SUNSHINE OILSANDS LTD. 陽光油砂有限公司* （一家根據加拿大阿爾伯塔省商業公司法註冊成立的有限公司） （香港聯交所：2012） 根據一般授權發行股份 以債轉股 香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈之內容概不負責，對其準確性或完整性亦不發表任何聲 明，並明確表示概不就因本公佈全部或任何部份內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 本公佈僅供參考，並不構成收購、購買或認購陽光油砂有限公司證券之邀請或要約。 承陽光油砂有限公司董事會命 孫國平 執行主席 香港，二零二五年七月三十日 卡爾加里，二零二五年七月三十日 於本公告發佈之日，董事會包括執行董事孫國平先生及何沛恩女士；非執行董事 Michael John Hibberd 先生、蔣喜娟女 士士及陳永嵐先生；以及獨立非執行董事賀弋先生、邢廣忠先生及龐珏女士。 *僅供識別 香港（二零二五年七月三十日）和 阿爾伯塔省卡爾加里（二零二五年七月三十日）- 陽光油砂有 限公司（「本公司」或「陽光」）（香港聯交所：2012）董事會（「董事會」）宣佈以下事項： 根據一般授權發行股份以債轉股 於香港時間二零二五年七月三十日（ ...

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies [1]. Core Insights - The report highlights a significant increase in social financing in China, with an increment of 16.34 trillion yuan in the first four months of the year, which is 3.61 trillion yuan more than the same period last year [3]. - The broad money supply (M2) reached 325.17 trillion yuan, reflecting an 8% year-on-year growth, while the narrow money supply (M1) increased by 1.5% to 109.14 trillion yuan [3]. - A reduction in the reserve requirement ratio by 0.5 percentage points is expected to inject approximately 1 trillion yuan of long-term liquidity into the market [3]. - The establishment of a "National Venture Capital Guidance Fund" aims to support high-level technological self-reliance and innovation [3]. Summary by Sections Market Performance - The Hang Seng Index closed at 23,640.65, up by 2.30% [2]. - The US Dow Jones Index decreased by 0.21% to 42,051.06, while the Nasdaq Index increased by 0.72% to 19,146.81 [2]. Company News - Tencent reported a net profit of 478.21 billion yuan for the first quarter, marking a 14.2% year-on-year increase [5]. - Weida's annual revenue was reported at 2.177 billion USD, a 1.5% increase year-on-year, while net profit decreased by 5.9% to 157 million USD [5]. - The demand for storage chips has surged, leading to rapid growth in the packaging substrate business [5].

Financial Performance - The company reported a net loss attributable to equity holders of CAD 9.7 million for the first quarter of 2025, compared to a net profit of CAD 22.2 million in the same quarter of 2024[7]. - For the three months ended March 31, 2025, the company reported a net loss of CAD 1.9 million, compared to a net loss of CAD 0.5 million for the same period in 2024[11]. - The company's oil sands heavy oil revenue for the first quarter of 2025 was CAD 0, a decrease of CAD 6.5 million compared to CAD 6.5 million in the same period of 2024[10]. - The company reported zero oil sales (net of royalties) for the three months ended March 31, 2025, compared to CAD 11.2 million in the same period of 2024[14]. - The company has a cash balance of CAD 310,000 as of March 31, 2025, indicating reliance on various forms of financing for operational expenses[4]. - The total assets of the company as of March 31, 2025, were CAD 740.9 million, showing a slight decrease from CAD 745.9 million in the previous year[7]. - The company's working capital deficit as of March 31, 2025, was CAD 99.3 million, an increase from CAD 84.2 million in the previous year[7]. - The company incurred a total of $57.7 million (approximately $83 million CAD) in unsecured convertible debt as of March 31, 2025[33]. - As of March 31, 2025, the company reported a net loss attributable to shareholders of $9.7 million CAD and a working capital deficiency of $99.3 million CAD[37]. Production and Sales - The average oil sands heavy oil production for the first quarter of 2025 was 0 barrels per day, resulting in zero sales volume due to equipment maintenance[5][10]. - Oil sands heavy oil production averaged 0 barrels per day for the three months ended March 31, 2025, a decrease of 1,186 barrels per day from 2024 due to equipment maintenance[12]. - Oil sands heavy oil sales averaged 0 barrels per day for the three months ended March 31, 2025, a decrease of 1,227 barrels per day from 2024, primarily due to equipment maintenance[13]. - The company reported zero share-based compensation expenses, consistent with the same period in 2024[24]. Operating Costs - The operating costs for the first quarter of 2025 were CAD 1.9 million, a decrease from CAD 4.3 million in the first quarter of 2024[7]. - Total operating costs decreased to CAD 1.878 million for the three months ended March 31, 2025, from CAD 4.290 million in 2024, mainly due to equipment maintenance[20]. - General and administrative expenses increased to CAD 5.301 million for the three months ended March 31, 2025, from CAD 4.604 million in 2024, primarily due to increased municipal costs and salary expenses[21]. - The company incurred zero transportation costs for the three months ended March 31, 2025, down from CAD 2.441 million in 2024, due to no sales during equipment maintenance[19]. - The total cost of diluents was CAD 0 for the three months ended March 31, 2025, a decrease of CAD 4.9 million from CAD 4.942 million in 2024, attributed to no production during equipment maintenance[17]. - The depletion and depreciation expenses decreased from CAD 2.619 million in Q1 2024 to CAD 0.184 million in Q1 2025, primarily due to maintenance activities at West Ells that halted production[25]. Financing and Debt - The company’s financing costs for the first quarter of 2025 were CAD 3.1 million, compared to CAD 2.7 million in the same quarter of 2024[7]. - Financing costs rose to CAD 3.111 million for the three months ended March 31, 2025, compared to CAD 2.740 million in 2024, mainly due to interest expenses from related party and shareholder loans[22]. - The company's debt-to-asset ratio was 99% as of March 31, 2025, compared to 98% as of December 31, 2024[37]. - The company has a total of $56.3 million CAD in unsecured loans from related parties, with an interest rate of 10%[43]. Tax and Legal Matters - The company has approximately CAD 1.43 billion in available tax deductions, with unrecognized tax losses expiring between 2029 and 2045[29]. - The company received a property tax payment notice from RMWB for $16.8 million CAD, along with overdue penalties of $23.7 million CAD, and is negotiating a settlement[33]. - The company is actively seeking judicial review regarding the legality of the property tax claims made by RMWB[33]. Future Plans and Projects - The company plans to enter the second phase of the West Ells project, which aims to increase production by an additional 5,000 barrels per day once financing is secured[3]. - The company plans to restart activities in the Muskwa and Godin regions in collaboration with joint ventures[73]. - A memorandum of understanding was signed with Noble Energy Holdings (China) Limited on June 3, 2024, to acquire its environmentally friendly energy business subsidiary, which is expected to significantly improve the company's financial position[72]. - The target company possesses leading technology related to geothermal heat pump centralized heating and cooling, which can enhance the company's current mining operations' cost efficiency[72]. Risks and Uncertainties - The company faces risks from foreign currency fluctuations, with a potential impact of $2.9 million CAD on debt value if the USD/CAD exchange rate changes by 1%[38]. - The company emphasizes that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially[56]. - The company advises investors not to rely excessively on forward-looking statements due to potential discrepancies with actual performance[57]. Shareholder Information - The company has issued a total of 291,174,417 Class "A" ordinary shares as of March 31, 2025[66]. - The company did not declare or pay any dividends for the three months ended March 31, 2025, consistent with the previous year[68]. - On April 17, 2025, the company entered into a settlement agreement for 48,695,736 Class A ordinary shares at a price of HKD 0.35 per share, totaling HKD 17,043,508[45]. - On April 28, 2025, the company entered into a settlement agreement for 162,310,261 Class A ordinary shares at a price of HKD 0.45 per share, totaling HKD 73,039,619[45]. Internal Controls and Reporting - The company has maintained its significant accounting policies since December 31, 2024[47]. - There were no significant changes in the internal control over financial reporting that could materially affect the company[53]. - The company has no off-balance sheet arrangements as of March 31, 2025[44].

