitumen Production volume for the one month ended March 31, 2017.
Cash flow from operations is a non-GAAP measure which is defined in the Advisory section of the MD&A.
Included payments for exploration and evaluation, property, plant and equipment.
The working capital deficiency includes the USD $200 million current portion of the Notes converted to CAD at each period end exchange rate.

Changes in Accounting Policies

For the three months period ended March 31, 2017 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, 2016.

Critical Accounting Policies and Estimates

The Company’s critical accounting estimates are those estimates having a significant impact on the Company’s financial position and operations and that require management to make judgments, assumptions and estimates in the application of IFRS. Judgements, assumptions and estimates are based on historical experience and other factors that management believes to be reasonable under current conditions. As events occur and additional information is obtained, these judgements, assumptions and estimates may be subject to change.

For a detailed discussion regarding to the Company’s critical accounting policies and estimates, please refer to The Company’s 2016 annual MD&A.

SUNSHINE OILSANDS LTD.

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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, 2016, which is available at www.sedar.com. The 2016 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 2016 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).

No material changes in the Company's ICFR were identified during the three months period ended March 31, 2017 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.

ADVISORY SECTION

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.

SUNSHINE OILSANDS LTD.

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Non-IFRS Financial Measures

This MD&A includes references to financial measures commonly used in the oil and natural gas industry, such as operating netback, cash flow used in operations, operating loss and operating cash flow are non-GAAP measures. 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. 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.

Operating Netback

Operating “Netback” is defined as petroleum sales, net of royalties less diluent costs, less operating costs and less transportations costs. The following is reconciliation to the nearest IFRS measurement:

		For the three months ended March 31,
($ thousands)		2017	2016
Petroleum sales, net of royalties	$	2,985	-
Diluent Cost		(1,090)	-
Operating costs		(2,216)	-
Transportationcosts		(1,153)	-
Operatingnetback	$	(1,474)	-

Cash Flow Used in Operations

Cash flow used in operations is non-GAAP measure utilized by the Company to analyze operating performance and liquidity. Cash flow used in operations excludes the net change in non-cash operating working capita and decommissioning expenditures while the IFRS measurement “Net cash used in operating activities” includes these items. Cash flow used in operations is reconciled to Net cash used in operating activities in the table below:

		For the three months ended March 31,	For the three months ended March 31,
($thousands)		2017		2016
Net cash used in operating activities	$	8,460	$	(6,056)
Add (deduct)
Net change in non-cash operating working capital
items		(14,260)		1,599
Cash flow used in operations	$	(5,800)	$	(4,457)

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.

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SUNSHINE OILSANDS LTD.

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.

Purchase, Sale or Redemption of Sunshine’s Listed Securities

On January 17, 2017 the Company entered into a subscription agreement for a total of 60,000,000 class “A” common shares at a price of HKD $0.262 per share (approximately CAD $0.045 per common share), for gross proceeds of HKD $15.7 million (approximately CAD $2.7 million). On January 24, 2017 the Company completed the closing of this subscription agreement. In addition, a placing commission of HKD $117,900 (approximately CAD $0.02 million), was incurred in relation to the Closing.

On March 16, 2017 the Company entered into a subscription agreement for a total of 247,350,000 class “A” common shares at a price of HKD $0.283 per share (approximately CAD $0.050 per common share), for gross proceeds of HKD $70 million (approximately CAD $12.1 million). On March 24, 2017 the Company completed the closing of this subscription agreement. In addition, a placing commission of HKD $525,000 (approximately CAD $0.09 million), was incurred in relation to the Closing.

On December 28, 2016, the Company entered into a subscription agreement with Zhengwei International Investment and Management Co., Limited (“Zhengwei”) under which Zhengwei agreed to subscribe for a total of up to 150,000,000 Class “A” Common Voting Shares of the Company (“Common Shares”) at a price of HKD $0.29 per Common Share or approximately CAD $0.048 per Common Share, which in the aggregate amounts to gross proceeds of HKD $43.5 million (approximately CAD $7.6 million). On March 28, 2017, the Company completed the closing of 40,000,000 Common Shares HKD $0.29 (approximately CAD $0.050 per Common Share). The Company received total gross proceeds of HKD $11.6 million (approximately CAD $2.0 million). The subscription agreement expired on the date of this announcement and hence the time for the completion of the remaining 110,000,000 Common Shares has lapsed.

Shares Outstanding

As at May 11, 2017, the Company had 5,490,825,358 Common Shares and 258,140,962 stocks options 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 months period ended March 31, 2017, together with comparative figures for the appropriate periods in 2016 as follows:

Condensed Consolidated Statements of Financial Position

Condensed Consolidated Statements of Financial Position
	March 31, 2017 December 31, 2016
Assets Current assets Cash 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 Current portion of long-term debt Provisions Net current assets Total assets less current liabilities Shareholders’ Equity Share capital Reserve for share-based compensation Deficit	$ 12,876 $ 13,635 4,624 2,654 2,259 5,054
	19,759 21,343
	292,237 291,716 688,488 684,531
	980,725 976,247
	$ 1,000,484 $ 997,590
	$ 78,474 $ 71,526 581 581 266,440 268,540
	345,495 340,647
	51,409 49,488
	396,904 390,135
	(325,736) (319,304)
	654,989 656,943
	1,263,600 1,247,302 68,258 67,262 (728,278) (707,109)
	603,580 607,455
	$ 1,000,484 $ 997,590

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SUNSHINE OILSANDS LTD.

