Sunshine Oilsands Ltd. - Interim / Quarterly Report 2021

==> picture [171 x 168] intentionally omitted <==

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)

2021 INTERIM REPORT

*For identification purpose only

MESSAGE TO SHAREHOLDERS

For three months ended June 30, 2021, the Corporation’s average bitumen production was 0 bbls/day. In the second quarter of 2021, the average Dilbit sales volume was 0 bbls/day. There were no bitumen production and sales in 2Q21 due to temporary suspension of production. On August 8, 2021, Sunshine and the Forbearing Holder confirmed the signing of the Forbearance Reinstatement and Amending Agreement pursuant to which the period of forbearance was extended to August 31, 2023.

Sunshine’s Capital Raising Activities during 2Q21

On April 1, 2020, the Corporation and a company wholly owned by Mr. Kwok Ping Sun entered into a Subscription Agreement for convertible bonds (“Chairman CB”) in an aggregate principal amount of HK$ 72,000,000. With an initial conversion price of HK$0.632 per share, a maximum of 113,924,051 new Class “A” common shares were to be allotted and issued upon the full conversion of the CB. The CB interest rate was 8% per annum and would mature in two years. The Subscription has been approved by the independent shareholders at the Special General Meeting on May 25, 2020. The subscription was completed on June 15, 2020. The entire proceeds were used for financing general working capital and repayment of debts. On October 1, 2020, the Corporation has received notice for conversion from the Subscriber. The Conversion and the Whitewash Waiver was then approved by the independent shareholders at the Special General Meeting on March 5, 2021. On April 7, 2021, the Conversion was completed and 113,924,051 new shares were duly allotted and issued to the Subscriber.

Summary of Financial Figures

For 2Q21, net Dilbit sales remained $0 as for the same period of 2020 mainly due to suspension of production in 2Q20. Net recurring loss was CAD $14.9 million for 2Q21.

As at June 30, 2021 and December 31, 2020, the Corporation notes the following selected balance sheet figures.

(Canadian $000s)	June 30,	December 31,
	2021	2020
Cash	262	838
Trade and other receivables	3,278	1,636
Exploration and evaluation assets	255,593	256,195
Property, plant and equipment	475,437	481,825
Total liabilities	604,669	596,240
Shareholders’ equity	148,756	165,420

2021 Outlook

Sunshine will continue to focus on cost controls and carefully monitor developments in crude oil markets as well as the development of COVID-19 pandemic in North America. The Corporation is also continuing with its joint venture for re-activation of the Muskwa and Godin Area activities as international oil price recovers.

Kwok Ping Sun Executive Chairman

Gloria Ho Chief Financial Officer

MESSAGE TO SHAREHOLDERS

Sunshine’s Capital Raising Activities during 2Q21

Summary of Financial Figures

For 2Q21, net Dilbit sales remained $0 as for the same period of 2020 mainly due to suspension of production in 2Q20. Net recurring loss was CAD $14.9 million for 2Q21.

As at June 30, 2021 and December 31, 2020, the Corporation notes the following selected balance sheet figures.

(Canadian $000s)	June 30,	December 31,
	2021	2020
Cash	262	838
Trade and other receivables	3,278	1,636
Exploration and evaluation assets	255,593	256,195
Property, plant and equipment	475,437	481,825
Total liabilities	604,669	596,240
Shareholders’ equity	148,756	165,420

2021 Outlook

Kwok Ping Sun Executive Chairman

Gloria Ho Chief Financial Officer

Management's Discussion and Analysis

This Management's Discussion and Analysis ("MD&A") of the financial condition and performance of Sunshine Oilsands Ltd. (" Sunshine " or the "Company") for the three and six months ended June 30, 2021 is dated August 12, 2021, and approved by the Company’s Board of Directors. This MD&A should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements and notes thereto for the three and six months period ended June 30, 2021 and with the audited consolidated financial statements and notes thereto for the year ended December 31, 2020. All amounts and tabular amounts are stated in thousands of Canadian dollars unless indicated otherwise.

Overview

Sunshine is a holder and a developer of Athabasca region oil sands resources with approximately 0.95 billion barrels of risked best estimate contingent resources. The Company’s un-risked best estimate contingent resources at December 31, 2020 was approximately 1.63 billion barrels. With approximately 1 million acres of oil sands and petroleum and natural gas leases, the Company has significant commercial development potential. Phase I (5,000 barrels) of the West Ells 10,000 barrels thermal commercial project is in production. 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. Canadian oil sands represent the largest single source of supply of oil imported into the United States. The Company has one business and geographical segment. Accordingly, no business and geographical segment information is presented.

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 June 30, 2021, the Company had invested approximately $1.29 billion in oil sands leases, drilling operations, project engineering, procurement and construction, operation start-up, regulatory application processing and other assets. As at June 30, 2021, the Company had $0.26 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 prices, 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.

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, royalties, expenses and depletion of the West Ells Project.

For three and six months ended June 30, 2021, the Company’s average bitumen production was zero bbls/day. The bitumen is blended with diluent as part of the production process to create the marketable “Dilbit” blend product. For the six months ended June 30, 2021, no diluent blending was made due to temporary suspension of production, whereas diluent was blended at 19.8% volumetric rate for the six months ended June 30, 2020 reflecting the blending ratio in 1Q20. The average Dilbit sales volume was 0 bbls/day and 14 bbls/day for the three and six months ended June 30, 2021.

Thickwood and Legend

The Thickwood and Legend projects are each planned for initial phase one production of 10,000 barrels per day. Regulatory approval for Thickwood was received in the third quarter of 2013 while Legend approval is expected in 2021. Once the Thickwood and Legend Lake’s projects are sanctioned for development and construction, additional significant financing will need to be secured to proceed.

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

As at the date of this report, Muskwa has no production. Development of Muskwa area is expected to be reactivated in 2021 under new ownership of Renergy, at no cost to Sunshine.

Summary of Quarterly Results

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

($ thousands except	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3
per share & bbl/d)	2021	2021	2020	2020	2020	2020	2019	2019
Bitumen sales_(bbl/d)_	-	22	-	-	-	871	1,657	2,130
Petroleum sales	-	144	78	266	-	3,840	9,192	12,691
Royalties	-	-	-	-	-	6	94	179
Diluent	-	-	-	560	46	1,236	3,133	3,345
Transportation	-	43	-	151	(4)	2,379	2,933	4,561
Operating costs	1,594	1,825	1,518	1,584	1,940	4,679	3,027	4,765
Finance cost	11,712	13,422	11,304	13,998	(6,501)	6,149	26,448	8,290
Net loss/(gain)	22,789	2,688	(41,190)	12,028	(14,591)	41,770	43,530	19,140
Per share - basic and
diluted	0.14	0.02	(0.02)	0.09	0.16	0.32	0.64	0.33
Capital expenditures1	486	428	450	294	431	299	654	549
Total assets	753,425	756,209	761,660	766,750	771,561	773,605	760,658	775,818
Working capital deficiency2	535,469	513,103	509,044	538,179	260,532	262,004	515,555	488,052
Shareholders’ equity	148,756	162,509	165,420	141,463	153,514	134,418	158,885	201,204

1. Includes payments for exploration and evaluation, property, plant and equipment.

2. The working capital deficiency includes the USD current portion of the Notes converted to CAD at each period end exchange rate.

Results of Operations

Operating Netback

Operating Netback
($ thousands, except $/bbl)	For the three months ended June 30,				For	the six months ended June 30,
		2021		2020		2021		2020
Realized bitumen revenue	$	-	$	(46)	$	144	$	2,558
Transportation		-		4		(43)		(2,375)
Royalties		(1)		-		(1)		(6)
Net bitumen revenues	$	(1)	$	(42)	$	100	$	177
Operating costs		(1,602)		(1,940)		(3,427)		(6,619)
Operating cash flow	$	(1,603)	$	(1,982)	$	(3,327)	$	(6,442)
Operatingnetback($/ bbl)		N/A		N/A		(1,361.29)		(81.30)

1. Operating cash flow is a non-GAAP measure which is defined in the Advisory section of this MD&A.

The Operating cash flow for the three months ended June 30, 2021 was a net loss of $1.6 million compared to a net loss of $2.0 million for the three months ended June 30, 2020. There was no disclosure on operating netback per barrel for 2Q21 & 2Q20 as there was zero dilbit sales after the temporary suspension of production since 31 March 2020.

The Operating cash flow for the six months ended June 30, 2021 was a net loss of $3.3 million compared to a net loss of $6.4 million for the six months ended June 30, 2020. Operating netback loss per barrel basis increased by $1,279.99/bbl to $1,361.29/bbl from a loss of $81.30/bbl. The increase in the loss of operating cash flow per barrel is primarily due to significant decrease in dilbit sales volume.

Bitumen Production

Bitumen Production
	For the three months	ended	For the six months	ended
	June 30,		June 30,
(Barrels/day)	2021	2020	2021	2020
Bitumen production	-	-	-	497

Bitumen production at West Ells for the three and six months ended June 30, 2021 averaged 0 bbls/day compared to 0 bbls/day and 497 bbls/day for the three and six months ended June 30, 2020, respectively. No bitumen production for the three months ended June 30, 2021 and 2020. For the six months ended June 30, 2021, bitumen production decreased by 497 bbls/day compared to the same period in 2020 mainly due to temporary production suspension since 31 March 2020. The Company will continue to monitor the international oil market and the development of Covid-19 pandemic in North America closely.

Bitumen Sales

Bitumen Sales
	For the three months	ended	For the six months	ended
	June 30,		June 30,
(Barrels/day)	2021	2020	2021	2020
Bitumen Sales	-	-	11	435

Bitumen sales at West Ells for the three and six months ended June 30, 2021 averaged 0 bbls/day and 11 bbls/day compared to 0 bbls/day and 435 bbls/day for the three and six months ended June 30, 2020, respectively. Bitumen sales decreased by 424 bbls/day for the six months ended June 30, 2021 compared to the same period in 2020 due to temporary suspension of production since 31 March 2020.

Petroleum Sales, net of royalties

	For the three months	For the three months	For the three months	ended		For the six months	For the six months	ended
		June	30,			June	30,
($ thousands, except $/bbl)		2021		2020		2021		2020
Petroleum sales	$	-	$	-	$	144	$	3,840
Royalties		-		-		(1)		(6)
Petroleum sales, net of
royalties	$	-	$	-	$	143	$	3,834
$ / bbl		N/A		N/A		58.75		48.37

Petroleum sales are from the sales of Dilbit. There was no disclosure on the petroleum sales per barrel for 2Q21& 2Q20 as there was zero dilbit sales after the temporary suspension of production since 31 March 2020.

Petroleum sales, net of royalties for the six months ended June 30, 2021 decreased by $3.7 million to $0.1 million from $3.8 million for the six months ended June 30, 2020. Petroleum sales per barrel increased by $10.38/bbl to $58.75/bbl from $48.37/bbl for the same period of 2020 due to year on year increase in oil price. Petroleum sales decreased by $3.7 million primarily due to temporary suspension of production since March 31, 2020.

The royalty rate applicable to pre-payout oil sands operations starts at 1% of bitumen sales and increases for every dollar that the WTI crude oil price in Canadian dollars is priced above $55 per barrel, to a maximum of 9% when the WTI crude oil price is $120 per barrel or higher. The West Ells project is currently at pre-payout. Royalties for the six months ended June 30, 2021 decreased by $0.005 million compared to the same period of 2020. The decreases are mainly due to significant decrease of Dilbit sales resulting from temporary suspension of production since 31 March 2020.