Financial Performance - Oil sales revenue (net of royalties) for the three months ended March 31, 2025, decreased to CAD 0 from CAD 11.19 million for the same period in 2024, primarily due to maintenance at the West Ells facility[3]. - Net operating income (loss) for the three months ended March 31, 2025, was a loss of CAD 1.71 million, compared to a net operating income of CAD 0.055 million for the same period in 2024[4]. - Operating cash flow for the three months ended March 31, 2025, was a net outflow of CAD 1.88 million, worsening from a net outflow of CAD 0.481 million for the same period in 2024[4]. - Net loss attributable to shareholders for the first quarter of 2025 was approximately CAD 9.72 million, an improvement from a net loss of CAD 22.14 million in the first quarter of 2024[3]. - Average diluted oil sands heavy oil sales volume for the three months ended March 31, 2025, was 0 barrels per day, down from 1,665.4 barrels per day in the same period in 2024[4]. - For the three months ended March 31, 2025, the company reported a net loss of CAD 9,793,000 compared to a net loss of CAD 22,217,000 for the same period in 2024, indicating a 56% improvement in losses year-over-year[15]. - The company reported a net loss attributable to shareholders of approximately $9,716,000 for the three months ending March 31, 2025, compared to a loss of $22,144,000 in 2024[65]. Assets and Liabilities - Total assets as of March 31, 2025, were CAD 740.91 million, compared to CAD 739.02 million as of December 31, 2024[9]. - Total liabilities as of March 31, 2025, increased to CAD 733.85 million from CAD 722.18 million as of December 31, 2024[9]. - Shareholders' equity decreased to CAD 7.06 million as of March 31, 2025, from CAD 16.85 million as of December 31, 2024[5]. - As of March 31, 2025, total equity attributable to shareholders was CAD 7,055,000, a decrease from CAD 91,047,000 as of December 31, 2023, reflecting a significant decline in shareholder equity[12]. - The company’s total liabilities increased to CAD 293,944,000 as of March 31, 2025, from CAD 285,918,000 as of December 31, 2024[41]. - The company's total assets as of March 31, 2025, were $898,721,000, reflecting a slight increase from $897,120,000 as of December 31, 2024[34]. - The company's total liabilities increased to CAD 721,514,000 in 2025 from CAD 710,372,000 in 2024, indicating a rise of approximately 1.6%[91]. Cash Flow and Financing - The company's cash flow from operating activities for the three months ended March 31, 2025, was a net outflow of CAD 1,239,000, compared to a net outflow of CAD 916,000 in the same period of 2024[15]. - The company had cash and cash equivalents of CAD 309,000 at the end of March 31, 2025, down from CAD 388,000 at the end of March 31, 2024[15]. - The company incurred financing costs of CAD 3,111,000 for the three months ended March 31, 2025, compared to CAD 2,740,000 for the same period in 2024, representing a 14% increase[15]. - The company has unsecured loans from a shareholder amounting to approximately CAD 21.7 million, with an interest rate of 10%[80]. - The company has commitments for annual payments of approximately CAD 1.5 million for oil sands mineral leases and surface leases[82]. - The company has accrued a total of CAD 16.8 million in property tax demands from the RMWB for the period from 2016 to 2025[82]. - As of March 31, 2025, the company reported a total of CAD 677.4 million in cash outflows related to financial liabilities, with CAD 115.0 million due within one year[81]. Operational Insights - The company is engaged in the evaluation and development of oil sands resources, primarily in the Athabasca oil sands region of Alberta, Canada[16]. - The company continues to assess its ability to develop the West Ells project, with potential implications for asset valuations if additional financing is not secured[18]. - The management has made significant judgments in forecasting oil sales and prices, as well as the payment schedule for multiple debts due by March 31, 2025[19]. - The group has ongoing discussions with existing shareholders and creditors regarding refinancing current debt and obtaining additional financing[21]. - The group’s ability to continue as a going concern is significantly dependent on achieving forecasted revenues and obtaining additional financing[20]. Market and Revenue - The company's royalty fee structure is based on a sliding scale, starting at 1% of heavy oil sales, increasing to a maximum of 9% when the price of West Texas Intermediate crude exceeds $120 per barrel[57]. - Revenue from customer contracts is entirely derived from Canadian clients, with no geographical diversification reported[60]. - Customer A contributed 63.2% of total revenue for the period ending March 31, 2025, down from 88.6% in the previous year[61]. - The company faces foreign exchange risk due to fluctuations in currency rates, with a potential impact of approximately CAD 2.9 million on debt value if the USD/CAD exchange rate changes by 1% as of March 31, 2025[71]. - As of March 31, 2025, the company reported unrealized foreign exchange losses of CAD 513,000, compared to gains of CAD 12.3 million as of March 31, 2024[73]. Employee and Administrative Costs - The total employee costs, including director remuneration, amounted to CAD 1,619,000 for the year ending March 31, 2025, compared to CAD 1,446,000 in the previous year, reflecting an increase of approximately 12%[92]. - Operating expenses increased to $5,301 million for the period ending March 31, 2025, compared to $4,604 million in 2024, reflecting a rise in salaries, consulting fees, and other administrative costs[63]. Legal and Regulatory Matters - The company has been instructed by the Alberta Energy Regulator to submit a project abandonment plan due to failure to meet maintenance requirements, but this has not significantly impacted business operations[88]. - The company is subject to a court judgment requiring payment of approximately USD 19.7 million (equivalent to approximately CAD 26.0 million) to non-exempt holders as of December 13, 2023[84].

Financial Performance - For the twelve months ended December 31, 2024, the company's oil sands heavy oil sales decreased slightly from CAD 29.6 million to CAD 29.3 million, primarily due to a decrease in sales volume and increased royalty expenses [6]. - The net operating loss for the three months ended December 31, 2024, was CAD 1.3 million, compared to a net operating income of CAD 0.8 million in the same period of 2023 [7]. - The company reported a net loss attributable to shareholders of CAD 75.4 million for the twelve months ended December 31, 2024, compared to a net loss of CAD 19.3 million for the same period in 2023 [7]. - The operating cash flow for the twelve months ended December 31, 2024, was a net loss of CAD 2.4 million, an improvement from a net loss of CAD 9.5 million in the same period of 2023 [9]. - The company reported a net loss of approximately CAD 75.69 million for the fiscal year ending December 31, 2024 [62]. - Current liabilities exceeded current assets by approximately CAD 92.67 million as of December 31, 2024 [62]. - The total amount of current liabilities, including accounts payable and accrued liabilities, was approximately CAD 108.59 million [62]. - The company had cash and cash equivalents of only about CAD 319,000 as of December 31, 2024 [62]. - The company reported a distributable reserve of approximately CAD 17 million as of December 31, 2024, down from CAD 91 million in 2023 [94]. - The board of directors decided not to declare any final dividend for the fiscal year ending December 31, 2024 [96]. Production and Sales - The average oil sands heavy oil production decreased from 1,152.8 barrels per day in 2023 to 1,018.8 barrels per day in 2024 [7]. - The average production rate for West Ells for the twelve months ended December 31, 2024, was 727 barrels per day, down from 946 barrels per day in 2023 [166]. - Oil sands heavy oil production averaged 302 barrels per day for the three months ended December 31, 2024, a decrease of 1,302 barrels per day compared to 1,604 barrels per day in the same period of 2023 [166]. - Oil sands heavy oil sales averaged 311 barrels per day for the three months ended December 31, 2024, down from 1,550 barrels per day in the same period of 2023, indicating a substantial reduction in sales volume [167]. - The realized heavy oil revenue for Q4 2024 was CAD 1.96 million, a decrease of CAD 4.90 million from CAD 6.89 million in Q4 2023 [163]. - The realized price per barrel of heavy oil increased from CAD 40.54/barrel in Q4 2023 to CAD 49.80/barrel in Q4 2024 [163]. - The total sales of oil (net of royalties) for the twelve months ended December 31, 2024, was CAD 29.3 million, slightly down from CAD 29.6 million in 2023, indicating a stable revenue stream despite volume reductions [168]. Liabilities and Debt - The company reported a significant increase in total liabilities, rising from CAD 654.9 million in 2023 to CAD 722.2 million in 2024 [8]. - The company’s cash and cash equivalents decreased from CAD 527,000 in 2023 to CAD 319,000 in 2024 [8]. - The company has unsecured debt totaling $56.6 million (approximately CAD 81.4 million) as of December 31, 2024 [192]. - Over 90% of the company's debt is owed to related parties, who have committed not to demand repayment of interest-bearing debts for the next twelve months after 2024 [67]. - The company's debt-to-asset ratio increased to 98% as of December 31, 2024, compared to 88% as of December 31, 2023 [195]. Corporate