----

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|   | **Nevsun Resources Ltd.**

Consolidated Financial Statements      Years ended December 31, 2013 and 2012      (Expressed in United States dollars) |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

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**MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING**

The accompanyingconsolidated financial statements of Nevsun Resources Ltd. are theresponsibility of management.

The consolidatedfinancial statements have been prepared in accordance with InternationalFinancial Reporting Standards as issued by the International AccountingStandards Board.  These statements include amounts that are based onmanagement’s best estimates and judgments.  Management has determined suchamounts on a reasonable basis in order to ensure that the consolidatedfinancial statements are presented fairly, in all material respects. Management is also responsible for ensuring that financial information usedelsewhere in annual filings is consistent with that in the financialstatements.

The Companymaintains a system of internal control in order to provide management withreasonable assurance that the financial information is relevant, reliable andaccurate and that the Company’s assets are appropriately accounted for andadequately safeguarded.

The Board ofDirectors is responsible for ensuring that management fulfills itsresponsibilities for financial reporting and internal control, and exercisesthis responsibility through the Audit Committee.  The Audit Committeeconsists of three directors all of whom are independent.  This Committeemeets periodically with management, as well as the external auditors, tosatisfy itself that each party is properly discharging its responsibilities,and to review the quarterly and annual consolidated financial statements andsubmit them to the Board of Directors; review the adequacy of the system ofinternal controls; review any relevant accounting, financial and securityregulatory matters; recommend the appointment of external auditors; and approvethe scope of the internal and external auditors' audit and non-auditwork.  

The Company’sauditors, KPMG LLP, Registered Public Accountants, appointed by theshareholders, conduct an examination in accordance with Canadian generallyaccepted auditing standards and standards of the Public Company AccountingOversight Board (United States) to allow them to express their opinion on thefinancial statements.  The auditors have full and free access to the AuditCommittee and their reports are included herein.

*“Cliff T. Davis”*

Cliff T. DavisChief Executive Officer

*“Tom Whelan”*

Tom WhelanChief Financial Officer

March 11, 2014

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|   | **KPMG LLP      Chartered Accountants**      PO Box 10426 777 Dunsmuir Street      Vancouver BC V7Y 1K3      Canada | Telephone  (604)  691-3000      Fax              (604)  691-3031      Internet     www.kpmg.ca |
|--------|---------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**INDEPENDENT AUDITORS’ REPORT OF REGISTERED****PUBLICACCOUNTING FIRM**

To the Shareholders and Directors of  Nevsun Resources Ltd.  

We have audited the accompanying consolidated  financial statements of Nevsun Resources Ltd., which comprise the consolidated  balance sheets as at December 31, 2013 and December 31, 2012, and the  consolidated statements of comprehensive income,  changes in equity, and cash flows for the years then ended,  and notes, comprising a summary of significant accounting policies and  other explanatory information.

*Management's Responsibility for the Consolidated  Financial Statements*

Management is responsible for the preparation and fair  presentation of these consolidated financial  statements in accordance with International Financial Reporting Standards as  issued by the International Accounting Standards Board, and for such internal  control as management determines is necessary to enable the preparation of consolidated financial statements that are free from  material misstatement, whether due to fraud or error.

*Auditors’ Responsibility*

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We  conducted our audits in accordance with Canadian generally accepted auditing  standards and the standards of the Public Company Accounting  Oversight Board (United States). Those standards require that we  comply with ethical requirements and plan and perform the audit to obtain  reasonable assurance about whether the consolidated financial  statements are free from material misstatement. 

 An audit involves performing procedures to obtain audit  evidence about the amounts and disclosures in the consolidated  financial statements. The procedures selected depend on our judgment,  including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or  error. In making those risk assessments, we consider internal control  relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit  procedures that are appropriate in the circumstances. An audit also includes  evaluating the appropriateness of accounting policies used and the reasonableness  of accounting estimates made by management, as well as evaluating the overall  presentation of the consolidated financial  statements. 