Bitumen Realization

Bitumen Realization
		For the three	months	ended		For the six months		ended
		June 30,					June 30,
($ thousands, except $/bbl)		2021		2020		2021		2020
Dilbit revenue	$	-	$	-	$	144	$	3,840
Diluent blended		-		(46)		-		(1,282)
Realized bitumen revenue1	$	-	$	(46)	$	144	$	2,558
($ / bbl)		N/A		N/A		58.75		32.27

1. Realized bitumen revenue is used to calculate operating netbacks.

Bitumen realization represents the Company’s realized petroleum revenue (“Dilbit revenue”), net of diluent expenses. Dilbit revenue represents the Company’s revenue from its bitumen produced at West Ells project blended with purchased diluent. The cost of blending is impacted by the amount of diluent required and the Company’s cost of purchasing and transporting the diluent. A portion of the diluent expense is effectively recovered in the sales price of the blended product.

There was no disclosure on the bitumen realization per barrel for 2Q21 & 2Q20 as there was zero dilbit sales after the temporary suspension of production since 31 March 2020.

During the six months ended June 30, 2021, the Company’s bitumen realization revenue decreased by $2.4 million to $0.1 million from $2.6 million for the same period in 2020. The bitumen realized price per barrel increased by $26.65/bbl to $58.92 /bbl from $32.27/bbl.

Diluent Costs

Diluent Costs
		For the three	months ended		For the six months ended
($ thousands, except $/bbl				June 30,			June 30,
and blend ratio)		2021		2020	2021		2020
Diluent	$	-	$	46 $	-	$	1,282
$/bbl		N/A		N/A	-		16.18
Blend ratio		N/A		N/A	N/A		19.8%

At West Ells, diluent is blended with the bitumen as part of the production process to create a marketable dilbit blend product at West Ells. Diluent expense is mainly impacted by the required amount, cost of purchasing and transporting diluent, Canadian and U.S. benchmark pricing, the timing of diluent inventory purchases and changes in value of the Canadian dollar relative to the U.S. dollar.

There was no disclosure on the diluent cost per barrel for 2Q21 as there was zero dilbit sales after the temporary suspension of production since 31 March 2020. Diluent costs decreased by $1.3 million for the six months ended June 30, 2021 and 2020 was mainly due to temporary suspension of production since 31 March 2020.

Transportation

Transportation
		For the three		months ended		For the six	months ended
				June 30,				June 30,
($ thousands, except $/bbl)		2021		2020		2021		2020
Transportation	$	-	$	(4)	$	43	$	2,375
$ / bbl		N/A		N/A		17.56		29.97

Transportation costs consist of trucking costs for Dilbit and pipeline terminals fees. The transportation expense per barrel for the six months ended June 30, 2021 was $17.56/bbl compared to $29.97/bbl for the six months ended June 30, 2020, respectively. There was no disclosure on the transportation cost per barrel for 2Q21& 2Q20 as there was zero dilbit sales after the temporary suspension of production since 31 March 2020. The decrease in the transportation cost per barrel for the six months ended June 30, 2021 and 2020 was mainly due to decreased rates charged by the third party trucking companies.

Operating Costs

Operating Costs
		For the three	months ended			For the six months ended
				June 30,				June 30,
($ thousands, except $/bbl)		2021		2020		2021		2020
Energy operating costs	$	575	$	327	$	1,236	$	1,312
Non-energy operating costs		1,027		1,613		2,191		5,307
Operating costs	$	1,602	$	1,940	$	3,427	$	6,619
$ / bbl		N/A		N/A		1,402.21		83.52

Operating costs are comprised of the sum of non-energy operating costs and energy costs. Non-energy operating costs represent production-related operating activities, excluding energy operating costs. Energy operating costs represent the cost of natural gas for the production of steam and power at the West Ells facilities.

There was no disclosure on the operating expense per barrel for 2Q21 & 2Q20 as there was zero dilbit sales after the temporary suspension of production since 31 March 2020. For the six months ended June 30, 2021, the operating costs per barrel increase by $1,318.69/bbl compared to the same period in 2020 primarily due to the no production since March 31, 2020. Since the majority of the operating costs at West Ells are fixed in nature, the operating costs per barrel of production should be reduced as production resumes at West Ells.

General and Administrative Costs

General and Administrative Costs
	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Salaries, consultants and benefits Rent Legal and audit Other Balance,end ofperiod	$ 816 $ 1,224 $ 1,783 $ 2.758 53 69 107 78 174 238 117 582 443 525 245 1,283
	$ 1,279 $ 1,992 $ 2,858 $ 4,364

The Company’s general and administrative costs were $1.2 million and $2.9 million for the three and six months ended June 30, 2021 compared to $2.0 million and $4.4 million for the same periods in 2020. General and administrative costs decreased by $0.7 million and $1.5 million for the three and six months ended June 30, 2021 compared to the same periods in 2020 primarily due to workforce reductions as a result of temporary suspension of production since March31, 2020 and the Company’s continued focus on cost management.

Finance Costs

Finance Costs
		For the	three	months ended		For	the six months ended
				June 30,				June 30,
($ thousands)		2021		2020		2021		2020
Interest expense on senior
notes, including yield
maintenance premium
(YMP)	$	10,053	$	(7,992)	$	20,312	$	(3,122)
Interest expense on other
loans		1,387		831		2,866		1,767
Financing related costs		-		32		-		34
Other interest expense		33		14		1,515		29

Other interest expense-
leases		11		35		51		77
Unwinding of discounts on
provisions		228		579		390		863
Finance costs	$	11,712	$	(6,501)	$	25,134	$	(352)

The Company’s finance costs were 11.7 million and 25.1 million for the three and six months ended June 30, 2021 compared to ($6.5) million and ($0.4) million for the three and six months ended June 30, 2020. The increases for both periods were mainly attributed to interest expense on senior notes including YMP.

Share-based Compensation

		Three months		Three months
		ended June 30, 2021		ended June 30, 2020
	Expensed	Capitalized Total	Expensed	Capitalized Total
Stock options	$1	$- $1	$127	$-$127

		Six months ended		Six months ended
		June 30, 2021		June 30, 2020
	Expensed	Capitalized Total	Expensed	Capitalized Total
Stock options	$2	$- $2	$254	$- $254

Share-based compensation expense for the three and six months ended June 30, 2021 was $0 million and $0 million compared to $0.1 million and $0.3 million for the same periods in 2020. The fair value of share-based compensation associated with the granting of stock options is recognized by the Company in its condensed consolidated interim financial statements. Fair value is determined using the Black-Scholes option pricing model.

Depletion, Depreciation and Impairment

		For the three months ended	For the three months ended	For the six months ended	For the six months ended	For the six months ended
			June 30,			June 30,
($ thousands, except $/bbl)		2021	2020	2021		2020
Depletion	$	- $	- $	-	$	2,058
Depreciation		282	354	580		778
Depletion and depreciation	$	282 $	354 $	580	$	2,836
Depletion ($ / bbl)		N/A	N/A	N/A		25.97

The Company commenced commercial production at West Ells Project I on March 1, 2017. As at that time, the Company started recording depletion of West Ells Project I assets in the statement of comprehensive income (loss) for the three months ended March 31, 2017. The depletion rate is based on unit-of-production.

Depletion and depreciation expense was $0.3 million and $0.6 million for the three and six months ended June 30, 2021 compared to $0.4 million and $2.8 million for the three and six months ended June 30, 2020, respectively. Depletion and depreciation expense decreased by $2.3 million for six months ended June 30, 2021 and 2020 was mainly due to no depletion in 2021 YTD & 2Q 2020 resulting from temporary suspension of production since March 31, 2020.

As at June 30, 2021, the Company did not identify any indicators of further impairment (or reversal of the previous impairments recorded in previous years) 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 and six months ended June 30, 2021 and 2020. 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 June 30,

2021, the Company had total available tax deductions of approximately $1.72 billion, with unrecognized tax losses that expire between 2030 and 2039.

Liquidity and Capital Resources

Liquidity and Capital Resources
	June 30, 2021 December 31, 2020
Working capital deficiency Shareholders’ equity	$ 535,469 $ 509,044 148,756 165,420
	$ 684,225 $ 674,464

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.

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 forbearance 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”). On March 21, 2017, the Company entered into the Forbearance Reinstatement Agreement ("FRA") and a Note Exchange Agreement (the “NEA”) with the Forbearing Holders. The Forbearing Holders agreed to waive the liability of the Company in relation to previous violations of terms listed on the Agreement and fully reinstate the Agreement, provided that the Company made the following payments on or before March 27, 2017:

Payment of USD $2.8 million representing 20% of the yield maintenance premium 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 cash commitment USD $5.2 million was paid;
the Company agreed to repurchase and the Forbearing Holders agreed to sell up to USD $11.2 million of Senior Notes in exchange for common shares of the Company, pending on conditions.

Other payments contemplated in the FRA included:

Payment of all legal professional fees by March 21, 2017, which was paid on March 21, 2017;
80% of the yield maintenance premium to be repaid on August 1, 2017 in cash;
80% of the accrued interest and forbearance fee of USD $9.6 million to be repaid on August 1, 2017 in cash;
Make principal repayments to the Forbearing Holders 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.

On September 26, 2017, the Company and the Forbearing Holders confirmed the signing of the Amended and Restated Forbearance Agreement (the “Amended FA”). The principal terms of the Amended FA include:

The Forbearance would be extended to August 1, 2018 (New York time), provided that;
Repayment of USD $0.2 million upon signing the Amended FA, which was paid on September 26, 2017;
Repayment of USD $1.8 million by October 30, 2017;
Repayment of USD $5.0 million and USD $15.0 million on February 1, 2018 and May 1, 2018 respectively, if repayment is made prior to December 31, 2017, all accrued and unpaid interests incurred on the corresponding amount will be waived;

The Company was to obtain financing of USD $5.0 million within 45 days after signing the Amended FA;
The Company was to obtain financing of USD $5.0 million every quarter.

Some of the Company’s loan agreements are subject to covenant clauses, whereby the Company is required to meet certain criteria. The Company did not fulfill the minimum liquidity, quarterly financings and capital raise covenants as required in the Amended FA. Furthermore, Sunshine did not fulfill repayment requirements of USD $1.8 million on October 30, 2017, USD $5.0 million on February 1, 2018 and USD $15.0 million on May 1, 2018.

On August 1, 2018, the Company was required, amongst other matters, to repay notes principal, and any previous outstanding payment commitments. The Company did not fulfill the repayment requirements. On October 31, 2018 (Calgary time), the Company and the noteholders signed a Reinstatement and Amending Agreement (the “FRAA”). The principal terms of the FRAA include:

The Forbearance was extended to August 1, 2019 (New York time);
An interest of 10% per annum is incurred from the date hereof until August 1, 2019 (New York time);
The Company is to obtain financing of at least USD $5.0 million by April 30, 2019 to maintain sufficient liquidity.

On April 24, 2020, the Company and the Forbearing Holders confirmed the signing of the Forbearance Reinstatement and Amending Agreement (the “ FRAA ”). The principal terms of the FRAA include:

The FRAA covers the period from December 31, 2019 to August 31, 2021 (“Period of Forbearance);
Same as the Forbearance Reinstatement and Amending Agreement executed on November 1, 2018, all outstanding amounts (principal and interests) will continue to be accrued at an interest of 10% per annum until August 31, 2021, and during the Period of Forbearance, there will not be any forbearance fee and yield maintenance premium based on the initial Forbearance Agreement executed on September 12, 2016.