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the three months ended March 31, Notes	2017 2016
Revenues and Other Income Petroleum revenue, net of royalties 15 Other income 16 Expenses Diluent 8 Transportation 8 Operating 8 General and administrative 7, 8 Finance costs 17 Stock based compensation 14.2 Foreign exchange (gains)/losses 19.3 Contract Provision Expense 11.2 Depletion, depreciation and impairment 7, 8 Loss before income taxes Income taxes 12 Net loss and comprehensive loss Basic and diluted loss per share 18	$ 2,985 $ - 5 18
	2,990 18
	1,090 - 1,153 - 2,216 - 4,316 3,827 14,467 14,598 979 161 (1,928) (16,088) - 142 1,866 151
	$ 24,159 $ 2,791
	21,169 2,773 - -
	$ 21,169 $ 2,773
	$ 0.004 $ 0.001

Notes

1. Basis of Preparation

These condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The condensed consolidated interim 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 consolidated interim 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 consolidated interim 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. On March 24, 2017, Sang Xiang Petroleum & Chemical (Shanghai) Limited (“Sunshine Shanghai”) was incorporated in China and is a wholly owned subsidiary of the Company. No activity has yet occurred in Boxian and Sunshine Shanghai 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:

		March 31, 2017		December 31, 2016
Petroleum Receivable	$	2,407	$	-
Trade Receivable		2,084		1,434
Other		133		1,220
	$	4,624	$	2,654

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:

		March 31, 2017		December 31, 2016
0 - 30 days	$	2,579	$	1,205
31 - 60 days		64		1
61 - 90 days		5		11
>90 days		1,976		1,437
	$	4,624	$	2,654

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:

		March 31, 2017		December 31, 2016
Trade
0 - 30 days	$	2,450	$	4,514
31 - 60 days		684		1,343
61 - 90 days		465		750
>91days		24,176		20,734
		27,775		27,341
Accruedliabilities		50,699		44,185
	$	78,474	$	71,526

5. Dividends

The Company has not declared or paid any dividends in respect of the three months period ended March 31, 2017 (three months period ended March 31, 2016 - $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:

		March 31, 2017		December 31, 2016
Deferred tax assets (liabilities)
Exploration and evaluation assets and property, plant	$	(140,299)	$	(119,980)
and equipment
Decommissioning liabilities		13,880		13,362
Share issue costs		1,629		1,754
Non-capital losses		207,348		193,894
Deferred taxbenefitsnotrecognized		(82,558)		(89,030)
	$	-	$	-

The Company’s non-capital losses of $767,995 (December 31, 2016 - $718,126), expire between 2028 and 2035.

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 months period ended March 31, 2017. 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 $1.2 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 months period ended March 31, 2017.

Review of interim results

The condensed consolidated interim financial statements for the Company for the three months period ended March 31, 2017, 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 CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three months ended March 31, 2017 and 2016

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.

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SUNSHINE OILSANDS LTD.

Condensed Consolidated Statements of Financial Position

(Expressed in thousands of Canadian dollars)

	March 31, 2017 December 31, 2016
Assets Notes Current assets Cash 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 Senior Notes 10 Non-current liabilities Provisions 11 Shareholders’ Equity Share capital 13 Reserve for share-based compensation Deficit	$ 12,876 $ 13,635 4,624 2,654 2,259 5,054
	19,759 21,343
	292,237 291,716 688,488 684,531
	980,725 976,247
	$ 1,000,484 $ 997,590
	$ 78,474 $ 71,526 581 581 266,440 268,540
	345,495 340,647 51,409 49,488
	396,904 390,135
	1,263,600 1,247,302 68,258 67,262 (728,278) (707,109)
	603,580 607,455
	$ 1,000,484 $ 997,590

Going concern (Note 2) Commitments and contingencies (Note 22) Subsequent events (Note 24)

Approved by the Board

“Gerry Stevenson” Director

“Qiping Men” Executive Director

See accompanying notes to the Condensed Consolidated Interim Financial Statements.

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SUNSHINE OILSANDS LTD.

Condensed Consolidated Statements of Operations and Comprehensive Loss

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

For the three months ended March 31, Notes	2017 2016
Revenues and Other Income Petroleum sales, net of royalties 15 Other income 16 Expenses Diluent 8 Transportation 8 Operating 8 General and administrative 7, 8 Finance costs 17 Stock based compensation 14.2 Foreign exchange (gains)/losses 19.3 Contract Provision Expense 11.2 Depletion, depreciation and impairment 7, 8 Loss before income taxes Income taxes 12 Net loss and comprehensive loss Basic and diluted loss per share 18	$ 2,985 $ - 5 18
	2,990 18
	1,090 - 1,153 - 2,216 - 4,316 3,827 14,467 14,598 979 161 (1,928) (16,088) - 142 1,866 151
	$ 24,159 $ 2,791
	21,169 2,773 - -
	$ 21,169 $ 2,773
	$ 0.004 $ 0.001

See accompanying notes to Condensed Consolidated Interim Financial Statements.

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SUNSHINE OILSANDS LTD.

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

Notes	Reserve for share based compensation Share capital Deficit Total
Balance, December 31, 2016 Net loss and comprehensive loss for the year Issue of common shares 13.1 Recognition of share-based compensation 14.2 Share issue costs, net of deferred tax ($Nil) 13.1 Balance, March 31, 2017 Balance, December 31, 2015 Net loss and comprehensive loss for the year Recognition of share-based compensation 14.2 Balance, March 31, 2016	$ 67,262 1,247,302 (707,109) 607,455 - - (21,169) (21,169) - 16,741 - 16,741 996 - - 996 - (443) - (443)
	$ 68,258 1,263,600 (728,278) (603,580)
	$ 62,910 $ 1,174,987 $ (633,799) $ 604,098 - - (2,773) (2,773) 252 - - 252
	$ 63,162 $ 1,174,987 $ (636,572) $ 601,577

See accompanying notes to the Condensed Consolidated Interim Financial Statements.