Governance - The board consists of eight members, including two executive directors and three non-executive directors, ensuring a balanced composition [24]. - All independent non-executive directors confirmed their independence, meeting the requirements of the Listing Rules, with none holding more than 1% of the company's issued shares [28]. - The company is committed to high standards of corporate governance, which is fundamental to protecting shareholder interests [23]. - The board is responsible for setting the strategic business direction and overseeing operational and financial performance [26]. - The company has established four board committees: Audit Committee, Corporate Governance Committee, Remuneration Committee, and Reserves Committee, each with clear written terms of reference [40]. - The board held at least one meeting annually to review disclosure procedures related to oil and gas activities [50]. - The company has adopted a board diversity policy aimed at enhancing decision-making capabilities, considering factors such as gender, age, and professional experience [33]. - The board's diversity policy is reviewed at least annually to ensure alignment with the company's business strategy [37]. Risk Management - The risk management and internal control systems are designed to manage risks rather than eliminate them, providing reasonable assurance against significant misstatements or losses [71]. - The company conducted an annual review of its risk management and internal control systems, assessing their effectiveness based on the 2013 framework by the Committee of Sponsoring Organizations of the Treadway Commission [72]. - The audit committee and board of directors concluded that the risk management and internal control systems are effective and sufficient [73]. Environmental and Community Engagement - The company emphasized the importance of health, safety, and environmental principles, maintaining a good safety record [52]. - The company is committed to improving on-site safety monitoring systems to prevent workplace injuries [52]. - The company engages with local Indigenous communities to discuss operational impacts and address concerns, emphasizing community development and sustainability [83]. - The company maintains strict compliance with environmental standards and regulations as part of its operational principles [127]. - The company has not identified any significant non-compliance issues with relevant laws and regulations as of December 31, 2024 [128]. Future Plans and Acquisitions - The company has signed a memorandum of understanding with Noble Energy Holdings (China) Ltd. to acquire its environmental energy business, which is expected to significantly improve the company's financial position, including revenue and cash flow [12]. - The company is assessing the feasibility of resuming production at West Ells, with expectations to restore operations by Q4 2025 [67]. - The acquisition of Nobao assets is anticipated to significantly enhance the company's business, profitability, and cash flow, with potential investors showing interest post-transaction [66]. - The company plans to utilize new energy management technologies from the target company to enhance its oil sands production efficiency [69]. Share Capital and Equity - The company issued 48,695,736 Class A ordinary shares at a price of HKD 0.38 per share, generating total proceeds of HKD 18,504,380 [98]. - As of December 31, 2024, the company's issued share capital consisted of 243,478,681 Class A ordinary voting shares [105]. - Executive director Sun Guoping holds 61.7% of the company's ordinary shares, totaling 150,232,591 shares [105]. - Major shareholder Zhang Jun holds 59,695,736 shares, representing 20.40% of the ordinary shares [118]. - The company has a post-IPO share option plan aimed at attracting and retaining skilled personnel by providing them with equity opportunities [113].

Financial Performance - Oil sales (net of royalties) for the twelve months ended December 31, 2024, slightly decreased to CAD 29.30 million from CAD 29.60 million for the same period in 2023, primarily due to a decline in sales volume and an increase in royalties[3]. - The net operating income (excluding one-time foreign exchange losses) for the twelve months ended December 31, 2024, was a loss of CAD 1.30 million, compared to a net operating income of CAD 0.80 million for the same period in 2023[3]. - The recurring net loss attributable to shareholders (excluding foreign exchange losses/gains and non-cash depreciation) for the twelve months ended December 31, 2024, was CAD 25.16 million, compared to CAD 22.40 million for the same period in 2023[4]. - The company reported a net loss attributable to shareholders of CAD 75.39 million for the twelve months ended December 31, 2024, compared to a net loss of CAD 19.33 million for the same period in 2023[4]. - Total revenue for the year ended December 31, 2024, was CAD 30,927 thousand, a decrease of 22.0% from CAD 39,377 thousand in 2023[24]. - The company reported a net loss of CAD 75,689 thousand for the year, compared to a net loss of CAD 19,626 thousand in 2023, representing an increase in loss of 285.0%[24]. Cash Flow and Liquidity - Operating cash flow for the twelve months ended December 31, 2024, was a net outflow of CAD 1.70 million, compared to a net outflow of CAD 1.40 million for the same period in 2023[3]. - As of December 31, 2024, cash and cash equivalents were CAD 0.32 million, down from CAD 0.53 million as of December 31, 2023[4]. - The company faces significant uncertainty regarding its ability to continue as a going concern, with current liabilities exceeding current assets by approximately CAD 92.67 million as of December 31, 2024[11]. - The company is exploring measures to improve its working capital and cash flow, including monitoring general administrative expenses and operating costs[12]. - The company aims to secure additional new financing sources, such as prepayments from shareholders, to alleviate liquidity pressure[39]. - The company had cash and cash equivalents of only approximately CAD 319,000 as of December 31, 2024, highlighting liquidity challenges[37]. Assets and Liabilities - The total liabilities as of December 31, 2024, increased to CAD 722.18 million from CAD 654.89 million as of December 31, 2023[4]. - Total assets decreased to CAD 739,023 thousand in 2024 from CAD 745,932 thousand in 2023, a decline of 0.9%[19]. - Shareholders' equity decreased significantly to CAD 16,848 thousand in 2024 from CAD 91,047 thousand in 2023, a drop of 81.5%[21]. - The company’s total liabilities, including lease liabilities, amounted to CAD 755,383,000 as of December 31, 2024[190]. Financial Ratios and Metrics - The diluted loss per share for the year was CAD 30.73, compared to CAD 7.94 in 2023, indicating a significant increase in loss per share[26]. - The company incurred total expenses of CAD 63,067 thousand in 2024, down from CAD 70,686 thousand in 2023, a decrease of 10.7%[24]. - The company reported a decrease in operating cash flow before changes in working capital, with a net cash outflow of CAD 2.97 million for the year ending December 31, 2024[33]. Accounting Policies and Standards - The company has adopted new and revised International Financial Reporting Standards (IFRS) effective from January 1, 2024, with no significant impact on financial performance or disclosures for the current and prior years[43]. - The company has not early adopted several new IFRS amendments that are published but not yet effective, including amendments to IFRS 21 and IFRS 9, which will take effect in 2025 and 2026 respectively[45][46]. - The company has changed its accounting policy related to Long Service Payments (LSP) liabilities in accordance with the guidance from the Hong Kong Institute of Certified Public Accountants, with no significant impact on current or prior financial conditions[49]. Revenue Recognition - Revenue recognition is based on the transfer of control of goods or services to customers, with the company using a five-step model to recognize revenue[58]. - Oil sales revenue is recognized based on the consideration specified in customer contracts, with revenue confirmed upon transferring control of the product to the customer[61]. - The group recognizes revenue when performance obligations are satisfied, allowing customers to simultaneously obtain and consume benefits[65]. Credit and Risk Management - The group faces a currency risk primarily through receivables and loans from related parties, with significant exposure to HKD, USD, and RMB[171]. - The group currently has no foreign currency hedging policy but monitors foreign exchange risks and may consider hedging when necessary[172]. - The group has implemented a credit risk management team to establish monitoring procedures to minimize credit risk and recover overdue debts[180]. - The expected credit loss for trade receivables was 0% for 2024, compared to 1.61% for 2023, indicating improved credit quality[195]. Impairment and Decommissioning - The company will conduct impairment tests on exploration assets if no economically recoverable reserves are found, with any differences deducted from the comprehensive income statement[95]. - The company must recognize provisions for future decommissioning liabilities based on estimated costs, which are subject to change due to various assumptions[160]. - The company recognizes impairment losses for property, plant, and equipment if the recoverable amount is estimated to be less than its carrying amount[104].