On February 5, 2021 (Calgary time), the Company and the Forbearing Holders entered into an interest waiver agreement (the “Interest Waiver Agreement”) pursuant to which the Forbearing Holders agree to unconditionally and irrevocably waive the interest accrued between January 1, 2020 to December 31, 2020 at 10.0% per annum on the outstanding amounts (principal and interests) under the FRAA dated April 24, 2020 (the “Waiver of Interest”) which amounted to US$31.5 million. Save as the Waiver of Interest, all other terms and conditions as stipulated in the FRAA remain unchanged.

On August 8, 2021, the Company and the Forbearing Holder confirmed the signing of the Forbearance Reinstatement and Amending Agreement (the “ FRAA ”). The principal terms of the FRAA include:

The FRAA covers the period from September 1, 2021 to August 31, 2023 (“Period of Forbearance);
Same as the Forbearance Reinstatement and Amending Agreement executed on April 24, 2020, all outstanding amounts (principal and interests) will continue to be accrued at an interest of 10% per annum until August 31, 2023, and during the Period of Forbearance, there will not be any forbearance fee and yield maintenance premium based on the initial Forbearance Agreement executed on September 12, 2016.

The Board believes the entering into of the FRAA is in the interests of the Company and its shareholders as a whole in view that the FRAA will provide the Company with additional time to repay or refinance the indebtedness owned by the Company to the Noteholders under the Notes, whilst at the same time the financing cost has been substantially lowered to reasonable market level.

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, reporting status and undertaking certain corporate transactions.

The Note Indenture allows the Company to incur additional indebtedness in an aggregate principal amount not to exceed US$5.0 million (the “Permitted Debt”). The Company had asked for consent from a majority note holders, effective as of April 14, 2016, to amend the Note Indenture to increase the amount of Permitted Debt from US$5.0 million to US$15.0 million. A majority of the Note holders agreed to this amendment as of May 11, 2016. As of June 30, 2021, the Company has incurred unsecured third party Debt for a total of US$36.9 million (CAD$46.4 million equivalent).

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. As at June 30, 2021. no amounts have been accrued in the Condensed Consolidated Interim Financial Statements 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.

The Company received a demand notice from the Regional Municipality of Wood Buffalo (“RMWB”) in relation to the 2016-2021 municipal property taxes of $11.7 million. The Group was also charged with overdue penalties of $6.7 million. Since then the Group was in active negotiation with RMWB for a settlement plan with proposals to waive overdue penalties. As at the date of this report, the Group believes that notices issued by RMWB relating to property taxes did not comply with relevant legislation and the Group has sought judicial review to determine the effect of non-compliant tax notices on RMWB’s property tax claim.

The Company is involved in various claims including claims described above and actions arising in the course of operations and is subject to various legal actions, pending claims and exposures. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Unfavorable outcome were to occur against such claims or pending claims, there exists the possibility of a material adverse impact on the Company’s consolidated net income or loss in the period in which the outcome is determined. Accruals for litigation, claims and assessments are recognized if the Company determines that the loss is probable and the amount can be reasonably estimated. The Company believes it has made adequate provision for such claims. While fully supportable in the Company’s view, some of these positions, if challenged may not be fully sustained on review. 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 June 30, 2021, the Company had incurred $0.82 million in Builders’ liens (not related mineral leases) against them during the ordinary course of business.

The Notes are translated into Canadian dollars at the period end exchange rate of $1 USD = $1.2394 CAD.

The Company’s strategy is to access sufficient capital, through equity issuances, monetization, joint ventures and the utilization of debt, in order to maintain a capital base that properly supports the objectives of maintaining financial flexibility and of sustaining future development of the business. The Company manages its capital structure in order to continue as a going concern and makes adjustments relative to changes in economic conditions and the Company’s

risk profile. In order to manage risk, the Company may from time to time issue shares and adjust its capital spending to manage current working capital deficiency levels. The Company’s liquidity may be adversely affected if the Company’s access to the capital markets is hindered because of financial market conditions generally, or as a result of conditions specific to the Company.

For the six months ended June 30, 2021, the Company reported a net loss including non-controlling interest of $22.8 million. At June 30, 2021, the Company had a working capital deficiency of $535.5 million.

The Company’s debt-to-asset ratio, measured based on total liabilities divided by total assets was 80% as at June 30, 2021, compared to 78% as at December 31, 2020.

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 United States dollars (“USD”) and Hong Kong dollars (“HKD”). 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 six months ended June 30, 2021.

If exchange rate to convert from USD to CAD had been one percent higher or lower with all other variables held constant, foreign cash held at June 30, 2021 would have been impacted by $Nil (2020: $Nil) and the carrying value of the debt at June 30, 2021 would have been impacted by $2.46 million (2020: $2.9 million).

If exchange rate to convert from HKD to CAD had been one percent higher or lower with all other variables held constant, foreign cash held at June 30, 2021 would have been impacted by $Nil (2020: $Nil) and the carrying value of the debt at June 30, 2021 would have been impacted by $0.33 million (2020: $0.23 million).

Commitments and Contingencies

Management estimated the contractual maturities of the Company's obligations. These estimated maturities may differ significantly from the actual maturities of these obligations. For a detailed discussion regarding to the Company’s commitments and contingencies, please refer to the Company's Unaudited Condensed Consolidated interim Financial Statements and notes thereto for the three and six months period ended June 30, 2021 and with the Audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2020.

Transactions with Related Parties

For the six months ended June 30, 2021, a consulting Company, to which a director of Sunshine is related, charged the Company $0.25 million (December 31, 2020 – $0.5 million) for management and advisory services .

As at 30 June 2021, Mr. Kwok Ping Sun, the Company’s Executive Chairman, has beneficial ownership of, or control or direction of 150,232,591 common shares of the Company, which represents approximately 61.70% of the Company’s outstanding common shares.

On April 1, 2020, the Company and a company wholly owned by Mr. Kwok Ping Sun entered into a Subscription Agreement for convertible bonds (“CB”) in an aggregate principal amount of HK$ 72,000,000. With an initial conversion price of HK$0.632 per share, a maximum of 113,924,051 new Class “A” common shares were to be allotted and issued upon the full conversion of the CB. The CB interest rate was 8% per annum and matures in two years. The Subscription has been approved by the independent shareholders at the Special General Meeting on 25 May 2020. The subscription was completed on 15 June 2020. The entire proceeds were used for financing general working capital and repayment of debts. On October 1, 2020, the Company has received notice for conversion from the Subscriber. The Whitewash Waiver has been conditionally granted by HKSFC on 4 March 2021. The Conversion and the Whitewash Waiver was then approved by the independent shareholders at the Special General Meeting on 5 March 2021. On April 7, 2021, the Conversion was completed and 113,924,051 new shares were duly allotted and issued to the Subscriber.

As at June 30, 2021, the Company had loans from related companies, which are unsecured, interest bearing at 10% per annum, and of which approximately CAD $38,227,000 can be rollover for a period of 3 to 12 months.

Off-balance Sheet Arrangements

No asset or liability value was assigned to these agreements on the Company’s balance sheet. As at June 30, 2021, the Company did not have any other off-balance sheet arrangements.

Changes in Accounting Policies

These Condensed Consolidated Interim Financial Statements have been prepared using the same accounting policies and methods of computation as the annual audited consolidated financial statements of the Company for the year ended December 31, 2020, with the exception of the adoption of IFRS 16 described below. These Condensed Consolidated Interim Financial Statements do not include all of the information and disclosures required in the Corporation’s annual consolidated financial statements, and should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended December 31, 2020.

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 2020 annual MD&A.

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, 2020, which is available at www.hkexnews.hk. The 2020 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.

Disclosure Controls and Procedures

Gloria Ho, Executive Director of the Board and Chief Financial Officer and Mr. Frank Ng, who temporarily assumes direct responsibility for all CEO tasks and functions, 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 Group is made known to the Group's 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 Group 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. As at June 30, 2021, the Chief Financial Officer and the interim Chief Executive Officer evaluated the design and operation of the Group’s DC&P. Based on that evaluation, the Executive Director of the Board and the Chief Financial Officer and the interim Chief Executive Officer concluded that the Group’s DC&P were effective as at June 30, 2021.

Internal Controls over Financial Reporting

Sponsoring Organizations of the Treadway Commission (2013 Framework); they have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Group’s ICFR at June 30, 2021, and concluded that the Group’s ICFR are effective at June 30, 2021 for the foregoing purpose.

No material changes in the Company's ICFR were identified during the six months period ended June 30, 2021 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

Non-GAAP Measures

This MD&A includes references to certain measures which do not have a standardized meaning as prescribed by IFRS, such as “operating netbacks” and “funds from operations”, and therefore are considered non-GAAP measures. These non-GAAP measures are commonly used in the oil and gas industry and the Company believes including such measures is useful to investors. Investors are cautioned that these non-GAAP measures should not be construed as an alternative to measures calculated in accordance with IFRS as, given the non-standardized meanings, these measures may not be comparable to similar measures presented by other issuers.

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 capital 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	months ended		For the six months ended	For the six months ended	For the six months ended
				June 30,				June 30,
($ thousands)		2021		2020		2021		2020
Net cash used in operating
activities	$	(2,054)	$	(3,188)	$	(4,874)	$	(9,094)
Deduct (add)
Net change in non-cash
operating working capital
items		830		1,221		1,313		1,736
Cash flow used in
operations	$	(2,884)	$	(4,409)	$	(6,187)	$	(10,830)

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 forwardlooking 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 forwardlooking 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 forwardlooking 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.

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

(i) 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. Nevertheless, 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.
(ii) The Company is in course of identifying suitable insurers for appropriate insurance coverage for legal actions against the Company's Directors.

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 enquiries 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.

Movements in Stock Options

The table below presents the movements in stock options for Directors, the chief executive and other executive management of the Company during the period ended June 30, 2021.

Name	December 31, 2020	Granted	Exercised	Forfeited	Expired	June 30, 2021
Kwok Ping Sun	6,933,580	-	-	-	-	6,933,580
Michael Hibberd	933,580	-	-	-	-	933,580
Gloria Ho	400,000	-	-	-	-	400,000
Yi He	150,000	-	-	-	-	150,000
Linna Liu	-	-	-	-	-	-
Xijuan Jiang	20,000	-	-	-	-	20,000
Guangzhong Xing	100,000	-	-	-	-	100,000
Alfa Li	-	-	-	-	-	-
Sub-total for Directors	8,537,160	-	-	-	-	8,537,160
Sub-total for other share
option holders	518,841	-	-	(3,208)	-	515,633
Total	9,056,001	-	-	(3,208)	-	9,052,793

Please refer to our consolidated financial statements included in the 2020 Annual Report for additional details on our stock option plans and movements for the year ended December 31, 2020.

Fair Value of Share Options Granted

The weighted average fair value of the share options granted for the period ended June 30, 2021 was 0.60-2.00 (year ended December 31, 2020 - $0.60). Options were priced using the Black-Scholes model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non- transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected volatility is based on the historical share price volatility of the Company during 2021 and 2020.

The table below details the input variables used in the Black-Scholes model to determine the fair value of options granted for the six months ended June 30, 2021 and year ended December 31, 2020.