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SUNSHINE OILSANDS LTD.

Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of Canadian dollars)

Notes	For the three month ended March 31, 2017 2016
Cash flows used in operating activities Net loss Finance costs 17 Unrealized foreign exchange (gains)/losses 19.3 Contract provision expense 11.2 Interest income 16 Gain on sale of assets 8, 16 Fair value adjustment on share purchase warrants 16 Depreciation and impairment 7, 8 Share-based compensation 14.2 Movement in non-cash working capital 23 Net cash provided by(used in) operating activities Cash flows used in investing activities Interest received Proceeds from sale of asset Payments for exploration and evaluation assets 7 Payments for property, plant and equipment 8 Movement in restricted cash 4 Movement in non-cash working capital 23 Net cash provided by (used in) investing activities Cash flows provided in financing activities Proceeds from issue of common shares 13.1 Payment for share issue costs 13.1 Payment for finance costs 17 Proceeds from shareholder loan Movement in non-cash working capital 23 Net cash provided by (used in) financing activities Effect of exchange rate changes on cash held in foreign currency 19.3 Net increase / (decrease) in cash Cash, beginning of year Cash, end of period	$ (21,169) $ (2,773) 14,467 14,598 (1,938) (16,651) - 75 (5) (13) - (3) - (2) 1,866 151 979 161 14,260 (1,599)
	8,460 (6,056)
	5 13 - 2 (227) (307) (4,452) (9,515) - 13,825 (10,481) 8,653
	(15,155) 12,671
	16,741 - (443) - (14,193) (10,673) - 5,791 4,616 (6,755)
	6,721 (11,637)
	(785) 37
	(759) (4,985) 13,635 6,545
	$ 12,876 $ 1,560

See accompanying notes to the Condensed Consolidated Interim Financial Statements.

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SUNSHINE OILSANDS LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2017 and 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 March 31, 2017, no activity has occurred in Boxian. The purpose of Boxian is to pursue new investment opportunities.

On March 24, 2017, Sang Xiang Petroleum & Chemical (Shanghai) Limited (“Sunshine Shanghai”) was incorporated in China and is a wholly owned subsidiary of the Company. The address of the principal place of business for Sunshine Shanghai is Building 1, Level 6, Room 41, 39 Jia Tai Road, the China (Shanghai) Pilot Free Trade Zone.

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 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 Consolidated Interim Financial Statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business for the foreseeable future. The Company has historically met its day to day working capital requirements and funded its capital and operating expenditures through funding received from the proceeds of share issuances.

There is a material risk that the Company will be unable to meet its financing obligations including payments of outstanding interest and principal balances on its Senior Notes (Note 10). Management continually monitors the Company’s financing requirements and is pursuing negotiations to refinance current debt and access immediate additional financing to fund its ongoing operations. Management is engaged in discussions with existing shareholders and creditors on proposed transactions and agreements which would reduce anticipated cash outflows and provide the additional financing required to fund capital and operating expenditures, and to meet obligations as they fall due in the 12 months following March 31, 2017.

The timing and extent of forecast capital and operating expenditures is based on the Company’s 2017 budget and on management’s estimate of expenditures expected to be incurred beyond 2017. The Company has a significant degree of control and flexibility over both the extent and timing of expenditures under its future capital investment program.

SUNSHINE OILSANDS LTD.

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2. Basis of preparation (Continued)

On March 1, 2017, the West Ells Phase I project, located in the Athabasca region of Alberta, commenced commercial production. This marked a key milestone for the Corporation, following which the Project is treated as a fully operational and commercialized project.

On September 9, 2016, the Company entered into a forbearance agreement (the “Forbearance Agreement”) with Wells Fargo Bank N.A., as administrative agent, and certain bondholders (collectively “the Bondholders”) in respect of USD $200 million of notes made under a note agreement dated August 8, 2014. Under the terms of the Forbearance Agreement, the Lenders agreed to, among other things, forbear from exercising the rights and remedies arising from the Company’s failure to pay cash interest and principal payments due on August 1, 2016.

On March 21 2017, the Company entered into the Forbearance Reinstatement Agreement ("FRA") with the Bondholders. The Bondholders agreed to waive the liability of the Company in relation to previous violations listed above and fully reinstate the Forbearance Agreement, provided that Sunshine make the following payments on or before March 27, 2017:

Payment of USD $2.8 million representing 20% of the the Yield Maintenance Premium (the "YMP")originally due on August 1, 2016;
Payment of USD $2.4 million representing 20% accrued interest and forbearance fee originally due on February 1, 2017;
As of March 27, 2017, all the above USD $5.2 million have been paid.

Other payments contemplated in the FRA include:

Payment of all legal professional fees by March 21, 2017, which has been paid on March 21, 2017;
80% of the YMP will be repaid on August 1, 2017 in cash;
80% of the accrued interest and forbearance fee of USD $9.6 million will be repaid on August 1, 2017 in cash;
The Company agreed to repay bond principal of an amount equal up to 80% of the YMP by issuance of shares,
Make principal repayments to the Bondholders of USD $5.0 million on April 30, 2017, USD $10.0 million on June 30, 2017 and the remaining amount on or before the maturity date of the bond on August 1, 2017. As of May 5, 2017, USD $1.5 million has been paid.