[Management Discussion and Analysis](index=1&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview and analysis of the company's financial condition and operating results [Company Overview](index=2&type=section&id=Company%20Overview) Sunshine Oil Sands Ltd. is an Athabasca oil sands developer with 640 million barrels of best estimate contingent resources, facing ongoing financing and profitability challenges - The company is an interest holder and developer of oil sands resources in the Athabasca region, with approximately **640 million barrels** of best estimate contingent resources[3](index=3&type=chunk) - The West Ells Phase I commercial project (5,000 barrels/day) is in production and ramping up, with plans for a Phase II expansion to add an additional 5,000 barrels/day[3](index=3&type=chunk) - As of December 31, 2024, the company had invested approximately **CAD 1.29 billion** in oil sands leases, drilling, engineering, procurement, and construction assets[4](index=4&type=chunk) - The company's ability to continue as a going concern faces significant doubt, dependent on West Ells' continued operation and development, favorable oil sands heavy oil sales prices, achieving profitability, and securing additional financing[4](index=4&type=chunk) [Recent Operating Performance](index=2&type=section&id=Recent%20Operating%20Performance) West Ells project resumed full operations in April 2023, with Q4 2024 production and sales significantly impacted by equipment maintenance - The West Ells project resumed full operations on April 11, 2023, after a suspension in March 2020 due to crude oil market volatility, equipment maintenance, and the pandemic[5](index=5&type=chunk) West Ells Oil Sands Bitumen Production and Diluted Bitumen Sales (barrels/day) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Average Oil Sands Bitumen Production | 301.9 | 1,604 | 726.9 | 946 | | Average Diluted Bitumen Sales | 428 | 1,550 | 1,018.8 | 968 | - Production and sales decreased in Q4 and full-year 2024, primarily due to equipment maintenance at West Ells in Q4 2024[15](index=15&type=chunk)[16](index=16&type=chunk) - The Thickwood and Legend projects are planned for initial production of **10,000 barrels/day** each, with the Muskwa area expected to resume development under new Renergy ownership in 2024 at no cost to Sunshine Oil Sands[6](index=6&type=chunk)[7](index=7&type=chunk) [Quarterly Performance Summary](index=3&type=section&id=Quarterly%20Performance%20Summary) This section summarizes key financial data for the past eight quarters, including oil sales, operating costs, net loss, and capital expenditures Key Financial Data for the Past Eight Quarters (CAD thousand, except per share amounts and barrels/day) | Metric | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Oil Sands Bitumen Sales (barrels/day) | 311 | 479 | 884 | 1,227 | 1,550 | 9 | 1,294 | 1,025 | | Oil Sales | 3,074 | 5,211 | 10,674 | 11,437 | 11,932 | 49 | 11,064 | 7,192 | | Royalties | 86 | 340 | 408 | 245 | 373 | (2) | 298 | 13 | | Diluent | 1,113 | 2,422 | 4,668 | 4,942 | 5,040 | 31 | 3,528 | 3,863 | | Transportation | 477 | 778 | 1,576 | 2,441 | 3,436 | 106 | 3,468 | 2,521 | | Operating Costs | 3,062 | 2,683 | 3,269 | 4,290 | 4,528 | 3,581 | 4,472 | 4,487 | | Finance Costs | 4,308 | 2,630 | 2,920 | 2,740 | 2,684 | 2,668 | 2,237 | 2,536 | | Net Loss/(Profit) | 41,845 | 579 | 11,048 | 22,217 | (2,111) | 15,758 | (5,671) | 11,650 | | Net Loss/(Income) Attributable to Equity Holders | 41,769 | 505 | 10,974 | 22,144 | (2,184) | 15,686 | (5,745) | 11,573 | | Per Share - Basic and Diluted | 0.17 | (0.00) | 0.05 | 0.09 | (0.01) | 0.06 | (0.02) | 0.05 | | Capital Expenditures | 962 | 275 | 672 | 171 | 378 | 1,864 | 593 | (54) | | Total Assets | 739,023 | 741,301 | 742,120 | 745,963 | 745,932 | 739,708 | 744,484 | 747,557 | | Working Capital Deficit | 92,666 | 514,041 | 83,772 | 84,242 | 79,458 | 94,082 | 87,079 | 517,464 | | Shareholders' Equity | 16,848 | 57,203 | 57,782 | 68,830 | 91,047 | 88,272 | 104,030 | 98,359 | - **Net loss** for Q4 2024 significantly increased to **CAD 41,845 thousand**, compared to a net profit of CAD 2,111 thousand in Q4 2023[8](index=8&type=chunk) - Oil sands bitumen sales volume for Q4 2024 significantly decreased year-over-year, from **1,550 barrels/day** to **311 barrels/day**[8](index=8&type=chunk) [Operating Results](index=3&type=section&id=Operating%20Results) This section analyzes the company's operating financial metrics for Q4 and full-year 2024 compared to 2023, covering revenue, costs, and impairment [Oil Sands Bitumen Revenue](index=3&type=section&id=Oil%20Sands%20Bitumen%20Revenue) Q4 2024 bitumen revenue decreased due to lower production, while per-barrel realized prices increased for both Q4 and the full year Oil Sands Bitumen Revenue (CAD thousand, except CAD/barrel) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Diluted Bitumen Revenue | 3,074 | 11,932 | 30,396 | 30,237 | | Diluent Blended | (1,113) | (5,040) | (13,145) | (12,462) | | Realized Oil Sands Bitumen Revenue | 1,961 | 6,892 | 17,251 | 17,775 | | Realized Price per Barrel (CAD/barrel) | 49.80 | 40.54 | 46.27 | 42.24 | - Realized oil sands bitumen revenue for Q4 2024 decreased by **CAD 4.9 million** to **CAD 2 million** year-over-year, primarily due to reduced production from equipment maintenance[11](index=11&type=chunk) - The realized price per barrel of oil sands bitumen increased by **CAD 9.26/barrel** to **CAD 49.80/barrel** in Q4 2024 year-over-year, and by **CAD 4.03/barrel** to **CAD 46.27/barrel** for the full year[11](index=11&type=chunk)[12](index=12&type=chunk) [Operating Netback](index=4&type=section&id=Operating%20Netback) Q4 2024 operating cash flow net loss widened due to reduced sales, but full-year net loss narrowed from improved prices and lower costs Operating Netback (CAD thousand, except CAD/barrel) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Realized Oil Sands Bitumen Revenue | 1,961 | 6,892 | 17,251 | 17,775 | | Transportation | (477) | (3,436) | (5,272) | (9,531) | | Royalties | (86) | (373) | (1,079) | (682) | | Net Oil Sands Bitumen Revenue | 1,398 | 3,083 | 10,900 | 7,562 | | Operating Costs | (3,062) | (4,528) | (13,304) | (17,068) | | Operating Cash Flow | (1,664) | (1,445) | (2,404) | (9,506) | | Operating Netback (CAD/barrel) | (42.26) | (8.50) | (6.44) | (22.59) | - The operating cash flow net loss for Q4 2024 widened to **CAD 1.7 million**, and the operating netback loss per barrel increased by **CAD 33.76/barrel** to **CAD 42.26/barrel**, mainly due to higher operating costs per barrel from reduced sales volume[14](index=14&type=chunk) - The full-year operating cash flow net loss narrowed to **CAD 2.4 million**, and the operating netback loss per barrel decreased by **CAD 16.15/barrel** to **CAD 6.44/barrel**, primarily benefiting from higher sales prices and lower transportation/operating costs[14](index=14&type=chunk) [Oil Sands Bitumen Production](index=5&type=section&id=Oil%20Sands%20Bitumen%20Production) West Ells bitumen production significantly decreased in Q4 and full-year 2024 due to equipment maintenance Oil Sands Bitumen Production (barrels/day) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Oil Sands Bitumen Production | 302 | 1,604 | 727 | 946 | - Q4 2024 production decreased by **1,302 barrels/day** year-over-year, and full-year production decreased by **219 barrels/day**, primarily due to equipment maintenance at West Ells in Q4 2024[15](index=15&type=chunk) [Oil Sands Bitumen Sales](index=5&type=section&id=Oil%20Sands%20Bitumen%20Sales) West Ells bitumen sales significantly decreased in Q4 and full-year 2024, primarily due to reduced production Oil Sands Bitumen Sales (barrels/day) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Oil Sands Bitumen Sales | 311 | 1,550 | 723 | 968 | - Q4 2024 sales volume decreased by **1,239 barrels/day** year-over-year, and full-year sales decreased by **245 barrels/day**, mainly due to reduced oil sands bitumen production at West Ells in Q4 2024[16](index=16&type=chunk) [Oil Sales, Net of Royalties](index=5&type=section&id=Oil%20Sales%2C%20Net%20of%20Royalties) Q4 2024 oil sales net of royalties decreased due to lower sales volume, but per-barrel prices increased for both periods Oil Sales, Net of Royalties (CAD thousand, except CAD/barrel) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Oil Sales | 3,074 | 11,932 | 30,396 | 30,237 | | Royalties | (86) | (373) | (1,079) | (682) | | Oil Sales, Net of Royalties | 2,988 | 11,559 | 29,317 | 29,555 | | CAD/barrel | 75.91 | 68.00 | 78.63 | 70.24 | - Oil sales net of royalties for Q4 2024 decreased to **CAD 3 million** year-over-year, primarily due to lower sales volume resulting from reduced oil sands bitumen production[17](index=17&type=chunk) - The per-barrel oil sales net of royalties increased by **CAD 7.91/barrel** to **CAD 75.91/barrel** in Q4 2024, and by **CAD 8.39/barrel** to **CAD 78.63/barrel** for the full year, driven by higher diluted bitumen sales prices[17](index=17&type=chunk) - Royalty rates are linked to WTI oil prices, increasing with prices above **CAD 55/barrel** up to a maximum of **9%**; Q4 