Input Variables	Six-month period
	ended	Year ended
	June 30, 2021	December 31, 2020
Grant date share price ($)	0.60-2.00	0.60-2.00
Exercise Price ($)	0.60-2.00	0.60-2.00
Expected volatility (%)	61.88-63.91	61.88-63.91
Option life (years)	1.88-2.47	1.32-2.50
Risk-free interest rate (%)	1.48-1.95	1.48-1.95
Expected forfeitures(%)	15.39-15.39	15.39-15.39

Purchase, Sale or Redemption of Sunshine’s Listed Securities

Class “A” Common Shares

General mandate

2021 activity

The Conversion and the Whitewash Waiver was then approved by the independent shareholders at the Special General Meeting on March 5, 2021. On April 7, 2021, the Conversion was completed and 113,924,051 new shares were duly allotted and issued to the Subscriber.

2020 activity

On January 3, 2020, the Board proposed to implement a Share Consolidation on the basis that every fifty (50) Existing Shares will be consolidated into one (1) Consolidated Share. The total number of Consolidated Shares in the issued share capital of the Company immediately following the Share Consolidation was rounded down to a whole number by cancelling any fractional Shares of the Company arising from the Share Consolidation. The Share Consolidation was conditional upon, among other things, the approval of the Shareholders at the SGM. The Board proposed to change the board lot size for trading on the Stock Exchange from 500 Existing Shares to 1,000 Consolidated Shares conditional upon the Share Consolidation becoming effective.

On February 24, 2020, a Special General Meeting approved the Share Consolidation and the Change in Board Lot Size became effective on February 26, 2020.

On February 27, 2020, the Company entered into a settlement agreement for a total of 1,443,000 consolidated Class “A” common shares at a price of HKD $1.31 per share (post-consolidation) for gross proceeds of HKD $1,896,134.68. On March 5, 2020, the Company completed the closing of this settlement agreement. This settlement agreement was entered into for settlement of trade payables with an independent third party.

On April 1, 2020, the Company and a wholly owned company held by Mr. Kwok Ping Sun entered into a Subscription Agreement for convertible bonds (“Chairman CB”) in an aggregate principal amount of HK$ 72,000,000. With an initial conversion price of HK$0.632 per share, a maximum of 113,924,051 new Class “A” common shares will be allotted and issued upon the full conversion of the CB. The CB interest rate is 8% per annum and matures in two years. The Subscription has been approved by the independent shareholders at the Special General Meeting on 25 May 2020. The subscription was subsequently completed on 15 June 2020. The entire proceeds will be used for financing its general working capital and repayment of debts. On October 1, 2020, the Company has received notice for conversion from the Subscriber.

Shares Outstanding

As at June 30, 2021, the Company had 243,478,681 Class “A” common shares issued and outstanding.

Employees

As at June 30, 2021, the Company has 22 full-time employees. For the three and six months ended June 30, 2021, total staff costs amounted to $1.0 million and $1.9 million, respectively.

Change in Directors’ Information

During the period under review and up to the date of this report, save as Greenfields Petroleum Corporation no longer listed on the TSX Venture Exchange where Mr. Michael J Hibberd remains as Chairman, all other Directors’ information remains unchanged pursuant to Rule 13.51B.

DISCLOSURE OF INTERESTS

(a) Directors’ and Chief Executive’s Interests and Short Positions in Shares, Underlying Shares or Debentures

As at June 30, 2021, the interests and short positions of the Directors and chief executive of the Corporation in the shares of the Corporation or its associated corporations (within the meaning of Part XV of the SFO, which were required (a) to be notified to the Corporation and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which each of them had taken or was deemed to have taken under the provisions of the SFO); or (b) to be recorded in the register required to be kept by the Corporation pursuant to section 352 of the SFO;

or (c) to be notified to the Corporation and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules were as follows:

Director’s long position in the Company

1. Common Shares

Name	Company	Nature of Interest	Number of Common Shares held	Approximate % interest in the Common Shares
Kwok Ping Sun	Sunshine Oilsands Ltd.	Direct/Indirect	150,232,591	61.70%
Michael Hibberd	Sunshine Oilsands Ltd.	Direct/Indirect	2,165,981	0.89%
Gloria Ho	Sunshine Oilsands Ltd.	N/A	-	-
Yi He	Sunshine Oilsands Ltd.	Direct	139,682	0.06%
Xijuan Jiang	Sunshine Oilsands Ltd.	Direct	104,814	0.04%
Linna Liu	Sunshine Oilsands Ltd.	N/A	-	-
Guangzhong Xing	Sunshine Oilsands Ltd.	N/A	-	-
Alfa Li	Sunshine Oilsands Ltd.	N/A	-	-

2. Stock Options

Name of Directors	Date of grant	As at January 1, 2021	Granted during the period	Exercised during the period	Lapsed during the period	Cancelled during the Period	As at June 30, 2021	Exercise price (HKD)2	Market Closing price (HKD)2	End of Vesting period3	End of Exercis e period 3
Gloria Ho	12/3/2016	100,000	-	-	-	-	100,000	20.5	19.75	12/4/2018	12/3/2021
	7/5/2018	300,000	-	-	-	-	300,000	11.8	11.5	7/5/2020	7/5/2023
Kwok Ping Sun	9/23/2016	933,580	-	-	-	-	933,580	29.6	29	9/24/2018	9/23/2021
	7/5/2018	6,000,000	-	-	-	-	6,000,000	11.8	11.5	7/5/2020	7/5/2023
Michael Hibberd	9/23/2016	933,580	-	-	-	-	933,580	29.6	29	9/24/2018	9/23/2021
Xijuan Jiang	8/17/2016	20,000	-	-	-	-	20,000	17.5	17.5	8/18/2018	8/17/2021
Yi He	8/17/2016	20,000	-	-	-	-	20,000	17.5	17.5	8/18/2018	8/17/2021
	4/3/2017	30,000	-	-	-	-	30,000	15.5	14.75	4/4/2019	4/3/2022
	9/9/2019	100,000	-	-	-	-	100,000	3.65	3.6	9/9/2021	9/9/2024
Guangzhon g Xing	9/9/2019	100,000	-	-	-	-	100,000	3.65	3.6	9/9/2021	9/9/2024
	Subtotal	8,537,160	-	-	-	-	8,537,160

Employees’ Options

Date of grant	As at January 1, 2021	Granted during the period	Exercised during the period	Lapsed during the period	Cancelled during the period	As at June 30, 2021	Exercise price (HKD)2	Market Closing price (HKD)2	End of Vesting period3	End of Exercise period3
5/20/2016	3,208	-	-	3,208	-	-	19	18.25	5/21/2018	5/20/2021
8/17/2016	36,233	-	-	-	-	36,233	17.5	17.5	8/18/2018	8/17/2021
9/23/2016	429,400	-	-	-	-	429,400	29.6	29	9/24/2018	9/23/2021

4/3/2017	50,000	-	-	-	-	50,000	15.5	14.75	4/4/2019	4/3/2022
Subtotal	518,841	-	-	3,208	-	515,633

Notes:

1) The Corporation conducted a share consolidation on the basis that every fifty (50) the then shares be consolidated into one (1) consolidated share on February 26, 2020. All numbers of share options above are adjusted on a post shareconsolidation basis.
2) The exercise prices and the market closing price immediately before the date of grant of options are adjusted on a post share-consolidation basis.
3) Under the Post-IPO share option scheme, the first 1/3 of the options granted are vested and exercisable on the date of grant, and each remaining 1/3 of the total options will become vested and exercisable in each subsequent two years immediately after the date of grant. And the options will expire in five years from the date of grant.

Save as disclosed above, as at June 30, 2021, none of the Directors or chief executive of the Corporation had interests or short positions in the shares, underlying shares or debentures of the Corporation and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Corporation and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which each of them had taken or deemed to have taken under the provisions of the SFO); or (b) to be recorded in the register required to be kept by the Corporation pursuant to section 352 of the SFO; or (c) to be notified to the Corporation and the Hong Kong Stock Exchange pursuant to the Model Code.

(b) Substantial Shareholders’ Interests and Short Positions in Shares and Underlying Shares

As at June 30, 2021, according to the register of interests kept by the Company under section 336 of the SFO, and so far as was known to the Directors or chief executive of the Company, the following persons (other than the Directors or chief executive of the Company) had an interest or short position in the Shares which would require to be disclosed by the Company under the provisions of Divisions 2 and 3 of the Part XV of the SFO, or who was directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of the Company:-

Name	Nature of Interest	Common Shares Held	Approximately % in the Common Shares
Zhang Jun	Direct/Indirect	20,131,519	8.27%

Save as disclosed above, as at June 30, 2019, according to the register of interests kept by the Corporation under section 336 of the SFO, and so far as was known to the Directors or chief executive of the Corporation, save as disclosed above, none of the substantial shareholders of the Corporation had an interest or short position in the Shares which would require to be disclosed by the Corporation under the provisions of Divisions 2 and 3 of Part XV of the SFO, or is directly or indirectly interested in 5% or more of the nominal value of any (a) Director’s Share Options class of share capital carrying rights to vote in all circumstances at general meeting of the Corporation.

Dividends

The Company has not declared or paid any dividends in respect of the six months period ended June 30, 2021 (six months period ended June 30, 2020 - $Nil).

Review of Interim Results

The condensed consolidated interim financial statements for the Company for the three and six months ended June 30, 2021, were reviewed by the Audit Committee of the Company and approved by the Board.

Publication of Information

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

Outlook

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of Canadian dollars)

	Notes	June 30, 2021 December 31, 2020
Assets Current assets Cash Trade and other receivables Non-current assets Other loan receivables Other receivables Exploration and evaluation Property, plant and equipment Right-of-use assets Liabilities and Shareholders’ Equity Current liabilities Trade and accrued liabilities Other loans Loans from related companies Senior notes Lease liabilities Non-current liabilities Senior notes Bonds Other loans Loans from related companies Lease liabilities Provisions Shareholders’ Equity Share capital Convertible bond-conversion options Reserve for share-based compensation Exchange fluctuation reserve Deficit Equity attributable to owners of the Company Non-controlling interests		$ 262 $ 838 3,278 1,636
	4
		3,540 2,474
		11,041 12,882 6,562 6,562 255,593 256,195 475,437 481,825 1,252 1,722
	4
	4
	5
	6
	7
		749,885 759,186
		$ 753,425 $ 761,660

		$ 242,188 $ 223,711 2,535 1,158 38,227 32,745 - 252,911 1,058 993


	8
	9.2
	21.3
	9.3
	7
		284,008 511,518 255,001 - 9,306 11,593 13,204 263 318 801 53,749 61,148

	9.3
	9.1
	9.2


	10

		604,669 596,240
		1,315,265 1,296,814 - 4,170 76,413 76,411 (494) (412) (1,242,045) (1,211,241)

	12

	13.3


		149,139 165,742 (383) (322)
		148,756 165,420
		$ 753,425 $ 761,660

Going concern (Note 2) Commitments and contingencies (Note 22) Subsequent events (Note 25)

Approved by the Board

“David Yi He”

Independent Non-Executive Director

“Kwok Ping Sun” Executive Director

See accompanying notes to the Condensed Consolidated Interim Financial Statements.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