On March 21, 2017, Sunshine agreed to repurchase and the Bondholders have agreed to sell up to USD $8.9 million of Senior Notes in exchange for Common Shares of Sunshine.

2.1 Statement of compliance

The Condensed Consolidated Interim 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 Consolidated Interim Financial Statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value (Note 19). The Condensed Consolidated Interim Financial Statements are presented in Canadian Dollars (“$”), which is the functional currency of the Company.

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SUNSHINE OILSANDS LTD.

3. Significant accounting policies

For the three months ended March 31, 2017 there has been no change in accounting policy from the policies adopted by the Company in the Consolidated Financial Statements for year ended December 31, 2016.

4. Cash and cash equivalents

4. Cash and cash equivalents
	March 31, 2017 December 31, 2016
Current asset Cash1	$ 12,876 $ 13,635
	$ 12,876 $ 13,635
1. 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%. 5. Trade and other receivables
	March 31, 2017 December 31, 2016
Petroleum Receivable Trade Receivable Other	$ 2,407 $ - 2,084 1,434 133 1,220
	$ 4,624 $ 2,654
6. Prepaid expenses and deposits
	March 31, 2017 December 31, 2016
Prepaid expenses Deposits	$ 1,483 $ 1,067 776 3,987
	$ 2,259 $ 5,054

As at March 31, 2017, the deposits include Nil held with the Alberta Energy Regulator for the Licensee Liability Rating Program (on February 22, 2017, $3.2 million has been refunded in total). The remaining deposits include ordinary business deposits of $0.8 million.

7. Exploration and evaluation

Balance, December 31, 2015 Capital expenditures Non-cash expenditures1 Balance, December 31, 2016 Capital expenditures Non-cash expenditures1 Balance, March 31, 2017	$ 290,945 1,344 (573)
	$ 291,716
	227 294
	$ 292,237

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

Exploration and evaluation assets are comprised of undeveloped land and oil sands evaluation projects pending the determination of technical feasibility and commercial viability. As at March 31, 2017, the Company did not identify any indicators of further impairment (or reversal of the original impairment recorded at previous year end) of the E&E Assets.

Gross exploration and evaluation costs (before impairment) are comprised of the following:

	March 31, 2017 December 31, 2016
Intangibles Tangibles Land and lease costs	$ 271,286 $ 270,957 19,584 19,584 91,367 91,175
	$ 382,237 $ 381,716

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SUNSHINE OILSANDS LTD.

8. Property, plant and equipment

8. Property, plant and equipment
	Crude oil assets Corporate assets Total
Cost Balance, December 31, 2015 Capital expenditures Non-cash expenditures1 Balance, December 31, 2016
	$ 853,848 $ 4,462 $ 858,310 35,970 175 36,145 (1,997) - (1,997)
	$ 887,821 $ 4,637 $ 892,458
Capital expenditures Non-cash expenditures1 Balance, March 31, 2017	4,166 286 4,452 1,371 - 1,371
	$ 893,358 4,923 898,281
1. Non-cash expenditures include capitalized share-based compensation and decommissioning obligations.
	Crude oil assets Corporate assets Total
Accumulated depreciation, depletionand impairment Balance, December 31, 2015 Depletion and Depreciation expense Balance, December 31, 2016 Depletion and Depreciation expense Balance, March 31, 2017 Carrying value, December 31, 2016 Carrying value, March 31, 2017
	$ 205,000 $ 2,380 $ 207,380 - 547 547
	$ 205,000 $ 2,927 $ 207,927
	1,743 123 1,866
	$ 206,743 $ 3,050 $ 209,793
	$ 682,821 $ 1,710 $ 684,531 $ 686,615 $ 1,873 $ 688,488

The Company commenced commercial production at West Ells Project I on March 1, 2017. At the time it ceased capitalization of petroleum revenue, royalties, diluent, transportation, and operating expenses relating to West Ells Project I and has included these amounts in the statement of comprehensive income (loss) for the three months ended March 31, 2017.

The Company also commenced recording depletion of West Ells Project I assets in the statement of comprehensive income (loss) for the three months ended March 31, 2017. Prior to March 1, 2017, the West Ells Phase I assets of $687.1 million were not being depleted. In determining the unit-of-production depletion charge on recoverable reserves, future development costs of $2,702 million were included in property, plant and equipment.

During the three months ended March 31, 2017, the Company capitalized directly attributable costs of $0.02 million for share-based compensation (three months ended March 31, 2016 - $0.1 million) and $0.4 million for general and administrative costs (three months ended March 31,2016 - $1.0 million).

As at March 31, 2017, the Company did not identify any indicators of further impairment (or reversal of the original impairment recorded at the previous year end) of the West Ells Cash Generating Unit (CGU).

9. Trade and accrued liabilities

9. Trade and accrued liabilities
	March 31, 2017 December 31, 2016
Trade Accrued liabilities	$ 27,775 $ 27,341 50,699 44,185
	$ 78,474 $ 71,526
10. Senior Notes
	March 31, 2017 December 31, 2016
Senior secured notes (USD $200,000,000) Discount on notes Financing transaction costs on notes Amortization of financing transaction costs and discount Balance, end ofyear	$ 266,440 $ 268,540 (16,168) (16,168) (11,846) (11,846) 28,014 28,014
	$ 266,440 $ 268,540

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SUNSHINE OILSANDS LTD.

10. Senior Notes (continued)

On February 1, 2017, the payment of accrued interest and repurchase of USD $22.5 million were not met.