2024 royalties decreased by **CAD 0.3 million** due to lower sales volume, while full-year royalties increased by **CAD 0.4 million** due to higher sales volume and rates[18](index=18&type=chunk)[19](index=19&type=chunk) [Diluent Costs](index=6&type=section&id=Diluent%20Costs) Q4 2024 diluent costs decreased due to lower production, while full-year costs increased from higher on-site blending for new pipeline requirements Diluent Costs (CAD thousand, except CAD/barrel and blending ratio) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Diluent (on-site) | 1,113 | 3,276 | 12,551 | 7,658 | | Diluent (off-site) | - | 1,764 | 594 | 4,804 | | Total | 1,113 | 5,040 | 13,145 | 12,462 | | CAD/barrel | 28.27 | 29.65 | 35.25 | 29.62 | | Blending Ratio (on-site) | 27.4% | 16.1% | 29.0% | 16.0% | | Blending Ratio (off-site) | 0% | 22.2% | 8.2% | 23.0% | - Total diluent costs for Q4 2024 decreased by **CAD 3.9 million** year-over-year, primarily due to reduced on-site diluent blending volumes from lower production[21](index=21&type=chunk) - Total diluent costs for the full year 2024 increased by **CAD 0.7 million**, mainly due to increased on-site diluent usage to meet specific pipeline requirements for a new terminal, leading to a significant rise in the on-site blending ratio[21](index=21&type=chunk) [Transportation](index=6&type=section&id=Transportation) Transportation costs significantly decreased in Q4 and full-year 2024 due to lower sales volume and reduced trucking rates from a closer delivery terminal Transportation Costs (CAD thousand, except CAD/barrel) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Transportation | 477 | 3,436 | 5,272 | 9,531 | | CAD/barrel | 12.11 | 20.21 | 14.14 | 22.65 | - Transportation costs decreased by **CAD 2.9 million** in Q4 2024 year-over-year and by **CAD 4.2 million** for the full year, primarily due to lower sales volume and reduced trucking rates from delivering diluted bitumen to a closer new terminal since February 2024[22](index=22&type=chunk) - Transportation costs per barrel decreased by **CAD 8.10/barrel** to **CAD 12.11/barrel** in Q4 2024, and by **CAD 8.51/barrel** to **CAD 14.14/barrel** for the full year[22](index=22&type=chunk) [Operating Costs](index=7&type=section&id=Operating%20Costs) Operating costs decreased in Q4 and full-year 2024 due to lower natural gas prices and reduced non-energy expenses Operating Costs (CAD thousand, except CAD/barrel) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Energy Operating Costs | 596 | 1,404 | 3,301 | 5,059 | | Non-Energy Operating Costs | 2,466 | 3,124 | 10,003 | 12,009 | | Total Operating Costs | 3,062 | 4,528 | 13,304 | 17,068 | - Operating costs decreased by **CAD 1.5 million** to **CAD 3.1 million** in Q4 2024 year-over-year, and by **CAD 3.8 million** to **CAD 13.3 million** for the full year[24](index=24&type=chunk) - The cost reduction was mainly due to lower energy costs from decreased natural gas prices at West Ells, and reduced non-energy costs (chemicals, processing, trucking, etc.)[24](index=24&type=chunk) - As most operating costs are fixed, operating costs per barrel are expected to decrease with increasing West Ells production[24](index=24&type=chunk) [General and Administrative Expenses](index=7&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased in Q4 and full-year 2024, mainly due to lower salaries and rent, partially offset by higher municipal fees General and Administrative Expenses (CAD thousand) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Salaries, Consulting Fees & Benefits | 1,346 | 1,489 | 5,493 | 6,124 | | Rent | 3 | 14 | 24 | 54 | | Legal & Audit | 387 | 328 | 519 | 832 | | Other | 1,066 | 1,052 | 6,255 | 5,543 | | Total | 2,802 | 2,883 | 12,291 | 12,553 | - General and administrative expenses decreased by **CAD 0.7 million** in Q4 2024 year-over-year, and by **CAD 0.3 million** for the full year, primarily due to lower salaries and rent expenses, partially offset by higher municipal fees[25](index=25&type=chunk) [Finance Costs](index=8&type=section&id=Finance%20Costs) Finance costs increased in Q4 and full-year 2024 due to higher interest expenses on related party and shareholder loans, and accretion costs Finance Costs (CAD thousand) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Senior Note Interest Expense | 308 | 299 | 1,192 | 1,174 | | Other Loan Interest Expense | 717 | 110 | 932 | 491 | | Related Party and Shareholder Loan Interest Expense | 2,723 | 1,744 | 8,375 | 6,678 | | Other Interest Expense - Leases and Other | 137 | 147 | 346 | 322 | | Accretion | 423 | 384 | 1,753 | 1,460 | | Total | 4,308 | 2,684 | 12,598 | 10,125 | - Finance costs increased by **CAD 1.6 million** in Q4 2024 year-over-year, and by **CAD 2.5 million** for the full year, primarily due to higher interest expenses on related party and shareholder loans, increased interest expenses on other loans, and higher accretion costs[26](index=26&type=chunk) [Share-Based Compensation](index=8&type=section&id=Share-Based%20Compensation) Share-based compensation was zero for both the three and twelve months ended December 31, 2024 and 2023 - Share-based compensation was **CAD 0** for both the three and twelve months ended December 31, 2024 and 2023[27](index=27&type=chunk) [Depletion, Depreciation, and Impairment](index=8&type=section&id=Depletion%2C%20Depreciation%2C%20and%20Impairment) This section covers the assessment of depletion, depreciation, and impairment, noting reduced expenses due to lower production and no impairment losses in 2024 [Depletion and Depreciation](index=8&type=section&id=Depletion%20and%20Depreciation) Depletion and depreciation expenses decreased in Q4 and full-year 2024 due to lower production and a reduced depletion rate Depletion and Depreciation (CAD thousand) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Depletion | 672 | 3,311 | 5,946 | 7,737 | | Depreciation | 143 | 211 | 740 | 873 | | Total Depletion and Depreciation | 815 | 3,522 | 6,686 | 8,610 | - Depletion and depreciation expenses decreased by **CAD 2.7 million** in Q4 2024 year-over-year, and by **CAD 1.9 million** for the full year, primarily due to lower production and a reduced depletion rate[29](index=29&type=chunk) [Impairment (Reversal)](index=9&type=section&id=Impairment%20(Reversal)) The company assesses assets for impairment, determining recoverable amounts based on FVLCD and VIU, with no impairment losses recognized in 2024 - The company assesses its E&E and PP&E assets for indicators of impairment or reversal of impairment at each reporting date, with recoverable amounts determined as the higher of fair value less costs to dispose (FVLCD) and value in use (VIU)[30](index=30&type=chunk) - For the full year 2024, the company did not recognize any impairment losses[32](index=32&type=chunk)[33](index=33&type=chunk) - In 2024, the discount rates for future cash flows of the Exploration and Evaluation assets CGU and West Ells CGU were **11.07%** and **10.86%**, respectively, a decrease from **14.91%** and **14.95%** in 2023[32](index=32&type=chunk) [Income Tax](index=10&type=section&id=Income%20Tax) The company did not recognize deferred income tax assets related to unrecognized tax losses for the periods ended December 31, 2024 and 2023 - For the periods ended December 31, 2024 and 2023, the company did not recognize any deferred income tax assets primarily related to unrecognized tax losses[34](index=34&type=chunk) - As of December 31, 2023, the company had approximately **CAD 1.42 billion** in available aggregate tax deductions, with unrecognized tax losses expiring between 2029 and 2043[34](index=34&type=chunk) [Liquidity and Capital Resources](index=10&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2024, the company had a working capital deficit of CAD 92.67 million and faces various legal claims and a high debt-to-asset ratio Liquidity Position (CAD thousand) | Metric | December 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Working Capital Deficit | 92,666 | 79,458 | | Shareholders' Equity | 16,848 | 91,047 | - The company has entered into multiple interest waiver agreements with forbearance holders, waiving accrued interest of **USD 31.5 million** annually for 2024 and 2025, and signed an Amended and Restated Forbearance Agreement extending the debt repayment period to August 31, 2027[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk) - As of December 31, 2024, the company had incurred unsecured royalty debt totaling **USD 56.6 million** (approximately **CAD 81.4 million**)[40](index=40&type=chunk) - The company faces **CAD 16.5 million** in municipal property taxes and **CAD 19.7 million** in overdue penalties, for which it has sought judicial review; additionally, it faces a New York State court judgment for **USD 19.694 million** (approximately **CAD 26.048 million**)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - As of December 31, 2024, the company's debt-to-asset ratio was **98%**, compared to **88%** in 2023, indicating an increased debt level[43](index=43&type=chunk) - The company is primarily exposed to foreign exchange risks in Hong Kong Dollars, US Dollars, and