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

	Three months ended June 30, Six months ended June 30,
Notes	2021 2020 2021 2020
Revenues and Other Income Petroleum sales, net of royalties 14 Other income 16 Foreign exchange gains/(losses) 20.4 Expenses Diluent Transportation Operating Depletion, depreciation and impairment 6,7 General and administrative 17 Finance costs 18 Stock based compensation 13.3 Gain/(Loss) before income taxes Income taxes 11 Net gain/(loss) Less: Net Gain/(Loss) attributable to Non-controlling interests Net gain/(loss) and comprehensive gain/(loss) for the year attributable to equity holders of the Group Basic and diluted gain/(loss) per share 19	$ (1) $ - $ 143 $ 3,834 - 14 443 (7,913) 12,458 6,424 (14,151)
	(7,914) 12,472 6,567 (9,874)
	- 46 - 1,282 - (4) 43 2,375 1,602 1,940 3,461 6,619 281 354 580 2,836 1,279 1,992 2,858 4,364 11,712 (6,501) 25,134 (352) 1 127 2 254
	$ 14,875 $ (2,046)$ 32,044 $ 17,378
	(22,789) 14,518 (25,477) (27,252) - - - -
	(22,789) 2 14,518 73 (25,477) (61) (27,252) (132)
	(22,787) 14,591 (25,538) (27,120)
	$ (0.14) $ 0.16 $ (0.14) $ (0.21)

See accompanying notes to the Condensed Consolidated Interim Financial Statements

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

Attributable to Equity Holders

Balance at December 31, 2020 Net loss and comprehensive loss for the period Exchange fluctuation reserve FX Gain/loss Issue of common shares (note 12) Convertible bond-conversion option Issue of shares under employee share savings plan Issue of shares Director Share Arrangement (note 12) Issue of shares upon exercise of share options Share option reserve transferred on exercise of stock options Recognition of share-based payments (note 13.3) Share issue costs, net of deferred tax ($Nil) Six Months Ended June 30, 2021 Balance at December 31, 2019 Net loss and comprehensive loss for the period Issue of common shares (note 12) Convertible Bond-Conversion options (note 9.1) Issue of shares under employee share savings plan Issue of shares Director Share Arrangement Issue of shares upon exercise of share options Share option reserve transferred on exercise of stock options Recognition of share-based payments (note 13.3) Share issue costs, net of deferred tax ($Nil) Six Months Ended June 30, 2020	Share capital Reserve for share based compensation Convertible Bond Exchange fluctuation reserve Deficit Total Non- controlling interests Total Equity
	$ 1,296,814 $ 76,411 $ 4,170 (412) $(1,211,241) $ 165,742 $ (322) $ 165,420 - - - - (25,477) (25,477) (61) (25,538) - - - (82) (82) - (82) - - - - - - - - - - - 18,467 (4170) (5,327) 8,970 8,970 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2 - - - 2 - 2 16 - - - - (16) - (16)
	$1,315,265 $76,413 - (494) $ (1,242,045) $149,139 $ (383) $148756
	$ 1,296,523 $ 75,904 - - $(1,213,469) $ 158,958 $ (73) $158,885 - - - - (27,120) (27,120) (132) (27,252) 324 - - - - 324 - 324 - - 4,466 - - 4,466 - 4,466 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 254 - - - 254 - 254 (33) - - - - (33) - (33)
	$1,296,814 $76,158 $4,466 $ (1,223,719) $153,719 $ (205) $154,514

See accompanying notes to the Condensed Consolidated Interim Financial Statements

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of Canadian dollars)

(Expressed in thousands of Canadian dollars)
Notes	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Cash flows from operating activities Net loss / (gain) Finance costs Unrealized foreign exchange (gains)/losses 20.4 Other income Depletion and depreciation 6,7 Share-based compensation 13.3 Movement in non-cash working capital 24 Net cash used in operating activities Cash flows from investing activities Other income received Payments for exploration and evaluation assets 5 Payments for property, plant and equipment 6 Movement in non-cash working capital 24 Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from issue of common shares 12 Payment for share issue costs 12 Payment for finance costs 18 Payments for the notes principal Proceeds from Bonds 9.1 Payments for Bonds 9.1 Proceeds from shareholder loans 21.1 Repayment of shareholder loans 21.1 Payment of lease liabilities Movement in non-cash working capital 24 Net cash provided by financing activities Effect of exchange rate changes on cash held in foreign currency 20.4 Net increase / (decrease) in cash Cash, beginning of period Cash, end of period	$ (22,789) $ 14,518 $ 11,712 (6,501) 7,911 (12,466) - (441) 281 354 1 127 713 1,221	(25,477) $ (27,252) 25,134 (352) (6,426) 14,127 - (443) 580 2,836 2 254 1,196 1,736
	(2,171) (3,188)	(4,991) (9,094)
	- 1 (463) (274) (23) (157) 119 (254)	- 3 (690) (500) (224) (230) 238 (115)
	(367) (684)	(676) (842)
	- - - (15) (430) (65) - - (1) 4,670 - (142) 3,897 558 (864) - (263) (310) - (676)	- (16) (33) (492) (880) - 630 9,128 (546) (478) 10,269 771 (4,294) - (529) (562) (78) 1,276
	2,339 4,020	4,944 9,222
	(8) (68)	147 (70)
	(207) 80 469 390	(576) (784) 838 1,254
	$ 262 $ 470 $	262 $ 470

See accompanying notes to the Condensed Consolidated Interim Financial Statements. .

Notes to Condensed Consolidated Interim Financial Statements

For the three months ended June 30, 2021 and 2020

(Expressed in thousands of Canadian dollars, unless otherwise indicated)

1. General 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 1100, 700 – 6th Avenue S.W., Calgary, Alberta, Canada T2P 0T8. 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. The Company and its subsidiaries are collectively referred to as the “Group”.

The Group 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. Details of the subsidiaries are set out in note 23.

On April 15, 2019, Sang Xiang Petroleum & Chemical (Hebei) Limited (“Sunshine Hebei”) was incorporated in China and is a joint venture company in which the Company owns 51% interests. The address of the principal place of business for Sunshine Hebei is Techno Building, Level 4, Room 0430, Chengde Hi-Tech Industry Development Zone, Hebei Province.

On March 31, 2020, the Board has decided to temporarily suspend production due to volatility in the international crude oil market, severe decline in crude oil prices, and having considered the fact that the Company’s West Ells production equipment and road need repair, coupled with the outbreak of COVID-19 in Canada.

The Company expects that the temporary suspension will not have a material adverse impact on its operations. Management of the Company will continue to closely monitor developments in the international crude oil market and intends to take appropriate actions accordingly in response to the actual situation, and act in the best interests of the Company and its shareholders as a whole.

2. Basis of preparation

Going Concern

The Condensed Consolidated Interim Financial Statements have been prepared on a basis which asserts that the Group 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 Group 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 Group’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 9) the Group would be unlikely to be able to continue the development of the West Ells project and the Group would be required to consider divestiture of the West Ells project and other assets. Such curtailment of activity would likely materially and negatively impact the Group’s assessment of the carrying values of assets and liabilities associated with the West Ells project.

The Group incurred a loss including non-controlling interests of CAD $25.5 million for the six months ended June 30, 2021, and as at June 30, 2021, the Group had net current liabilities of CAD $548 million. The Group will need to refinance or restructure its current debt and obtain additional financing in order to meet its near-term operating cash requirements, debt payments and sustaining capital expenditures. The validity of which depends upon that the Group will be able to successfully refinance or restructure its current debt and obtain additional financing to meet its liabilities as they fall due in the foreseeable future.

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 June 30, 2021, the availability of additional financing, and the timing and extent of capital and operating expenditures.

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. The timing and extent of forecast capital and operating expenditures is based on the Company’s 2021 budget and on management’s estimate of expenditures expected to be incurred beyond 2021. The Company has a significant degree of control and flexibility over both the extent and timing of expenditures under its future capital investment program. 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 9.3). 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 June 30, 2021.

2.1 Statement of compliance

The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and the applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and by the Hong Kong Companies Ordinance. The Condensed Consolidated Interim financial statements have been prepared on the historical cost basis. Any financial instruments are measured at fair value. The Condensed Consolidated Interim financial statements are presented in Canadian Dollars (“$”).

The Condensed Consolidated Interim Financial Statements reflect management’s best estimates after giving consideration to likely outcomes. The Group has consistently applied the accounting policies to all periods presented in these financial statements. Certain information and disclosures normally included in the audited annual consolidated financial statements, prepared in accordance with International Financial Reporting Standards (“IFRS”), have been condensed or omitted, except for the adoption of IFRS 15 Revenue from Contracts with Customers, IFRS 9 Financial Instruments and IFRIC 22 Foreign Currency Transactions and Advance Consideration. Accordingly, these Condensed Consolidated Interim Financial Statements should be read in conjunction with the audited annual Consolidated Financial Statements for the year ended December 31, 2020.

3. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)

In the current year, the Group has applied for the first time the following new and amendments to IFRSs issued by the International Accounting Standards Board (the “IASB”).

Amendments to IFRS 3	Definition of a Business
Amendments to IAS 1 and IAS 8	Definition of Material
Amendments to IFRS 9, IAS 39 and IFRS 7	Interest Rate Benchmark Reform
Conceptual Framework for Financial
Reporting 2018	Revised Conceptual Framework for Financial Reporting

The application of other new and amendments to IFRSs in the current year has had no material impact on the Group’s financial performance and position for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

New and amendments to IFRSs issued but not yet effective

The Group has not early applied the following new and amendments to IFRSs and interpretation that have been issued but are not yet effective:

IFRS 17	Insurance Contracts3
Amendments to IFRS 16	COVID-19 - Related Rent Concessions5
Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and
	Its Associate or Joint Venture4
Amendments to IAS 39, IFRS4, IFRS	Interest Rate Benchmark Reform - Phase 21
7, IFRS 9 and IFRS 16
Amendments to IFRS 3	Reference to the Conceptual Framework2
Amendments to IAS 16	Property, Plant and Equipment - Proceeds before Intended
	Use2
Amendments to IAS 37	Onerous contracts: Cost of fulfilling a contract2
Amendments to IAS 1 and IFRS	Disclosure of Accounting Policies3
Practice Statement 2
Amendments to IAS 8	Definition of Accounting Estimates3
Amendments to IAS 1	Classification of liabilities as Current or Non-current3
Amendments to IFRSs	Annual Improvements to IFRS 2018 - 2020 cycle2

1 Effective for annual periods beginning on or after January 1, 2021

2 Effective for annual periods beginning on or after January 1, 2022

3 Effective for annual periods beginning on or after January 1, 2023 4 Effective date not yet been determined 5 Effective for annual periods beginning on or after June 1, 2020

The directors of the Company anticipate that, the application of the new and amendments to IFRSs will have no material impact on the results and the financial position of the Group.

4. Trade and other receivables

4. Trade and other receivables
	June 30, 2021 December 31, 2020
Trade receivables Other receivables – current Other loan receivables-non-current Other receivables – non current	$ - 1,770 $ - 1,636 11,041 12,882 6,562 6,562
	$ 19,373 $ 21,080

The Group allows an average credit period of 30 days to its trade customers. The Group transacts with a number of oil and natural gas marketing companies, and the marketing companies typically remit amounts to the Group by the 25th day of the month following production.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

The Group recognised lifetime ECL for trade receivables based on individually significant customer or the ageing of customers collectively that are not individually significant as follows:

As at June 30, 2021, the directors of the Company considered the ECL on trade receivables was insignificant.

