HONG KONG, Aug. 14, 2013 /CNW/ - Sunshine Oilsands Ltd. ("Sunshine" or the "Company") today announced its financial results for the second quarter of 2013. The Company's condensed interim consolidated financial statements, notes to the condensed interim consolidated financial statements and Management's Discussion and Analysis have been filed on SEDAR (www.sedar.com ) and with the SEHK at (www.hkexnews.hk ) and are available on the Company's website (www.sunshineoilsands.com ). All figures are in Canadian dollars unless otherwise stated.
- Sunshine continues to make progress in construction of the West Ells project. West Ells Phase 1 and Phase 2 have a design capacity of 10,000 barrels per day.
- The cost estimate for the West Ells project is now approximately $525 million. Sunshine continues to expect Phase 1 first steam to be in the fourth quarter of this year.
- In relation to other core areas, since all statements of concern have been removed, Thickwood is poised for Order in Council approval.
- We are pursuing up to an additional $300 million in funding to continue our capital program initiatives.
A strategic review process was initiated on August 6, 2013 to look at opportunities for additional funding in the form of debt, equity, JV arrangements or other structures to fund the development of our substantial asset base. Development work is to focus on West Ells before major expenditures on other projects are considered.
Message to Shareholders
The second quarter of 2013 was a busy but challenging quarter for Sunshine.
We are excited to see the significant progress at West Ells and eagerly anticipate plant commissioning and start up of operations in the next few months. Drilling and completions on the first 5,000 bpd pad is now done and drilling is nearly complete on the second 5,000 bpd pad. Surface work on the first pad will be finished soon and we will be readying the pad to start steaming. The second pad is expected to be ready to commence operations in early 2014. The central processing facility is progressing well, with the last modules expected to be delivered to the site in September. Construction is moving rapidly, to enable the plant to begin commissioning in the next few months.
We have continued to see cost pressures in construction at West Ells. The heavy rains and flooding in the Fort McMurray region in May slowed activity on site and added to costs for the project. Our project survived better than others as we were able to continue operations throughout the period but we did experience some delays. As well, the heavy and unprecedented flooding experienced in June in the Calgary area impacted our suppliers and the logistics associated with getting equipment to site. These delays and other impacts have combined to raise the cost estimate for the West Ells project to approximately $525 million.
We have been pleased with the progress on our other projects. Our second planned project at Thickwood has been advancing through regulatory approval. We believe the project will soon receive government approval to proceed since all public statements of concern have now been removed.
The delays and higher capital costs at West Ells, combined with monies spent on early stage development of our other projects, has increased the urgency of us accessing incremental capital. We are looking to secure financing of up to $300 million to allow us to continue to advance our projects.
Given the state of current markets and our financial position, we are focusing capital on West Ells and deferring our other attractive opportunities until capital markets improve and again recognize the high value opportunities captured in our asset base.
During the second quarter, we saw existing shareholders continue to support the company through increasing their ownership stake. We appreciate their support and that of all of our stakeholders as we work through these challenging times to validate the captured value of our large and attractive asset base. We expect the enormous embedded value in the asset base will receive better value recognition in the markets as we move toward first production over the next few months and realize increasing production in the coming year.
We thank you for your support through the challenging financing times. We believe we will be positioned to continue development at West Ells and look to expand into other asset areas as incremental funding is secured.
FORWARD-LOOKING INFORMATION AND DISCLAIMER
This document contains forward-looking information relating to, among other things: (a) the future financial performance and objectives of Sunshine Oilsands Ltd. ("Sunshine" or the "Company"); and (b) the plans and expectations of the Company. 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 document are not exhaustive and readers are not to place undue reliance on forward-looking statements as our 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 document, except as required under applicable securities legislation. The forward-looking statements speak only as of the date of this document 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 our material risk factors, see "Risk Factors" in our most recent Annual Information Form, "Risk Management" in our current MD&A for the three and six months ended June 30, 2013 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 our website at www.sunshineoilsands.com .
About Sunshine Oilsands Ltd.
The Company is engaged in the evaluation and the development of oil properties for the future production of bitumen in the Athabasca oil sands region in Alberta, Canada. Sunshine trades on the HKEX under the symbol "2012" and on the TSX under the symbol "SUO".
SOURCE: Sunshine Oilsands Limited
For further information:
Mr. John Zahary, President and CEO; Mr. David Sealock, Executive VP, Corporate Operations; (403) 984-1446, firstname.lastname@example.org, www.sunshineoilsands.com