Renminbi, but currently has no foreign currency hedging policy[43](index=43&type=chunk)[45](index=45&type=chunk) [Royalty Agreement](index=13&type=section&id=Royalty%20Agreement) The company signed a royalty agreement with BEH in 2021 for CAD 20 million, revised in June 2024 to accelerate a CAD 5 million payment and adjust royalty rates - The company entered into a royalty agreement with Burgess Energy Holdings (BEH) in 2021, granting an undivided interest in oil sands for a total consideration of **CAD 20 million**[46](index=46&type=chunk) - The agreement was revised in June 2024, accelerating a **CAD 5 million** payment to the company and adjusting the royalty rate from **8.75%** to a maximum of **25.00%** (previously **15.00%**) when WCS prices exceed **USD 80/barrel**[47](index=47&type=chunk) [Commitments and Contingencies](index=13&type=section&id=Commitments%20and%20Contingencies) Management's estimates of contractual obligation due dates may differ from actual dates, and various claims and lawsuits could materially impact net income - Management has estimated the contractual due dates for the company's obligations, but these estimates may differ significantly from actual due dates[48](index=48&type=chunk) - The company is involved in various claims and lawsuits, the outcomes of which cannot be predicted with certainty and could have a material adverse effect on net income or loss[41](index=41&type=chunk) [Related Party Transactions](index=13&type=section&id=Related%20Party%20Transactions) In 2024, a director-affiliated consulting firm received CAD 0.5 million for services, and the company has unsecured related party and shareholder loans totaling CAD 77.195 million - For the full year 2024, a consulting firm associated with a company director received **CAD 0.5 million** for management and consulting services[49](index=49&type=chunk) - As of December 31, 2024, Mr. Sun Guoping, the company's Executive Chairman, beneficially owned approximately **51.42%** of the company's issued common shares[49](index=49&type=chunk) Related Party Loans (CAD thousand) | Loan Type | December 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Related Party Loans | 56,205 | 51,933 | | Shareholder Loans | 20,990 | 19,021 | - Both related party and shareholder loans are unsecured and carry an annual interest rate of **10%**[49](index=49&type=chunk) [Off-Balance Sheet Arrangements](index=13&type=section&id=Off-Balance%20Sheet%20Arrangements) As of December 31, 2024, the group had no other off-balance sheet arrangements - As of December 31, 2024, the group had no other off-balance sheet arrangements[50](index=50&type=chunk) [Subsequent Events](index=13&type=section&id=Subsequent%20Events) On January 7, 2025, the company signed an Amended and Restated Forbearance Agreement, extending the debt forbearance period and waiving interest - On January 7, 2025, the company signed an Amended and Restated Forbearance Agreement with forbearance holders, extending the debt forbearance period to August 31, 2027[51](index=51&type=chunk) - Concurrently, accrued interest of **USD 31.529 million** for the period from January 1, 2025, to December 31, 2025, was waived[53](index=53&type=chunk) - The Board of Directors believes this action is in the best overall interest of the company and its shareholders, providing more time to repay or refinance debt and reducing financing costs[36](index=36&type=chunk) [Critical Accounting Judgments and Estimates](index=14&type=section&id=Critical%20Accounting%20Judgments%20and%20Estimates) Significant accounting estimates materially impact financial position and operations, requiring management judgment, assumptions, and estimates - The company's significant accounting estimates have a material impact on its financial position and operations, requiring management to make judgments, assumptions, and estimates based on past experience and reasonable factors[54](index=54&type=chunk) - For a detailed discussion, please refer to Note 4 of the consolidated annual financial statements for the year ended December 31, 2024[55](index=55&type=chunk) [Risk Factors](index=14&type=section&id=Risk%20Factors) Resource exploration, development, and extraction activities involve high risks, with significant factors remaining largely unchanged from the 2023 annual report - Resource exploration, development, and extraction activities involve a high degree of risk[56](index=56&type=chunk) - The significant risks and uncertainties affecting the company remain largely unchanged from those disclosed in the 2023 annual report[56](index=56&type=chunk) [Disclosure Controls and Procedures](index=14&type=section&id=Disclosure%20Controls%20and%20Procedures) As of December 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective - As of December 31, 2024, the company's Chief Executive Officer and Chief Financial Officer evaluated and concluded that the company's disclosure controls and procedures were effective[57](index=57&type=chunk) [Internal Control Over Financial Reporting](index=14&type=section&id=Internal%20Control%20Over%20Financial%20Reporting) As of December 31, 2024, the CEO and CFO concluded that the company's internal control over financial reporting (ICFR) was effective, with no significant changes identified - As of December 31, 2024, the company's Chief Executive Officer and Chief Financial Officer evaluated and concluded that the company's internal control over financial reporting (ICFR) was effective[58](index=58&type=chunk) - No changes that materially affected ICFR were identified during the quarter[59](index=59&type=chunk) [Guidance Section](index=15&type=section&id=Guidance%20Section) This section provides guidance on non-GAAP measures and forward-looking information [Non-GAAP Measures](index=15&type=section&id=Non-GAAP%20Measures) This MD&A includes non-GAAP measures like "operating netback" and "funds from operations," which are common in the industry but may not be comparable - This Management Discussion and Analysis includes non-GAAP measures such as "operating netback" and "funds from operations"[61](index=61&type=chunk) - These measures are commonly used in the oil and natural gas industry, but their non-standard definitions may lead to incomparability with similar measures provided by other issuers[61](index=61&type=chunk) [Cash Flow Used in Operating Activities](index=15&type=section&id=Cash%20Flow%20Used%20in%20Operating%20Activities) Cash flow used in operating activities is a non-GAAP measure for analyzing performance and liquidity, excluding non-cash working capital changes and decommissioning expenditures Cash Flow Used in Operating Activities (CAD thousand) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (935) | (2,385) | (2,968) | (7,588) | | Net Change in Non-Cash Working Capital Items | (3,954) | (1,874) | (10,697) | (12,198) | | Cash Flow Used in Operating Activities | (4,889) | (4,259) | (13,665) | (19,786) | - Cash flow used in operating activities is a non-GAAP measure that excludes the net change in non-cash working capital items and decommissioning expenditures[62](index=62&type=chunk) [Forward-Looking Information](index=15&type=section&id=Forward-Looking%20Information) This MD&A contains forward-looking statements involving significant risks and uncertainties that could cause actual results to differ materially, with no obligation to update - Certain statements in this Management Discussion and Analysis are forward-looking statements which, by their nature, involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated[63](index=63&type=chunk) - The company strongly advises investors not to place undue reliance on any such forward-looking statements, and the company has no obligation to update them[64](index=64&type=chunk) [HKEX Additional Information](index=16&type=section&id=HKEX%20Additional%20Information) This section provides additional disclosures required by the Hong Kong Stock Exchange, including corporate governance, directors' securities dealings, and outlook [Corporate Governance Code](index=16&type=section&id=Corporate%20Governance%20Code) For the three months ended December 31, 2024, the company complied with the Corporate Governance Code, except for seeking directors' legal action insurance - For the three months ended December 31, 2024, the company complied with the provisions of the Corporate Governance Code set out in Appendix C1 of the Hong Kong Listing Rules, except for seeking suitable insurance coverage for legal actions against the company's directors[66](index=66&type=chunk) [Standard Securities Dealing Code for Listed Company Directors](index=16&type=section&id=Standard%20Securities%20Dealing%20Code%20for%20Listed%20Company%20Directors) All directors confirmed compliance with the Standard Code for Securities Transactions by Directors of Listed Issuers during the review financial year - Following specific inquiries to all directors, the directors confirmed their compliance with the Standard Code set out in Appendix C3 of the Hong Kong Listing Rules during the review financial year[67](index=67&type=chunk) [Share Option Movements](index=16&type=section&id=Share%20Option%20Movements) As