5. Exploration and evaluation

Balance, December 31, 2019 Capital expenditures Non-cash expenditures1 Impairment loss Balance, December 31, 2020 Capital expenditures Non-cash expenditures1 Balance, June 30, 2021	$ 253,144 1,077 1,974 - $ 256,195 690 (1,292)	$ 253,144 1,077 1,974 - $ 256,195 690 (1,292)
		690 (1,292)
	$ 255,593

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

At the end of the reporting period, the Group assessed impairment for its E&E Assets. For the purpose of impairment testing, the recoverable amount of E&E Assets was determined using judgement and internal estimates. The recoverable amount is the higher of fair value less costs of disposal ("FVLCD") and value in use ("VIU"). FVLCD is the amount obtainable from the sale of an asset or CGU in an arms-length transaction between knowledgeable, willing parties, less the costs of disposal. VIU is the present value of estimated future cash flows expected to arise from the continuing use of an asset or CGU and from the disposal at the end of its useful life. Recoverable amount was based on the FVLCD model using the land sale price observed in Northern Alberta for similar properties.

For the six months ended June 30, 2021, the Group did not recognize an impairment loss based on its assessment the estimated recoverable amount exceeded the carrying value.

6. Property, plant and equipment

6. Property, plant and equipment
	Crude oil assets Corporate assets Total
Cost Balance, December 31, 2019 Disposal of Asset Capital expenditures Non-cash expenditures1 Exchange alignment Balance, December 31, 2020 Capital expenditures Non-cash expenditures1 Balance, June 30, 2021	$ 894,515 $ 5,487 $ 900,002 (4,850) - (4,850) - 397 397 9,762 - 9,761 - (2) (2)
	$ 899,427 $ 5,882 $ 905,309
	249 25 224 (6,495) - (6,495)
	$ 893,180 $ 5,859 $ 899,039
1. Non-cash expenditures include capitalized	share-based compensation and changes in decommissioning obligations.

	Crude oil assets Corporate assets Total
Accumulated depletion, depreciation and impairment Balance, December 31, 2019 Depletion and depreciation expense Impairment loss Balance, December 31, 2020 Depletion and depreciation expense Balance, June 30, 2021 Carrying value, December 31, 2020 Carrying value, June 30, 2021	$ 416,520 $ 4,427 $ 420,947 2,058 479 2,537 - - -
	$ 418,578 $ 4,906 $ 423,484
	- 118 118
	$ 418,578 $ 5,024 $ 423,602
	$ 480,849 $ 976 $ 481,825
	$ 474,602 $ 835 $ 475,437

As at June 30, 2021, the Group did not identify any indicators of further impairment (or reversal of the previous impairments recorded in previous years) of the West Ells Cash Generating Unit (CGU).

7. Right-of-use Assets and Leases Liabilities

Right-of-use Assets

	Trucks & Trailers	Offices	Total
Balance, January 1, 2020	648	1,436	2,084
Lease terminated	(591)	-	(591)
Additions	-	1,198	1,198
Depreciation	(57)	(896)	(953)
Exchange alignment	-	(16)	(16)
December 31, 2020	-	1,722	1,722
Additions	-	-	-
Depreciation	-	(470)	(470)
June 30, 2021	-	1,252	1,252

Leases Liabilities

Balance Sheets

Balance Sheets
	June 30, 2021
Lease liabilities	$ 1,058
Cash Flow Summary
	Six Months Ended
	June 30, 2021
Total cash flow used for leases	$ 529

The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, which are 7.9% for trailers, and 10% for the offices.

8. Trade and accrued liabilities

	June 30, 2021 December 31, 2020
Trade payables Interest payables Other payables Accrued liabilities	$ 17,399 $ 15,493 198,668 184,972 16,717 15,884 9,404 7,362
	$ 242,188 $ 223,711

The following is an aged analysis of trade payables based on dates of invoices at the end of the reporting period:

		June 30, 2021		December 31, 2020
Trade
0 - 30 days	$	601	$	-
31 - 60 days		375		-
61 - 90 days		86		554
>90 days		16,337		14,939
		17,399		15,493

9. Debt

9.1 Bonds

		2021		31, 2020
Current	$	-	$	-
Non-current		-		9,306
	$	-	$	9,306

On April 1, 2020, the Company and a company wholly owned by Mr. Kwok Ping Sun entered into a Subscription Agreement for convertible bonds (“CB”) in an aggregate principal amount of HK$ 72,000,000. With an initial conversion price of HK$0.632 per share, a maximum of 113,924,051 new Class “A” common shares will be allotted and issued upon the full conversion of the CB. The CB interest rate is 8% per annum and matures in two years. The Subscription has been approved by the independent shareholders at the Special General Meeting on 25 May 2020. The subscription was completed on 15 June 2020. The entire proceeds was used for financing general working capital and repayment of debts. On October 1, 2020, the Company has received notice for conversion from the Subscriber. The Conversion and the Whitewash Waiver has been approved by the independent shareholders at the Special General Meeting on 5 March 2021. On April 7, 2021, the Conversion was completed and 113,924,051 new shares were duly allotted and issued to the Subscriber.

9.2 Other loans

	June 30, 2021 December 31, 2020
Current Non-current	$ 2,535 $ 1,158 11,593 13,204
	$ 14,128 $ 14,362

As at June 30, 2021, the balances are unsecured interest bearing of 0%-20% (2020: 0-20%) per annum, and of which approximately CAD $842,000 (2020: $11,880,000) have a maturity date by December 31, 2021.

Included in the above balance is approximately CAD $13,286,000for which the Group and an independent Hong Kong-based investment holding company entered into loan agreements and under which the Group provided Renminbi (“CNY”) loan and received Hong Kong dollar (“HKD”) loan from the investment holding company. The Group has to repay HKD to receive CNY from the investment holding company.

9.3 Senior notes

Payment of USD $2.8 million representing 20% of the yield maintenance premium 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 cash commitment USD $5.2 million was paid;
The Company agreed to repurchase and the Forbearing Holders agreed to sell up to USD $11.2 million of Senior Notes in exchange for common shares of the Company, pending on conditions.

Other payments contemplated in the FRA included:

Payment of all legal professional fees by March 21, 2017, which was paid on March 21, 2017;
80% of the yield maintenance premium to be repaid on August 1, 2017 in cash;
80% of the accrued interest and forbearance fee of USD $9.6 million to be repaid on August 1, 2017 in cash;
Make principal repayments to the Forbearing Holders 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.

The Forbearance would be extended to August 1, 2018 (New York time), provided that;
Repayment of USD $0.2 million upon signing the Amended FA, which was paid on September 26, 2017;
• Repayment of USD $1.8 million by October 30, 2017;
Repayment of USD $5.0 million and USD $15.0 million on February 1, 2018 and May 1, 2018 respectively, if repayment is made prior to December 31, 2017, all accrued and unpaid interests incurred on the corresponding amount will be waived;
The Company was to obtain financing of USD $5.0 million within 45 days after signing the Amended FA;
• The Company was to obtain financing of USD $5.0 million every quarter.

The Forbearance was extended to August 1, 2019 (New York time);
An interest of 10% per annum is incurred from the date hereof until August 1, 2019 (New York time);
The Company is to obtain financing of at least USD $5.0 million by April 30, 2019 to maintain sufficient liquidity.

The FRAA covers the period from December 31, 2019 to August 31, 2021 (“Period of Forbearance);
• Same as the Forbearance Reinstatement and Amending Agreement executed on November 1, 2018, all outstanding amounts (principal and interests) will continue to be accrued at an interest of 10% per annum until August 31, 2021, and during the Period of Forbearance, there will not be any forbearance fee and

yield maintenance premium based on the initial Forbearance Agreement executed on September 12, 2016.

On August 8, 2021, the Company and the Forbearing Holder confirmed the signing of the Forbearance Reinstatement and Amending Agreement (the “ FRAA ”). The principal terms of the FRAA include:

The FRAA covers the period from September 1, 2021 to August 31, 2023 (“Period of Forbearance);
• Same as the Forbearance Reinstatement and Amending Agreement executed on April 24, 2020, all outstanding amounts (principal and interests) will continue to be accrued at an interest of 10% per annum until August 31, 2023, and during the Period of Forbearance, there will not be any forbearance fee and yield maintenance premium based on the initial Forbearance Agreement executed on September 12, 2016.

10. Provisions

Decommissioning obligations, non-current		June 30, 2021		December 31, 2020
Balance, beginning of year	$	61,148	$	48,910
Effect of changes in estimates		(7,788)		11,736
Unwinding of discount rate		390		502
Balance,end ofyear	$	53,749	$	61,148

As at June 30, 2021, the Group’s share of the estimated total undiscounted cash flows required to settle asset decommissioning obligations was $53.7 million (December 31, 2020 - $61.1 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 from 1.18% to 2.34% per annum and inflated using an inflation rate of 2.0% per annum

11. Income taxes

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

	June 30, 2021 December 31, 2020
Deferred tax assets (liabilities) Exploration and evaluation assets and property, plant and equipment Decommissioning liabilities Share issue costs Non-capital losses Total Debt Deferred tax benefits not recognized	$ (89,146) $ (98,148) 12,632 14,630 311 85 352,659 464,470 (5,579) (3,035) (270,877) (378,002)
	$ - $ -

12. Share capital

The Group’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 and fully paid (after share consolidation)	June 30, 2021 December 31, 2020
	Number of shares $ Number of shares $
Balance, beginning of year Issue of Shares – general mandate conversion of convertible bonds Director Share Arrangement Share issue costs, net of deferred tax ($Nil) Balance,end ofyear	129,554,630 1,296,814 128,111,630 1,296,523 1,443,000 324 113,924,051 18,467 13,242 - - (16) - (33)
	243,478,681 1,310,040 129,554,630 1,296,814

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

General mandate

2021 activity

In relation to the “Chairman CB” issued on June 15, 2020 (see “2020 activity” for details), Mr. Kwok Ping Sun has made application to the Securities & Futures Commission of Hong Kong (“HKSFC”) for a Whitewash Waiver. The Whitewash Waiver was conditionally granted by HKSFC on March 4, 2021. The Conversion and the Whitewash Waiver has been approved by the independent shareholders at the Special General Meeting on March 5, 2021. On April 7, 2021, the Conversion was completed and 113,924,051 new shares were duly allotted and issued to the Subscriber.

2020 activity

On February 24, 2020, a Special General Meeting approved the Share Consolidation and the Change in Board Lot Size became effective on February 26, 2020.

On February 27, 2020, the Company entered into a settlement agreement for a total of 1,443,000 consolidated Class “A” common shares at a price of HKD $1.31 per share (post-consolidation) for gross proceeds of HKD $1,896,134.68 (CDN$323,670.19). On March 5, 2020, the Company completed the closing of this settlement agreement. This settlement agreement was entered into for settlement of trade payables with an independent third party.

13. Share-based compensation

13.1 Employee stock option plan

Post-IPO Stock Option Plan

On January 26, 2012, the Post-IPO Stock Option Plan was approved and adopted by shareholders at the Group’s Annual General Meeting. The Post-IPO Stock Option Plan was effective immediately prior to the Group’s IPO closing and listing on the SEHK, March 1, 2012.The maximum number of Class “A” common shares that may be reserved for issuance pursuant to the Post-IPO Stock Option Plan is 10% of the total number of issued and outstanding shares, less the maximum aggregate number of shares underlying the options already granted pursuant to the Pre-IPO Stock Option Plan. The Post-IPO Stock Option Plan was amended at the Annual and Special Meeting of Shareholders on June 13,

As a result of the amendment, Options granted under the Post-IPO Stock Option Plan have an exercise price that is determined by the Board of Directors but is not less than the higher of: the closing price on the Toronto Stock Exchange or the Stock Exchange of Hong Kong (whichever is higher) on the option offer date, which must be a business day; the volume weighted average trading price (VWAP) of the shares on Toronto Stock Exchange or the Stock Exchange of Hong Kong (whichever is higher) for the five trading days immediately preceding the option offer date; and the average closing price of the shares on the Toronto Stock Exchange or the Stock Exchange of Hong Kong (whichever is higher) for the five trading days immediately preceding the option offer date.