On March 21, 2017, the Company and the Forbearing Holders confirmed the signing of the Forbearance Reinstatement Agreement (the "FRA"). The principal payment terms of the FRA include: (i) Payment of 20% of the YMP originally due on August 1, 2016 by cash; (ii) 80% of the YMP will be repaid on August 1, 2017 as the bond matures; (iii) Payment of 20% accrued interest and forbearance fees due on February 1, 2017 by cash and the remaining amount to be repaid on August 1, 2017 as the bond matures; and (iv) Regarding the USD $22.5 million of principal repayment which fell due on February 1, 2017, both parties agreed to defer the repayment as follows: USD $5.0 million and USD $10.0 million are to be repaid by the end of April 2017 and June 2017 respectively. The remaining amount shall be repaid on or before the maturity date of the bond, i.e. August 1, 2017. In addition, the Company and certain noteholders entered into a Note Exchange Agreement (the "NEA") whereby the Company agreed to repay bond principal of up to USD $8.9 million by issuance of shares.

From time to time, the Company receives liens or claims on accounts payable balances, and the Company continues to work toward resolution of any liens or claims. At March 31, 2017, the Company had incurred $10.7 million (USD $8.1 million equivalent using the period end exchange rate) in liens during the ordinary course of business.

The Notes are translated into Canadian dollars at the period end exchange rate of $1USD = $1.3322CAD.

11. Provisions

11. Provisions
	March 31, 2017 December 31, 2016
Decommissioning obligations (Note 11.1) Contract provision (Note 11.2) Presented as: Provisions (current) Provisions(non-current)	$ 51,409 $ 49,488 581 581
	$ 51,990 $ 50,069 $ 581 $ 581 $ 51,409 $ 49,488

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SUNSHINE OILSANDS LTD.

11.1 Decommissioning obligations

As at March 31, 2017, the Company’s share of the estimated total undiscounted cash flows required to settle asset decommissioning obligations was $78.6 million (December 31, 2016 - $80.1 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 0.48% to 2.04% per annum and inflated using an inflation rate of 2.0% per annum.

	March 31, 2017 December 31, 2016
Balance, beginning of year Effect of changes in discount rate Unwinding of discount rate Current portion Balance, end ofyear	$ 49,488 $ 51,656 1,647 (3,128) 274 960
	$ 51,409 $ 49,488 - -
	$ 51,409 $ 49,488

11.2 Contract provision

As at March 31, 2017, the Company had fully recognized a liability provision related to obligations under a drilling rig contract of $0.6 million (December 31, 2016 - $0.6 million). The $0.6 million represents the maximum obligation required if the drilling rig was not utilized over the remaining term of the contract, which ended in the fourth quarter of 2016. At March 31, 2017, this obligation was broken into a $5.6 million payable and a $0.6 million provision (December 31, 2016 - $5.6 million payable and $0.6 million provision).

12. Income taxes

12.1 Deferred tax balances

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

	March 31, 2017 December 31, 2016
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	$ (140,299) $ (119,980) 13,880 13,362 1,629 1,754 207,348 193,894 (82,558) (89,030)
	$ - $ -

12.2 Tax pools

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

	March 31, 2017 December 31, 2016
Canadian development expense Canadian exploration expense Undepreciated capital cost Non-capital losses Share issue costs	$ 25,960 $ 36,163 230,935 230,926 204,414 264,788 767,955 718,126 6,032 6,497
	$ 1,235,296 $ 1,256,500

The Company’s non-capital losses of $767,995 (December 31, 2016 - $718,126), expire between 2028 and 2035.

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SUNSHINE OILSANDS LTD.

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
		March 31, 2017		December 31, 2016
Common shares	$	1,263,600	$	1,247,302

13.1 Common shares

	March 31, 2017 December 31, 2016
	Number of shares $ Number of shares $
Balance, beginning of year Private placements – specific mandate Private placements – general mandate Issue of shares under share option plan (Note 14.5) Share option reserve transferred on exercise of stock options Share issue costs, net of deferred tax ($Nil) Balance,end ofyear	5,002,601,358 1,247,302 4,230,264,104 1,174,987 - 413,520,000 52,350 347,350,000 16,741 358,575,588 20,345 - 241,666 15 - - 10 - (443) - (405)
	5,349,951,358 1,263,600 5,002,601,358 1,247,302

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

On December 28, 2016, the Company entered into a subscription agreement with Zhengwei International Investment and Management Co., Limited (“Zhengwei”) under which Zhengwei agreed to subscribe for a total of up to 150,000,000 Class “A” Common Voting Shares of the Company (“Common Shares”) at a price of HKD $0.29 per Common Share or approximately CAD $0.048 per Common Share, which in the aggregate amounts to gross proceeds of HKD $43.5 million (approximately CAD $7.6 million). On March 28, 2017, the Company completed the closing of 40,000,000 Common Shares HKD $0.29 (approximately CAD $0.050 per Common Share). The Company received total gross proceeds of HKD $11.6 million (approximately CAD $2.0 million). The subscription agreement expired on the date of this announcement and hence the time to close the remaining 110,000,000 Common Shares has lapsed.

SUNSHINE OILSANDS LTD.

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13.2 Share purchase warrants

	March 31, 2017	December 31, 2016
Balance, beginning of period Expired Balance, end of period Exercisable,end ofperiod	Number of warrants Weighted average exercise price $ - - - - - - - -	Number of warrants Weighted average exercise price $ 132,910,941 0.34 (132,910,941) 0.34 - - - -

During the year ended December 31, 2016, all outstanding share purchase warrants expired.