of December 31, 2024, 200,000 share options held by directors expired, with no new options granted during the year Director Share Option Movements (shares) | Name | December 31, 2023 | Granted | Exercised | Forfeited | Lapsed | December 31, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | He Yi | 100,000 | - | - | - | 100,000 | - | | Xing Guangzhong | 100,000 | - | - | - | 100,000 | - | | Subtotal Directors | 200,000 | - | - | - | 200,000 | - | - No new share options were granted in 2024, and the weighted average fair value of options granted in prior years was **CAD 0** (CAD 0.6 in 2023)[70](index=70&type=chunk)[71](index=71&type=chunk) [Purchase, Sale and Redemption of Sunshine Oil Sands' Listed Securities](index=17&type=section&id=Purchase%2C%20Sale%20and%20Redemption%20of%20Sunshine%20Oil%20Sands%27%20Listed%20Securities) On December 18, 2024, the company issued 48,695,736 Class "A" common shares to settle trade payables, with no other listed securities activities - On December 18, 2024, the company issued **48,695,736 Class "A" common shares** at a price of **HKD 0.38 per share** to settle trade payables[72](index=72&type=chunk) - As of December 31, 2024, there were no other purchases, sales, or redemptions of Sunshine Oil Sands' listed securities[73](index=73&type=chunk) [Share Issuance](index=17&type=section&id=Share%20Issuance) As of December 31, 2024, the company had 292,174,417 Class "A" common shares in issue - As of December 31, 2024, the company had **292,174,417 Class "A" common shares** in issue[74](index=74&type=chunk) [Employees](index=17&type=section&id=Employees) As of December 31, 2024, the company had 230 full-time employees, with total personnel expenses of CAD 5.5 million for the year - As of December 31, 2024, the company had a total of **230 full-time employees**[75](index=75&type=chunk) - Total personnel expenses for the twelve months ended December 31, 2024, amounted to **CAD 5.5 million**[75](index=75&type=chunk) [Dividends](index=17&type=section&id=Dividends) The company did not declare or pay any dividends for the twelve months ended December 31, 2024 - The company did not declare or pay any dividends for the twelve months ended December 31, 2024[76](index=76&type=chunk) [Review of Annual Results](index=18&type=section&id=Review%20of%20Annual%20Results) The company's consolidated financial statements for the periods ended December 31, 2024, were reviewed by the audit committee, audited by external auditors, and approved by the board - The company's consolidated financial statements for the three and twelve months ended December 31, 2024, were reviewed by the company's Audit Committee, audited by the company's external auditors, and approved by the Board of Directors[77](index=77&type=chunk) [Publication of Information](index=18&type=section&id=Publication%20of%20Information) This annual results announcement is published on the HKEX and company websites in both English and Chinese, with the English version prevailing - This annual results announcement will be published on the Hong Kong Stock Exchange website (www.hkexnews.hk) and the company's website (www.sunshineoilsands.com)[78](index=78&type=chunk) - This announcement is available in both English and Chinese versions, with the English version prevailing in case of any discrepancy[78](index=78&type=chunk) [Outlook](index=18&type=section&id=Outlook) The company focuses on cost control and business expansion, including a proposed acquisition of an environmental energy business and restarting activities in Muska and Godin - The company continues to focus on cost control and seeks opportunities to prudently expand and diversify its business[79](index=79&type=chunk) - The company has signed a Memorandum of Understanding with Nobao Energy Holdings (China) Co., Ltd. to acquire its environmental energy business subsidiary, which is expected to significantly improve financial performance (revenue and cash flow) and enhance the cost-effectiveness of its mining operations[79](index=79&type=chunk) - The company will continue to restart activities in the Muskwa and Godin areas with its joint venture partners[80](index=80&type=chunk)

Financial Performance - For the third quarter of 2024, the company reported a net loss attributable to equity holders of CAD 505,000, compared to a net profit of CAD 15.7 million in the third quarter of 2023[8]. - The total assets as of September 30, 2024, were CAD 741.3 million, showing a slight decrease from CAD 742.1 million in the previous quarter[8]. - Sunshine Oilsands reported a significant increase in diluted bitumen revenue to CAD 27.32 million for the nine months ended September 30, 2024, compared to CAD 18.31 million for the same period in 2023[9]. - As of September 30, 2024, the company reported a net loss attributable to shareholders of CAD 33.6 million and a working capital deficit of CAD 514 million[41]. - The company's debt-to-asset ratio increased to 92% as of September 30, 2024, compared to 88% as of December 31, 2023[41]. Production and Sales - The average production of diluted bitumen for the three and nine months ended September 30, 2024, was 521.8 barrels per day and 869.7 barrels per day, respectively[5]. - The average sales volume of diluted bitumen for the same periods was 689.0 barrels per day and 1,217.1 barrels per day[5]. - The average oil sands heavy oil production for Q3 2024 was 522 barrels/day, a significant increase from 2 barrels/day in Q3 2023, representing an increase of 520 barrels/day[13]. - The average oil sands heavy oil sales for Q3 2024 was 479 barrels/day, up from 9 barrels/day in Q3 2023, an increase of 470 barrels/day[15]. Revenue and Pricing - The average price per barrel for diluted bitumen was CAD 45.85 for the nine months ended September 30, 2024, compared to CAD 43.39 for the same period in 2023[9]. - For the three months ended September 30, 2024, the company's realized oil sands heavy oil revenue increased by 2.77 million CAD to 2.79 million CAD, compared to 0.20 million CAD in the same period of 2023[10]. - The average realized price per barrel of oil sands heavy oil rose from 18.41 CAD/barrel to 44.00 CAD/barrel, an increase of 25.59 CAD/barrel, primarily due to insufficient delivery costs incurred in Q3 2023[10]. Costs and Expenses - The operating cash flow for the three months ended September 30, 2024, was a net loss of 1.00 million CAD, an improvement from a net loss of 3.67 million CAD in the same period of 2023[11]. - The royalty expenses increased by 300,000 CAD and 700,000 CAD for the three and nine months ended September 30, 2024, respectively, mainly due to increased oil sales and higher applicable royalty rates[17]. - Total diluent costs for the three and nine months ended September 30, 2024, were CAD 2.4 million and CAD 12 million, respectively, compared to CAD 0.03 million and CAD 7.4 million for the same periods in 2023, reflecting an increase of CAD 2.4 million and CAD 4.6 million due to higher production volumes[20]. - The cost per barrel for transportation decreased significantly to CAD 12.27 and CAD 14.38 for the three and nine months ended September 30, 2024, compared to CAD 108.45 and CAD 24.30 in 2023[21]. Financing and Debt - The company has incurred unsecured debt totaling $57.4 million (approximately CAD 77.5 million) as of September 30, 2024[38]. - The company entered into an interest waiver agreement with deferral holders, waiving accrued interest from January 1, 2023, to December 31, 2023, amounting to USD 31.5 million[35]. - The financing costs for the three months and nine months ended September 30, 2024, were CAD 2.63 million and CAD 8.29 million, respectively, compared to CAD 2.67 million and CAD 7.44 million for the same periods in 2023[26]. Legal and Regulatory Matters - The company is negotiating a settlement plan with the RMWB regarding a property tax claim of CAD 16.1 million and overdue penalties of CAD 19 million[38]. - The company faces various legal claims and uncertainties that could significantly impact its net income or loss during the determination period[39]. - The company has a judgment requiring it to pay $15.481 million (approximately CAD 20.967 million) to non-tolerant holders, which was later increased to $19.694 million (approximately CAD 26.048 million)[40]. Strategic Initiatives - Sunshine Oilsands plans to enter the second phase of the West Ells project, which aims to increase production by an additional 5,000 barrels per day once financing is secured[3]. - The company signed a memorandum of understanding on June 3, 2024, to acquire a clean energy subsidiary from Noble Energy Holdings (China) Co., Ltd., which is expected to significantly improve revenue and cash flow post-acquisition[74]. - The company is actively conducting due diligence and valuation for a potential acquisition of a wholly-owned subsidiary from Noble Energy Holdings (China) Limited[50]. Internal Controls and Governance - The company’s internal controls over financial reporting were assessed as effective as of September 30, 2024[56]. - The company’s disclosure controls and procedures were deemed effective as of September 30, 2024[55].