13.2 Movements in stock options

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

	June 30, 2021 December 31, 2020
Balance, beginning of period Granted Forfeited Expired Balance, end of period Exercisable,end ofperiod	Number of options Weighted average exercise price $ Number of options Weighted average exercise price $ 9,056,001 2.68 9,165,687 2.67 - - - - - - (109,686) 2.84 (3,208) 2.90 60,000 4.50
	9,052,793 2.68 9,056,001 2.68
	9,052,793 2.68 9,056,001 2.68

Number of options was adjusted on the assumption that the Share Consolidation had been effective in the current year and prior year.

As at June 30, 2021, stock options outstanding had a weighted average remaining contractual life of 1.54 years (December 31, 2020 – 2.7 years).

13.3 Share-based compensation

Share-based compensation has been recorded in the Condensed Consolidated Interim financial statements for the years presented as follows:

		Three months ended		Three months ended
		June 30, 2021		June 30, 2020
	Expensed	Capitalized Total	Expensed	Capitalized Total
Stock options	$1	$- $1	$127	$-$127

		Six months ended		Six months ended
		June 30, 2021		June 30, 2020
	Expensed	Capitalized Total	Expensed	Capitalized Total
Stock options	$2	$- $2	$254	$- $254

14. Segment information

Information reported to the directors of the Company, being the chief operating decision maker (the “CODM”), for the purpose of resource allocation and assessment of segment performance focuses on types of goods provided. No operating segments identified by the CODM has been aggregated in arriving at the reportable segments of the Group.

For management purpose, the Group operates in one business unit based on their products, and has one reportable and operating segment: mining, production and sales of crude oil products. The directors of the Company monitor the revenue of its business unit as a whole based on the monthly sales and delivery reports for the purpose of making decisions about resource allocation and performance assessment.

Information about geographical area

As all of the Group’s revenue is derived from the customers based in the Canada (country of domicile) and majority of the Group’s non-current assets are located in Canada, no geographical information is presented.

Information about major customers

Revenue from customers contributing over 10% of the total revenue of the Group is as follows:

	June 30, 2021 June 30, 2020
Customer A	$ 143 $ 3,834
15. Revenue
	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Petroleum sales Royalties Revenue from contracts with customers	$ - $ - $ 144 $ 3,840 (1) - (1) (6)
	$ (1) $ - $ 143 $ 3,834

All revenue from contracts with customers is derived from Canada and recognized at a point in time.

Revenue from the sale of crude oil is recognized when consideration is due when title has transferred and is generally collected in the month following the month of delivery. Revenues associated with the sale of crude oil are recognized at a point in time when control of goods have transferred, which is generally when title passes from the Group to the customer. Revenues are recorded net of crown royalties. Crown royalties are recognized at the time of production.

The royalty rate at West Ells is based on price sensitive royalty rates set by the Government of Alberta. The applicable royalty rates change dependent upon whether a project is pre-payout or post-payout, with payout being defined as the point in time when a project has generated enough net revenues to recover its cumulative costs. The royalty rate applicable to pre-payout oil sands operations starts at 1% of bitumen sales and increases for every dollar that the WTI crude oil price in Canadian dollars is priced above $55 per barrel, to a maximum of 9% when the WTI crude oil price is $120 per barrel or higher. The West Ells project is currently in pre-payout.

Revenue is allocated to each performance obligation on the basis of its standalone selling price and measured at the transaction price, which is the fair value of the consideration and represents amounts receivable for goods or services provided in the normal course of business. The price is allocated to each unit in the series as each unit is substantially the same and depicts the same pattern of transfer to the customer.

The Group’s petroleum sales are determined pursuant to the terms of the marketing agreements and spot sales agreements. The transaction price for crude oil is based on the commodity price in the month published during the delivery month and adjusted for premiums, quality adjustments and equalization adjustments. Commodity prices are based on market indices that are determined on a daily or monthly basis. Petroleum sales are received one month after the crude oil is produced and shipped and typically collected on the 25th day of the month following production.

16. Other income

16. Other income
	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Interest income Other income Balance, end ofperiod	$ - $ 1 $ - $ 3 - 13 - 440
	$ - $ 14 $ - $ 443

17. General and administrative costs

	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Salaries, consultants and benefits Rent Legal and audit Other Balance, end of period	$ 816 $ 1,224 $ 1,783 $ 2,758 53 69 107 78 172 238 117 582 443 525 245 1,283
	$ 1,279 $ 1,992 $ 2,858 $ 4,364

18. Finance costs

	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Interest expense on senior notes, including yield maintenance premium Interest expense on other loans Financing related costs Other interest expense Other Interest expenses-leases Unwinding of discounts on provisions Balance, end of period	$ 10,053 $ (7,992) $ 20,312 $ (3,122) 1,387 831 2,866 1,767 - 32 - 34 33 14 1,515 29 11 35 51 77 228 579 390 863
	$ 11,712 $ (6,501) $ 25,134 $ (352)

19. Loss per share

The calculation of basic loss per share attributable to owners of the Company is based on the loss for the year attributable to owners of the Company of approximately CAD $25,538,000 (2020: CAD $27,120,000) and the weighted average number of Class “A” common shares in issue during the years as presented in the following table.

	Six months ended June 30, 2021 2020
Basic and diluted – Class “A” common shares	243,478,681 129,982,773
Lossper share	$ 0.14 $ 0.21

20. Capital and financial risks management

20.1 Capital risk management

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

The Group’s strategy is to access sufficient capital, through equity issuances 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 Group manages its capital structure in order to continue as a going concern and makes adjustments relative to changes in economic conditions and the Group’s risk profile. In order to manage risk, the Group may from time to time issue shares and adjust its capital spending to manage current working capital levels.

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

	June 30, 2021 December 31, 2020
Working capital deficiency Shareholders’ equity	$ 535,469 $ 509,044 148,756 165,420
	$ 684,225 $ 674,464

There is no change in the Group’s objectives and strategies of capital management for the six months ended June 30, 2021.

20.2 Categories of financial instruments

The Group’s financial assets and liabilities comprise of cash, deposits, trade and other receivables, trade and accrued liabilities, loans, bonds and senior notes (debt). The carrying value or fair value of the Group’s financial instruments carried on Condensed Consolidated Interim Statements of Financial Position are classified in the following categories:

	June 30, 2021 December 31, 2020 Carrying amount Fair value Carrying amount Fair value $21,143 $21,143 $21,474 $21,474 $ 550,920 $ 550,920 $ 535,092 $ 535,092

Financial assets Financial assets at amortised cost (including cash and cash equivalents) Financial liabilities Financial liabilities at amortised cost

20.3 Fair value of financial instruments

The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortized costs in the consolidated financial statements approximate their fair values due to their short term maturity.

20.4 Currency risk

The Group 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 United States dollars (“USD”) and Hong Kong dollars (“HKD”). The Group 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 Group had no forward exchange rate contracts in place as at or during the six months ended June 30, 2021.

If exchange rate to convert from HKD to CAD had been one percent higher or lower with all other variables held constant, foreign cash held at June 30, 2021 would have been impacted by Nil (2020: $Nil) and the carrying value of the debt at June 30, 2021 would have been impacted by $0.33 million (2020: $0.23 million).

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

	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Unrealized foreign exchange loss/(gain) on translation of: U.S. denominated senior secured notes H.K. denominated loan Foreign currency denominated cash balances Foreign currency denominated accounts payable balances Realized foreign exchange loss/(gain) Total foreign exchange loss/(gain)	$ 8,309 $ (11,104) $ (6,498) $ 12,713 (770) (1,419) (748) 1,353 8 68 (147) 70 364 (11) 967 (9) 7,911 (12,466) (6,426) 14,127 2 8 2 24 $ 7,913 $ (12,458) $ (6,424) $ 14,151

20.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The Group’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.

The timing of cash outflows relating to financial liabilities as at June 30, 2021, are as follows:

	Total Less than 1year 1-2years
Trade and accrued liabilities Debt1	$ 242,188 $ 242,188 $ - 269,129 257,536 11,593
	$ 511,317 $ 499,724 $ 11,593

1. Principal amount of Notes and loans based on the month end exchange rate of $1 US = 1.2394 CAD and $1HKD = $0.1596 CAD. Debt is due on demand.

21. Related party transactions

In addition to the transactions and balances disclosed elsewhere in these Condensed Consolidated Interim financial statements, during the year, the Group entered into the following material related party transactions.

21.1 Trading transactions

For the six months ended June 30, 2021, a consulting Group, to which a director of Sunshine is related, charged the Group $0.25 million (December 31, 2020 – $0.5 million) for management and advisory services .

On April 1, 2020, the Company and a company wholly owned by Mr. Kwok Ping Sun entered into a Subscription Agreement for convertible bonds (“CB”) in an aggregate principal amount of HK$ 72,000,000. With an initial conversion price of HK$0.632 per share, a maximum of 113,924,051 new Class “A” common shares were to be allotted and issued upon the full conversion of the CB. The CB interest rate was 8% per annum and matures in two years. The Subscription has been approved by the independent shareholders at the Special General Meeting on 25 May 2020. The subscription was completed on 15 June 2020. The entire proceeds were used for financing general working capital and repayment of debts. On October 1, 2020, the Company has received notice for conversion from the Subscriber. The Conversion and the Whitewash Waiver was then approved by the independent shareholders at the Special General Meeting on 5 March 2021. The Whitewash Waiver has been conditionally granted by HKSFC on 4 March 2021. On April 7, 2021, the Conversion was completed and 113,924,051 new shares were duly allotted and issued to the Subscriber.

21.2 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:

	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Directors’ fees Salaries and allowances Share-based compensation	$	94 $ 96 $ 197 $ 198 492 793 983 1,578 1 127 2 254
	$	587 $ 1,016 $ 1,182 $ 2,030
*21.3 Related companies’ loans*
		June 30, 2021 December 31, 2020
Current Non-current		$ 38,227 $ 32,745 - -
		$ 38,227 $ 32,745

As at June 30, 2021, the Group had loans from related companies which are unsecured, interest bearing at 10% per annum, and of which approximately CAD $38,227,000 can be rollover for a period of 3 to 6 months.

22. Commitments and contingencies

22.1 Commitments

As at June 30, 2021, the Group’s commitments are as follows:

At June 30, 2021	Total 2021 2022 2023 2024	2025 Thereafter
Drilling, other equipment and contracts Lease rentals (Note) Office leases	280 30 50 50 50 3,256 1173 1,256 316 315 1,480 544 670 266- -	50 50 196 - - -
	$ 5,016 1,747 1,976 365 365	246 50

Note: The Group has an annual obligation for oil sands mineral lease rentals and surface lease rentals.

22.2 Litigation

The Group has been named as a Defendant in Court of Queen’s Bench of Alberta Judicial District of Calgary, commenced by a shareholder of the Group (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 Group to repurchase 4,132,232 shares (prior to the 20:1 share split that occurred prior to the Group’s IPO) of the Group 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 Group’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. As at June 30, 2020. no amounts have been accrued in the Condensed Consolidated Interim Financial Statements as the ultimate resolution is undeterminable at this time. The Group will record a provision if it believes that the outcome of the contingency becomes probable and can be reasonably estimated.