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:

	Period ended Year ended March 31, 2017 December 31, 2016
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 $ 258,740,469 0.13 95,554,786 0.31 - - 215,539,909 0.09 - - (241,666) 0.06 (9,116,177) 0.11 (45,542,821) 0.29 - - (6,569,739) 0.44
	249,624,292 0.13 258,740,469 0.13
	119,122,147 0.17 122,243,920 0.17

As at March 31, 2017, stock options outstanding had a weighted average remaining contractual life of 4.0 years (December 31, 2016 – 4.4 years).

In 2016, 42,111,000 of the stock options were granted conditionally to Mr. Kwok Ping Sun subject to shareholder approval at the next general meeting of the shareholders.

14.2 Share-based compensation

Share-based compensation has been recorded in the Condensed Consolidated Interim Financial Statements for the periods presented as follows:

March 31, 2017 March 31, 2016 Expensed Capitalized Total Expensed Capitalized Total Stock options $979 $17 $996 $161 $91 $252 15. Petroleum Revenue	March 31, 2017 March 31, 2016 Expensed Capitalized Total Expensed Capitalized Total Stock options $979 $17 $996 $161 $91 $252 15. Petroleum Revenue
Stock options $979 $
15. Petroleum Revenue
	March 31, 2017 March 31, 2016
Petroleum Sales Royalties Balance,end ofperiod	$ 3,005 $ - (20) -
	$ 2,985 $ -

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SUNSHINE OILSANDS LTD.

16. Other Income

16. Other Income
		March 31, 2017		March 31, 2016
Interest income	$	5	$	13
Gain on sale of assets		-		2
Fair value adjustment on share purchase
warrants		-		3
Total	$	5	$	18

17. Finance costs

		March 31, 2017 March 31, 2016
Interest expense on senior secured notes Interest expense on shareholder’s loan Amortization of financing transaction costs and discount Redemption/yield maintenance premium Financing related costs Other interest expense/(recovery) Unwinding of discounts on provisions	$	8,960 $ 6,240 - 37 - 3,665 505 4,347 4,722 46 6 3 274 260
	$	14,467 $ 14,598

18. 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 March 31,	2017	2016
Basic andDiluted– Class “A” common shares	5,067,173,025	4,230,264,104

19. Financial instruments

19.1 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 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 completion of the West Ells development, achieving profitable operations and the ability to refinance current debt and access additional financing.

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

	March 31, 2017 December 31, 2016
Working capital deficiency Shareholders’ equity	$ 325,736 $ 319,304 603,580 607,455
	$ 929,316 $ 926,759

The Company’s working capital deficiency of $325.7 million at March 31, 2017, includes the $266.4 million current portion of the Notes. There is no change in the Company’s objectives and strategies of capital management for the three months ended March 31, 2017.

SUNSHINE OILSANDS LTD.

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19.2 Categories of financial instruments

	March 31, 2017	March 31, 2017	December	31, 2016
	Carrying	Fair value	Carrying	Fair value
	amount		amount
Financial assets
Cash, restricted cash and cash
equivalents, prepaid expenses,
deposits and trade and other
receivables	$ 19,759	$ 19,759	$ 21,343	$	21,343
Financial liabilities
Trade and accrued liabilities	78,474	78,474	71,526		71,526
Senior Notes	266,440	266,440	268,540	268,540

19.3 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 period ended March 31, 2017.

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 March 31, 2017 would have been impacted by $0.1 million and the carrying value of the senior notes at March 31, 2017 would have been impacted by $2.7 million. At March 31, 2017 the Company held approximately USD $1.6 million or $2.2 million of cash, using the March 31, 2017 exchange rate of $1USD = $1.3322CAD, as cash, cash equivalents in the Company’s US bank account.

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 March 31, 2017 would have been impacted by approximately $0.1 million. At March 31, 2017, the Company held, after recent equity closings, approximately HKD $39.1 million or $6.7 million using the March 31, 2017 exchange rate of $1CAD = $5.8337HKD, as cash in the Company’s HKD bank account.

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

March 31, 2017 March 31,2016	March 31, 2017 March 31,2016
Unrealized foreign exchange loss /(gain) on translation of:
US denominated senior secured notes	$ (2,101) (16,302)
HK denominated shareholder loan	- (373)
Foreign currency denominated cash balances	785 (37)
Foreign currency denominated accounts payable balances	(622) 61
	(1,938) (16,651)
Realizedforeignexchangeloss	10 563
Total foreign exchange (gains)/ losses	$ (1,928) (16,088)

19.4 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 March 31, 2017, the Company had negative working capital of $325.7 million and an accumulated deficit of $728.7 million. The Company’s ability to continue as a going concern is dependent on completion of the West Ells development, achieving profitable operations and the ability to refinance current debt and access additional financing.

SUNSHINE OILSANDS LTD.

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19.4 Liquidity risk management (continued)

The timing of cash outflows relating to financial liabilities as at March 31, 2017, are as follows:

		Total		Less than 1year		1-2years
Trade and accrued liabilities	$	78,474	$	78,474	$	-
Debt1		266,440		266,440		-
	$	344,914	$	344,914	$	-

Principal amount of Notes based on the period end exchange rate of $1USD = $1.3322CAD.

20. Related party transactions

20.1 Trading transactions

In 2016, the Company’s Executive Chairman, Mr. Kwok Ping Sun, has purchased securities of the Company 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. As at December 31, 2016 and March 31, 2017, both the Loan and Second loan balances were Nil.