Financial Performance - For the nine months ended September 30, 2024, oil sales (net of royalties) increased from CAD 18 million to CAD 26.3 million, primarily due to increased sales volume and higher diluted oil sands heavy oil prices[1]. - The net operating loss for the three months ended September 30, 2024, was CAD 0.5 million, compared to a net operating income of CAD 0.9 million in the same period last year[2]. - Operating cash flow for the three months ended September 30, 2024, was a net outflow of CAD 1.0 million, an improvement from a net outflow of CAD 3.67 million in the same period last year[2]. - The net loss attributable to shareholders for the three months ended September 30, 2024, was approximately CAD 0.5 million, compared to a net loss of CAD 15.7 million in the same period last year[2]. - For the nine months ended September 30, 2024, the company reported a net loss of approximately $33,844,000 compared to a net loss of $21,737,000 for the same period in 2023, indicating a significant increase in losses[11]. - The company's financing costs for the nine months ended September 30, 2024, were $8,290,000, up from $7,441,000 in the previous year, reflecting increased financial pressure[11]. - The company reported a foreign exchange gain of CAD 6,827,000 for the three months ended September 30, 2024, compared to a loss of CAD 10,735,000 in the same period of 2023[9]. - The company reported unrealized foreign exchange losses of $(6,827) million for the nine months ended September 30, 2024, compared to $10,735 million for the same period in 2023[71]. Assets and Liabilities - Total assets as of September 30, 2024, were CAD 741.3 million, a slight decrease from CAD 745.9 million as of December 31, 2023[3]. - Total liabilities increased to CAD 684.1 million as of September 30, 2024, compared to CAD 654.9 million as of December 31, 2023[6]. - As of September 30, 2024, total equity was CAD 57,203,000, compared to a negative equity of CAD 999,000 as of December 31, 2022[10]. - The company's current liabilities net amounted to approximately $51,400,000, highlighting ongoing liquidity challenges[15]. - The total financial liabilities amounted to $629,239 million as of September 30, 2024, with $520,954 million due within one year[74]. - The company’s working capital deficit increased to $514,041 million as of September 30, 2024, from $79,458 million as of December 31, 2023[66]. Revenue and Sales - Oil sales, net of royalties, for the three months ended September 30, 2024, were CAD 4,871,000, a significant increase from CAD 51,000 in the same period of 2023[9]. - Oil sales revenue for the three months ended September 30, 2024, was $5,211,000, compared to $49,000 for the same period in 2023, while total revenue for the nine months ended September 30, 2024, was $27,322,000, up from $18,305,000 in 2023[54]. - Customer contract revenue for the three months ended September 30, 2024, was $4,871,000, compared to $51,000 in 2023, with total revenue for the nine months reaching $26,329,000, up from $17,996,000[54]. Expenses - Total expenses for the three months ended September 30, 2024, were CAD 12,230,000, up from CAD 6,110,000 in the same period of 2023[9]. - General and administrative expenses for the three months ended September 30, 2024, were $3,028,000, slightly down from $3,034,000 in 2023, while total expenses for the nine months were $9,489,000, compared to $9,670,000 in 2023[61]. - The company incurred financing costs of CAD 2,630,000 for the three months ended September 30, 2024, compared to CAD 2,668,000 in the same period of 2023[9]. Equity and Shareholder Information - Shareholders' equity decreased to CAD 57.2 million as of September 30, 2024, down from CAD 91.0 million as of December 31, 2023[3]. - The basic loss per share attributable to the company's owners was $(0.14) for the nine months ended September 30, 2024, compared to $(0.09) for the same period in 2023[63]. - The company has issued and fully paid common shares totaling 243,478,681 as of September 30, 2024, with no changes in share capital during the period[48]. Capital Expenditures and Investments - The company reported capital expenditures of $2,234 thousand for the year ending December 31, 2020, and $1,239 thousand for the year ending December 31, 2023, indicating ongoing investment in exploration and evaluation assets[25]. - The company’s exploration and evaluation assets increased slightly from CAD 237,971 thousand in 2023 to CAD 239,291 thousand in 2024, an increase of about 0.5%[95]. Debt and Financing - The company needs to refinance or restructure its current debt to meet its operational cash needs and maintain capital expenditures, indicating significant financial uncertainty[15]. - The company is actively discussing refinancing options with existing shareholders and creditors to secure additional funding for ongoing operations[17]. - The company entered into a debt transfer agreement, with the bondholder transferring bonds for a principal amount of approximately $188.66 million (equivalent to about CAD 240.2 million) as of December 31, 2021[40]. Legal and Regulatory Matters - The company is involved in ongoing litigation regarding a judgment requiring payment of approximately $19,694 million (equivalent to about $26,048 million CAD) to non-exempt holders[85]. - The group has accrued a total of $16.1 million in municipal property tax demands from RMWB for the period from 2016 to 2024, along with accrued late fees of $19 million[83]. Operational Challenges - The company continues to explore new strategies for market expansion and product development to improve financial performance moving forward[10]. - The company faces significant risks regarding its ability to continue operations due to uncertainties in capital and operational expenditures, with a focus on the 2023 budget and future spending estimates[17]. - The company is currently engaged in the assessment and development of oil properties, which involves high risks and uncertainties regarding profitability[15].

Financial Performance - Oil sales (net of royalties) increased from CAD 17.9 million to CAD 21.5 million for the six months ended June 30, 2024, primarily due to higher diluted oil sands heavy oil sales prices[1]. - Net operating income (excluding one-time foreign exchange losses) for the three months ended June 30, 2024, was CAD 1.13 million, down from CAD 1.66 million in the same period last year[2]. - The company reported a net loss attributable to shareholders of CAD 11 million for the second quarter of 2024, compared to a net profit of approximately CAD 5.7 million in the same period last year[2]. - Operating cash flow for the three months ended June 30, 2024, was a net inflow of CAD 0.8 million, compared to a net outflow of CAD 0.7 million in the same period last year[2]. - The company reported a net loss of approximately CAD 33.1 million for the six months ending June 30, 2024[31]. - The company’s total liabilities as of June 30, 2024, amounted to CAD 684,338,000, compared to CAD 654,885,000 as of December 31, 2023[60]. - The company’s total equity decreased to CAD 57.78 million as of June 30, 2024, from CAD 91.05 million as of December 31, 2023[29]. Production and Sales - Average diluted oil sands heavy oil sales volume increased from 1,380.1 barrels per day to 1,484.1 barrels per day for the six months ended June 30, 2024[1]. - In Q2 2024, the company reported oil sands heavy oil sales of 884 barrels per day, a decrease of 31.8% from 1,294 barrels per day in Q2 2023[13]. - The realized oil sands heavy oil revenue for Q2 2024 was CAD 6,006,000, down from CAD 7,536,000 in Q2 2023, reflecting a decrease of 20.3%[9]. - The average diluted loss per share for the three months ended June 30, 2024, was $0.05, compared to a profit of $0.02 in the same period of 2023[62]. Costs and Expenses - Total operating costs for the three and six months ended June 30, 2024, were CAD 3,269,000 and CAD 7,559,000, compared to CAD 4,472,000 and CAD 8,959,000 in 2023, indicating a decrease of 26.9% and 15.6% respectively[20]. - General and administrative expenses for the three months ended June 30, 2024, were CAD 1.857 million, down from CAD 2.098 million in the same period of 2023, mainly due to reduced salaries and legal fees[21]. - Financing costs increased to CAD 2.9 million for the three months ended June 30, 2024, from CAD 2.2 million in the same period of 2023, primarily due to interest expenses on loans from related parties and shareholders[22]. - The company incurred total expenses of $16,274 thousand for the three months ended June 30, 2024, compared to $18,612 thousand in the same period of 2023, indicating a reduction in operational costs[62]. Assets and Liabilities - As of June 30, 2024, the company had invested approximately CAD 1.29 billion in oil sands lease, drilling operations, project engineering, procurement, and construction[4]. - The company’s total liabilities as of June 30, 2024, amounted to CAD 684,338,000, compared to CAD 654,885,000 as of December 31, 2023[60]. - The company’s operating capital deficit was CAD 83.77 million as of June 30, 2024, compared to CAD 79.46 million as of December 31, 2023[29]. - The company has unsecured loans from related parties totaling approximately CAD 53.375 million, with an interest rate of 10%[35]. Tax and Legal Matters - As of June 30, 2024, the company has total available tax deductions of approximately CAD 1.43 billion, with unrecognized tax losses expiring between 2029 and 2044[27]. - The company has received a municipal property tax notice from RMWB for CAD 15.8 million, along with overdue penalties of CAD 13.6 million[30]. - The company is appealing a court judgment requiring it to pay approximately USD 19,694,000 (approximately CAD 26,048,000) to non-exempt holders[116]. Future Outlook and Strategy - The company continues to evaluate its exploration and evaluation assets for impairment indicators, ensuring asset recoverability is based on fair value and value in use assessments[25]. - The company plans to focus on cost control and will restart activities in the Muskwa and Godin areas with joint ventures[59]. - The company needs to refinance or restructure its current debt and secure additional financing to meet its short-term operational cash needs and maintain capital expenditures[68]. - The company’s ability to continue as a going concern is dependent on its ability to successfully refinance or restructure existing debt and secure additional financing[67].