The Group received a demand notice from the Regional Municipality of Wood Buffalo (“RMWB”) in relation to the 2016-2021 municipal property taxes of $11.7 million. The Group was also charged with overdue penalties of $6.7 million. Since then the Group was in active negotiation with RMWB for a settlement plan with proposals to waive overdue penalties. As at the date of this report, the Group believes that notices issued by RMWB relating to property taxes did not comply with relevant legislation and the Group has sought judicial review to determine the effect of non-compliant tax notices on RMWB’s property tax claim.

The Group is involved in various claims including claims described above and actions arising in the course of operations and is subject to various legal actions, pending claims and exposures. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Unfavorable outcome were to occur against such claims or pending claims, there exists the possibility of a material adverse impact on the Group’s consolidated net income or loss in the period in which the outcome is determined. Accruals for litigation, claims and assessments are recognized if the Group determines that the loss is probable and the amount can be reasonably estimated. The Group believes it has made adequate provision for such claims. While fully supportable in the Group’s view, some of these positions, if challenged may not be fully sustained on review. From time to time, the Group receives liens or claims on accounts payable balances, and the Group continues to work toward resolution of any liens or claims. At June 30, 2021, the Group had incurred $0.82 million in Builders’ liens (not related to mineral leases) against them during the ordinary course of business.

23. Subsidiaries

On May 4, 2012, Sunshine Oilsands (Hong Kong) Limited was incorporated in Hong Kong and is a wholly-owned subsidiary of the Company. The address of its principal place of business is 20/F, Two Chinachem Central, No.26 Des Voeux Road Central, Hong Kong. As of June 30, 2021, the subsidiary had no business activity.

On July 14, 2015, Boxian Investments Limited was incorporated in the British Virgin Islands and is a wholly-owned subsidiary of the Company. The address of its principal place of business is P.O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. The purpose of the subsidiary is to pursue new investment opportunities. As of June 30, 2021, the subsidiary had no business activity.

On March 24, 2017, Sang Xiang Petroleum & Chemical (Shanghai) Limited was incorporated in China and is a wholly-owned subsidiary of the Company. The address of its principal place of business is Building 1, Level 6, Room 41, 39 Jia Tai Road, the China (Shanghai) Pilot Free Trade Zone. As of June 30, 2021, the subsidiary had no business activity.

On April 15, 2019, Sang Xiang Petroleum & Chemical (Hebei) Limited was incorporated in China and is a subsidiary in which the Company owns 51% interests. The address of its principal place of business is Techno Building, Level 4, Room 0430, Chengde Hi-Tech Industry Development Zone, Hebei Province. As of June 30, 2021, the subsidiary had no business activity.

24. Subsequent Events

On August 8, 2021, the Company and the Forbearing Holder confirmed the signing of the Forbearance Reinstatement and Amending Agreement (the “ FRAA ”). The principal terms of the FRAA include:

The FRAA covers the period from September 1, 2021 to August 31, 2023 (“Period of Forbearance);
• Same as the Forbearance Reinstatement and Amending Agreement executed on April 24, 2020, all outstanding amounts (principal and interests) will continue to be accrued at an interest of 10% per annum until August 31, 2023, and during the Period of Forbearance, there will not be any forbearance fee and yield maintenance premium based on the initial Forbearance Agreement executed on September 12, 2016.

25. Supplemental cash flow disclosures

		Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 615 $ 561 $ 579 $ 2,230 130 186 (298) 1,230 451 2,120 (1,839) - 324 (364) (676) (1,045) 952 832 $ 291 $ 1,356 $ 2,897 615 $ 561 $ 579 $ 2,230 130 186 (298) 1,230 (32) 474 915 (1,724) 713 $ 1,221 $ 1,196 $ 1,736 119 $ (254) $ 238 $ (115) $ - $ (676) $ (78) $ 952 - 324
Cash provided by (used in): Trade and other receivables Prepaid expenses and deposits Trade and other payables Debt settlement Foreign Exchange changes 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 Foreign Exchange Changes-Loans Debt settlement	$
	$
	$
	$
	$

		$ $ (676) $ (78) $ 1,276
		$ 832 $ 291 $ 1,356 $ 2,897

26. Approval of Condensed Consolidated Interim Financial Statements

The Condensed Consolidated Interim Financial Statements were approved by the Board of Directors and authorized for issue on August 12, 2021(Calgary Time) /August 13, 2021 (Hong Kong Time).

Appendix to the consolidated financial statements (Unaudited)

Additional Stock Exchange Information

Additional information required by the SEHK and not shown elsewhere in these Condensed Consolidated Interim financial statements is as follows:

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

Notes Asset Current assets Trade and other receivables Prepaid expenses and deposits Cash and cash equivalents Non-current assets Exploration and evaluation assets Property, plant and equipment Right-of-use assets Other receivables Loan receivables Amounts due from subsidiaries Total Asset Liabilities and Shareholders’ Equity Current liabilities Trade and accrued liabilities Lease liabilities Loans from related companies Other loans Senior notes Amount due to subsidiaries Non-current liabilities Convertible bonds Other loans Lease liabilities Provisions Total liabilities Shareholders’ Equity Share capital Convertible bonds equity reserve Reserve for share-based compensation Accumulated Deficit Total shareholders’ equity Total Liabilities and Shareholders’ Equity	2021 CAD’000 1,770 1,273 236 3,279 255,405 475,357 1,054 2,070 11,041 11,424 756,351 759,630 240,988 1,058 29,581 2,535 255,001 2,529 531,692 11,593 110 53,749 65,452 597,144 1,315,265 76,413 (1,229,192)	2020 CAD’000 427 926 442 1,795 256,189 481,708 1,331 1,999 12,882 11,499 765,608 767,403 223,037 590 24,325 1,158 252,911 3,456 505,477 9,306 13,204 766 61,148 84,424 589,901 1,296,814 4,170 76,411 (1,199,893)
	162,486	177,502
	759,630	767,403

Appendix to the Condensed Consolidated Interim Financial Statements (Unaudited)

A2. Directors’ emoluments and other staff costs

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

	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
Directors’ emoluments Directors’ fees Salaries and allowances Share-based compensation Other staff costs Salaries and other benefits Share-based compensation Total staff costs, including directors’ emoluments Less: staff costs capitalized to qualifying assets	$ 94 $ 96 $ 197 $ 198 492 565 983 1,122 1 127 2 254
	587 788 1,182 1,574
	486 563 932 1,438 - -
	486 563 932 1,438

	1,073 1,351 2,114 3,012
	- -
	$ 1,073 $ 1,351 $ 2,114 $ 3,012

CORPORATE INFORMATION

BOARD OF DIRECTORS:

Executive Directors:

Mr. Kwok Ping Sun (Chairman) Ms. Gloria Pui Yun Ho

Non-Executive Directors:

Mr. Michael John Hibberd (Vice-Chairman) Ms. Linna Liu Ms. Xijuan Jiang

Independent Non-Executive Directors:

Mr. Yi He Mr. Guangzhong Xing Mr. Alfa Li

AUDIT COMMITTEE:

Mr. Yi He (Chairman) Mr. Guangzhong Xing Mr. Alfa Li

COMPENSATION COMMITTEE:

Mr. Kwok Ping Sun (Chairman) Mr. Guangzhong Xing Mr. Alfa Li

RESERVES COMMITTEE:

Mr. Yi He (Chairman) Mr. Guangzhong Xing Mr. Kwok Ping Sun

AUTHORIZED REPRESENTATIVES:

CORPORATE GOVERNANCE COMMITTEE:

Mr. Kwok Ping Sun Ms. Man Ngan Chow

AUDITORS:

Prism CPA Limited

LEGAL ADVISERS:

Robertson Solicitors

COMPETENT PERSONS:

GLJ Ltd

PRINCIPAL BANKERS:

Bank of China (Hong Kong) Limited Bank of China (Canada) ATB Financial

PLACE OF SHARE LISTING AND STOCK CODE:

The Stock Exchange of Hong Kong Limited: 2012

WEBSITE:

www.sunshineoilsands.com

Mr. Kwok Ping Sun (Chairman) Mr. Michael John Hibberd Mr. Yi He Mr. Guangzhong Xing Mr. Alfa Li

CORPORATE HEADQUARTERS:

Suite 1100, 700 - 6th Ave SW, Calgary, AB, T2P 0T8, Canada

REGISTERED OFFICE IN ALBERTA:

Suite 4000, 421 Seventh Avenue SW Calgary, Alberta T2P 4K9 Canada

PRINCIPAL PLACE OF BUSINESS IN HONG KONG:

20/F, Two Chinachem Central, No. 26 Des Voeux Road Central, Central, Hong Kong

SHARE REGISTRAR IN ALBERTA:

Alliance Trust Company

SHARE REGISTRAR IN HONG KONG:

Computershare Hong Kong Investor Services Limited

AI assistant

Sunshine Oilsands Ltd. — Interim / Quarterly Report 2021

50340_rns_2021-08-27_653c220f-3554-4213-9e60-1d57d250e24c.pdf

SUNSHINE OILSANDS LTD. 陽光油砂有限公司 *

2021 INTERIM REPORT

MESSAGE TO SHAREHOLDERS

Sunshine’s Capital Raising Activities during 2Q21

Summary of Financial Figures

2021 Outlook

MESSAGE TO SHAREHOLDERS

Sunshine’s Capital Raising Activities during 2Q21

Summary of Financial Figures

2021 Outlook

Management's Discussion and Analysis

Overview

Operational Update

West Ells

Thickwood and Legend

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

Summary of Quarterly Results

Results of Operations

Operating Netback

Bitumen Production

Bitumen Sales

Petroleum Sales, net of royalties

Bitumen Realization

Diluent Costs

Transportation

Operating Costs

General and Administrative Costs

Finance Costs

Share-based Compensation

Depletion, Depreciation and Impairment

Income Taxes

Liquidity and Capital Resources

Commitments and Contingencies

Transactions with Related Parties

Off-balance Sheet Arrangements

Changes in Accounting Policies

Critical Accounting Policies and Estimates

Risk Factors

Disclosure Controls and Procedures

Internal Controls over Financial Reporting

ADVISORY SECTION

Non-GAAP Measures

Cash Flow Used in Operations

Forward ‐ Looking Information

Additional Stock Exchange Information

Code of Corporate Governance Practice (the “Code”)

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

Movements in Stock Options

Fair Value of Share Options Granted

Purchase, Sale or Redemption of Sunshine’s Listed Securities

Class “A” Common Shares

General mandate

2021 activity

2020 activity

Shares Outstanding

Employees

Change in Directors’ Information

DISCLOSURE OF INTERESTS

(a) Directors’ and Chief Executive’s Interests and Short Positions in Shares, Underlying Shares or Debentures

Director’s long position in the Company

1. Common Shares

2. Stock Options

Employees’ Options

(b) Substantial Shareholders’ Interests and Short Positions in Shares and Underlying Shares

Dividends

Review of Interim Results

Publication of Information

Outlook

Condensed Consolidated Interim Statements of Financial Position

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

Attributable to Equity Holders

Condensed Consolidated Interim Statements of Cash Flows

Notes to Condensed Consolidated Interim Financial Statements

1. General information

2. Basis of preparation

Going Concern

2.1 Statement of compliance

Sunshine Oilsands Ltd. Interim / Quarterly Report 2021