20.2 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:

	March 31, 2017 March 31, 2016
Directors’ fees1 Salaries and allowances Share-based compensation	$ 171 $ 175 1,409 1,138 919 79
	$ 2,499 $ 1,392

For the period ended March 31, 2017, this number reflects accrued fees of $0.1 million. Refer to the appendix A2 for additional director fees disclosure.

21. Operating lease arrangements

Payments recognised as an expense

		March	31,	2017		March	31,	2016
Minimum leasepayments	$			615	$			536

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SUNSHINE OILSANDS LTD.

22. Commitments and contingencies

As at March 31, 2017, the Company’s commitments are as follows:

Repayment of long-term debt1 Interest payments on long- term debt2 Redemption premium3 Drilling, other equipment and contracts Lease rentals4 Office leases	Total 2017 2018 2019 2020 2021 Thereafter
	$ 266,440 266,440 - - - - - 16,519 16,519 - - - - - 19,445 19,445 - - - - - 3,397 3,312 85 - - - - 9,038 1,205 1,402 1,414 1,414 1,414 3,603 5,374 2,149 2,580 645 - - -
	$ 320,213 309,070 4,067 2,059 1,414 1,414 3,603

Principal amount of Notes based on the period end exchange rate of $1USD=1.3322CAD 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 $1USD = $1.3322CAD.
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 $1USD = $1.3322CAD this premium amounts to $19,445. At March 31, 2017, the Company had the option to redeem the Notes at 4.084% of the aggregate principal amount of the Notes outstanding which amounts to $6,265 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 Condensed Consolidated Interim Financial Statements for the period ended March 31, 2017 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.

23. Supplemental cash flow disclosures

	March 31, 2017 March 31, 2016
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 Property, plant and equipment Financing activities Share issue costs and finance costs	$ (1,970) $ 658 2,795 1,178 7,570 (1,537)
	$ 8,395 $ 299
	$ (1,996) $ 116 2,795 1,178 13,461 (2,893)
	$ 14,260 $ (1,599)
	(10,481) 8,653
	$ (10,481) $ 8,653
	$ 4,616 $ (6,755)
	$ 8,395 $ 299

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SUNSHINE OILSANDS LTD.

24. Subsequent events

On April 5, 2017, the Company entered into a Debt Settlement Agreement with a creditor for CAD $5,861,054.36. On April 13, 2017 the Company completed the closing a total of 147,874,000 shares to the Creditor at the issue price of HKD $0.241 per Common Shares (approximately CAD $0.041 per Common Share) pursuant to the terms and conditions of the Debt Settlement Agreement. The issued Common Shares in this transaction are subject to a four months holding period.

25. Approval of interim consolidated financial statements

The Condensed Interim Consolidated Financial Statements were approved by the Board of Directors and authorized for issue on May 11, 2017.

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SUNSHINE OILSANDS LTD.

Appendix to the Condensed Consolidated Interim 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, Boxian and Sunshine Shanghai.

	March 31, 2017 December 31, 2016
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 Current liabilities Trade and other payables Provisions Share purchase warrants Amount due to subsidiary Senior Notes 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	$ 688,091 $ 684,410 292,237 291,716 5,437 4,657
	985,765 980,783
	4,624 2,654 2,259 4,956 12,237 13,066
	19,120 20,676
	78,457 71,509 581 581 - - 2,717 2,611 266,440 268,540
	348,195 343,241
	(329,075) (322,565)
	656,690 658,218
	51,409 49,488
	51,409 49,488 $ 605,281 $ 608,730
	$ 1,263,600 $ 1,247,302 68,258 67,262 (726,577) (705,834)
	$ 605,281 $ 608,730

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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:

	March 31, 2017 March 31, 2016
Directors’ emoluments Directors’ fees Salaries and allowances Share-based compensation Other staff costs Salaries and other benefits Contribution to retirement benefit scheme Share-based compensation Total staff costs, including directors’ emoluments Less: staff costs capitalized to qualifying assets	$ 171 $ 175 1,231 915 900 64
	2,302 1,154
	1,101 1,462 115 158 96 188
	1,312 1,808

	3,614 2,962
	249 867
	$ 3,365 $ 2,095

Details of the Directors’ emoluments are as follows:

A3. Directors’ emoluments

	For the three months ended March 31, 2017
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 Jianzhong Chen1 Gerald Stevenson Raymond Fong Yi He Joanne Yan Xijuan Jiang	21 150 $ - 267 $ - 438 19 137 - 267 - 423 14 124 - 114 - 252 15 765 - 114 - 894 14 132 - 114 - 260 10 - - 4 - 14 19 - - 4 - 23 14 - - 4 - 18 16 - - 4 - 20 16 - - 4 - 20 14 - - 4 - 18
	$172 $1,308$- $900 $- $2,380

Mr. Chen ceased as a director on April 6, 2017.

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SUNSHINE OILSANDS LTD.

