News Column

Sunshine Oilsands Announces Closing of US$200 Million Senior Secured Notes

August 8, 2014

CALGARY, Alberta and HONG KONG, Aug. 8, 2014 /CNW/ -- Sunshine Oilsands Ltd. (the "Corporation" or "Sunshine") (HKEX: 2012, TSX: SUO) is pleased to announce the closing of the previously announced offering of US$200 million of 10% senior secured notes (the "Notes") issued at a price of US$938.01 per US$1,000 principal amount.  The Notes were offered in Canada and in the United States on a private placement basis through a syndicate of underwriters led by Imperial Capital, LLC (as sole physical book-runner) and Morgan Stanley & Co., LLC and Scotia Capital (USA) Inc. (as joint book-running managers).

"Closing of this financing, along with the raising of approximately US$150 million of equity funding since November of 2013 and the CDN$20 million sale of non-core leasehold interests, completes a significant initiative to secure funds to fully discharge incurred expenditure liabilities and to complete the first 5,000 barrel per day Phase 1 project at West Ells" stated Michael Hibberd, Chairman of Sunshine.  David Sealock, the Corporation's Interim President & CEO commented: "This debt financing provides us with sufficient funds to complete facilities to support steam injection and production from our initial eight horizontal well pairs in the West Ells Project Area.  The financing initiative also secured important support from North American institutions who understand the value of completing the first phase of our West Ells project."

Operations Planning and Timing for the Phase 1 project at West Ells

West Ells Phase 1, consisting of eight horizontal well pairs and supporting injection and handling facilities, is already approximately 80% complete with approximately four months of construction activity required to allow for commencement of site commissioning and steaming operations, assuming no interruptions or delays.  Project staging quality assurance activities are active and progressing aggressively to support preparations for construction recommencement.

Critical milestones for recommencement of West Ells construction and for achievement of first steam in the first quarter of 2015 and production early in the third quarter of 2015 are as follows:

    •Approximately eight weeks for completing all preparations for construction recommencement after quality assurance activities are completed; •Approximately 16 weeks for completion of construction, assuming no interruptions; •Approximately four weeks for site commissioning and startup of steam injection operations; and •Approximately 16 weeks of steam injection until first oil production is achieved.


Use of Proceeds

Sunshine realized estimated offering proceeds of approximately US$175.3 million from the Notes offering, after placement fees of US$9.5 million and estimated expenses of approximately US$2.8 million. Sunshine intends to use the proceeds from the Notes offering, together with the proceeds from the June 2014 private placement of US$70 million of Class "A" common voting shares of Sunshine and the CDN$20 million sale of non-core assets: (i) to fund expenditures associated with the anticipated final construction and development necessary to complete phase one at the West Ells asset; (ii) to settle all outstanding accounts payable; (iii) to fund the first three interest payments on the Notes in an interest escrow account to be established pursuant to the Note indenture; (iv) for general corporate purposes; and (v) to pay fees and expenses.

About Sunshine Oilsands Ltd.

The Corporation is a Calgary based public corporation, listed on the Hong Kong Stock Exchange since March 1, 2012 and the Toronto Stock Exchange since November 16, 2012. The Corporation is focused on the development of its significant holdings of oil sands leases in the Athabasca oil sands region. The Corporation owns interests in approximately one million acres of oil sands and P&NG leases in the Athabasca region. The Corporation is currently focused on executing milestone undertakings in the West Ells project area.  West Ells has an initial production target rate of 5,000 barrels per day, which is expected to be followed immediately by an approved expansion to a planned production capacity of 10,000 barrels per day, subject to securing additional financing.  In addition to West Ells activities, the Corporation has received regulatory approval to the Thickwood 10,000 barrels per day SAGD project and has an additional 10,000 barrels per day application in regulatory review for Legend.

Website: www.sunshineoilsands.com

DISCLAIMER AND FORWARD LOOKING INFORMATION

This news release does not constitute an offer of any security for sale in the United States or in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The Notes will not, except in limited circumstances, be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or the securities laws of any state, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Notes may be offered and sold in Canada, on a private placement basis pursuant to available prospectus exemptions. The Notes may be offered in the United States only to "qualified institutional buyers" (as defined in Rule 144A ("Rule 144A") under the U.S. Securities Act) in reliance on Rule 144A under the U.S. Securities Act and outside the United States in reliance on Regulation S under the U.S. Securities Act.

This announcement contains forward-looking information relating to, among other things: (a) the future financial performance and objectives of Sunshine; and (b) the plans and expectations of the Corporation. Such forward-looking information is subject to various risks, uncertainties and other factors. All statements other than statements and information of historical fact are forward-looking statements. The use of words such as "estimate", "forecast", "expect", "project", "plan", "target", "vision", "goal", "outlook", "may", "will", "should", "believe", "intend", "anticipate", "potential", and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on Sunshine's experience, current beliefs, assumptions, information and perception of historical trends available to Sunshine, and are subject to a variety of risks and uncertainties including, but not limited to those associated with resource definition and expected reserves and contingent and prospective resources estimates, unanticipated costs and expenses, regulatory approval, fluctuating oil and gas prices, expected future production, the ability to access sufficient capital to finance future development and credit risks, changes in Alberta's regulatory framework, including changes to regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations and the impact thereof and the costs associated with compliance. Although Sunshine believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this announcement are not exhaustive and readers are not to place undue reliance on forward-looking statements as the Corporation's actual results may differ materially from those expressed or implied. Sunshine disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this announcement, except as required under applicable securities legislation. The forward-looking statements speak only as of the date of this announcement and are expressly qualified by these cautionary statements. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. For a full discussion of the Corporation's material risk factors, see the Corporation's annual information form for the year ended December 31, 2013 (the "AIF") and risk factors described in other documents we file from time to time with securities regulatory authorities, all of which are available on the Hong Kong Stock Exchange at www.hkexnews.hk, on the SEDAR website at www.sedar.com or the Corporation's website at www.sunshineoilsands.com.

In addition, information and statements in this announcement relating to "reserves" and "resources" are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and that the reserves and resources described can be profitably produced in the future. The assumptions relating to Sunshine's reserves and resources are contained in the reports of GLJ Petroleum Consultants Ltd. and DeGolyer and MacNaughton Canada Limited, each dated effective December 31, 2013. For additional information regarding the specific contingencies which prevent the classification of Sunshine's contingent resources as reserves see "Statement of Reserves Data and Other Oil and Gas information" in the AIF. The estimates of reserves and future net revenue for individual properties in this announcement may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. "Contingent Resources" has the meaning given to that term in the AIF.

SOURCE Sunshine Oilsands Ltd.


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