A3. Directors’ emoluments (continued)

	For the three months ended March 31, 2016
Name of Director	Directors’ fees Salaries and allowances Contribution to retirement benefits scheme Share-based compensation8 Performance related incentive payments Total
Michael Hibberd Tseung Hok Ming Raymond Fong Robert Herdman Gerald Stevenson Jimmy Hu Zhefei Song Hong Luo Qi Jiang Kwok Ping Sun Jianzhong Chen	$ 20 $ - $ - $ 29 $ - $ 49 12 - - 2 - 14 19 - - 2 - 21 19 - - 2 - 21 20 - - 2 - 22 11 - - - - 11 15 - - - - 15 13 136 - 7 - 156 18 779 - 20 - 817 18 - - - - 18 10 - - - - 10
	$175 $ 915 $- $ 64$- $1,154

A4. Five highest paid individuals

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

For the three months ended March 31,	2017	2016
HKD $Nil to HKD $1,000,000	-	4
HKD $1,000,001 to HKD $1,500,000	1	-
HKD $1,500,001 to HKD $2,000,000	1	-
HKD $2,000,001 to HKD $2,500,000	1	-
HKD $2,500,001 to HKD $3,000,000	1	-
HKD $3,000,001 to HKD $3,500,000	-	-
HKD $3,500,001 to HKD $4,000,000	-	-
HKD $4,000,001 to HKD $4,500,000	-	-
HKD $4,500,001 to HKD $5,000,000	-	1
HKD $5,000,001 to HKD $5,500,000	1	-
HKD $5,500,001 to HKD $6,000,000	-	-
HKD $6,000,001 to HKD $6,500,000	-	-
HKD $6,500,001 to HKD $7,000,000	-	-
>HKD$$7,000,000	-	-

For the period ended March 31, 2017, the conversion factor used in the above table is $1CAD = $5.87HKD (three months ended March 31, 2016 -$1CAD = $5.66HKD).

The five highest paid individuals includes five directors of the Company for the three months ended March 31, 2017 (three month ended March 31, 2016 -- three directors of the Company and two key management executives of the Company). Since the directors’ emoluments are disclosed above, the compensation of key management executives for the Company is as follows:

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SUNSHINE OILSANDS LTD.

A4. Five highest paid individuals (continued)

For the three months ended March 31,	2017 2016
Salaries and other benefits Contributions to retirement benefits scheme Share-based compensation	$ - $ 220 - 3 - 15
	$ - $ 238
A5. Senior management remuneration by band

The emoluments fell within the following bands:

For the three months ended March 31,	2017	2016
HKD $Nil to HKD $1,000,000	1	4
HKD $1,000,001 to HKD $1,500,000	1	-
HKD $1,500,001 to HKD $2,000,000	1	-
HKD $2,000,001 to HKD $2,500,000	-	-
HKD $2,500,001 to HKD $3,000,000	1	-
HKD $3,000,001 to HKD $3,500,000	-	-
HKD $3,500,001 to HKD $4,000,000	-	-
HKD $4,000,001 to HKD $4,500,000	-	-
HKD $4,500,001 to HKD $5,000,000	-	1
HKD $5,000,001 to HKD $5,500,000	1	-
HKD $5,500,001 to HKD $6,000,000	-	-
HKD $6,000,001 to HKD $6,500,000	-	-
HKD $6,500,001 to HKD $7,000,000	-	-
> HKD$7,000,000	-	-

For the period ended March 31, 2017, the conversion factor used in the above table is $1CAD = $5.87HKD (three months ended March 31, 2016 -1CAD = $5.66HKD).

The table above includes the remuneration for the executive directors and executive officers of the Company. As at March 31, 2017, $0.1 million (2016 - $0.1 million) was the total payable to senior management and this was included in trade and accrued liabilities.

AI assistant

Sunshine Oilsands Ltd. — Interim / Quarterly Report 2017

50340_rns_2017-05-12_8d057ced-3f5a-44e7-ae23-9f93200b1715.pdf

SUNSHINE OILSANDS LTD. 陽光油砂有限公司 *

(HKEX: 2012)

ANNOUNCEMENT OF RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2017 AND AN UPDATE ON WEST ELLS PROGRESS

Sunshine Oilsands Ltd.

Announcement of Results for the First Quarter ended March 31, 2017 and an Update on West Ells Progress

MESSAGE TO SHAREHOLDERS

Sunshine’s Capital Raising Activities

Summary of Financial Figures

2017 Outlook

Hong Luo

Qiping Men

ABOUT SUNSHINE OILSANDS LTD.

FORWARD LOOKING INFORMATION

Management's Discussion and Analysis

Overview

Operational Update

West Ells

Thickwood and Legend

SUNSHINE OILSANDS LTD.

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

OUTLOOK

FINANCIAL AND OPERATRIONAL RESULTS

Production Volume

Operating Netbacks

Bitumen Revenue

Royalties

Diluent

Transportation

Operating Costs

SUNSHINE OILSANDS LTD.

Operating Costs (continued)

General and Administrative Costs

Finance Costs

Share-based Compensation

Share-based Compensation (continued)

Other Income

Depreciation, Depletion and Impairment

Income Taxes

Capital Expenditures

SUNSHINE OILSANDS LTD.

Liquidity and Capital Resources

SUNSHINE OILSANDS LTD.

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.

Off-balance Sheet Arrangements

Subsequent Events

Summary of Quarterly Results

Changes in Accounting Policies

Critical Accounting Policies and Estimates

Risk Factors

Disclosure Controls and Procedures

Internal Controls over Financial Reporting

ADVISORY SECTION

Forward‐Looking Information

Non-IFRS Financial Measures

Operating Netback

Cash Flow Used in Operations

Additional Stock Exchange Information

Code of Corporate Governance Practice (the “Code”)

SUNSHINE OILSANDS LTD.

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

Purchase, Sale or Redemption of Sunshine’s Listed Securities

Shares Outstanding

SUNSHINE OILSANDS LTD.

Summary of Financial Statements and Notes

Condensed Consolidated Statements of Financial Position

SUNSHINE OILSANDS LTD.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Notes

Sunshine Oilsands Ltd. Interim / Quarterly Report 2017