 We believe that the audit evidence we have obtained in our  audits is sufficient and appropriate to provide a basis for our audit  opinion.

|   | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG     network of independent member firms affiliated with KPMG International Cooperative      (“KPMG International”), a Swiss entity.    KPMG Canada provides services to KPMG LLP |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| *Nevsun Resources Ltd.       Page 2* |
|--------------------------------------|

*Opinion*

In our opinion, the consolidated financial  statements present fairly, in all material respects, the consolidated financial  position of Nevsun Resources Ltd. as at December 31, 2013 and December 31,  2012, and its consolidated financial performance and its consolidated cash  flows for the years then ended, in accordance with International Financial  Reporting Standards as issued by the International Accounting Standards  Board.

Other Matter

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 24, 2014 expressed an unqualified opinion on the effectiveness of the internal control over financial reporting. 

Chartered Accountants 

 March 24, 2014   Vancouver, Canada

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|   | **KPMG LLP      Chartered Accountants**      PO Box 10426 777 Dunsmuir Street      Vancouver BC V7Y 1K3      Canada | Telephone  (604)  691-3000      Fax              (604)  691-3031      Internet     www.kpmg.ca |
|--------|---------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

To the Shareholders and Board of Directors of Nevsun Resources Ltd.

We have audited Nevsun Resources Ltd.’s (the “Company”) internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

|   | KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.KPMG Canada provides services to KPMG LLP |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| *Nevsun Resources Ltd.       Page 2* |
|--------------------------------------|

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Nevsun Resources Ltd. as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and our report dated March 24, 2014 expressed an unqualified opinion on those consolidated financial statements.

Chartered Accountants

 March 24, 2014Vancouver, Canada 

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| **NEVSUN RESOURCES LTD.**    Consolidated Balance Sheets    (Expressed in thousands of United States dollars) |
|---------------------------------------------------------------------------------------------------------------|

|                                                                     | Note   |   | December 31,  2013 |   |   | December 31,  2012 |   |
|--------------------------------------------------------------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                                                                     |   |   |               |   |   |               |   |
| **Ass****ets**                                                           |   |   |               |   |   |               |   |
|                                                                     |   |   |               |   |   |               |   |
| Current assets                                                           |   |   |               |   |   |               |   |
|      Cash and cash equivalents                  | 7      | $      | 302,724            |   | $      | 396,404            |   |
|      Accounts receivable and prepaids           | 8      |   | 57,180             |   |   | 27,870             |   |
|      Inventories                                | 9      |   | 61,024             |   |   | 45,864             |   |
|      Due from non-controlling interest          | 10     |   | 46,691             |   |   | -                  |   |
|                                                                     |   |   | 467,619            |   |   | 470,138            |   |
| Non-current assets                                                       |   |   |               |   |   |               |   |
|      Due from non-controlling interest          | 10     |   | 36,503             |   |   | 63,130             |   |
|      Loan receivable                            | 11     |   | 2,573              |   |   | -                  |   |
|      Long-term inventories                      | 9      |   | 6,841              |   |   | -                  |   |
|      Mineral properties, plant and equipment    | 12     |   | 357,324            |   |   | 340,428            |   |
|                                                                     |   |   | 403,241            |   |   | 403,558            |   |
| Total assets                                                             |   | $      | 870,860            |   | $      | 873,696            |   |
|                                                                     |   |   |               |   |   |               |   |
| **Liabilities and equity**                                               |   |   |               |   |   |               |   |
|                                                                     |   |   |               |   |   |               |   |
| Current liabilities                                                      |   |   |               |   |   |               |   |
|      Accounts payable and accrued liabilities   | 13     | $      | 30,787             |   | $      | 18,130             |   |
|      Dividends payable                          | 14     |   | 13,943             |   |   | 9,949              |   |
|      Income taxes payable                       |   |   | 3,832              |   |   | 43,615             |   |
|                                                                     |   |   | 48,562             |   |   | 71,694             |   |
|                                                                     |   |   |               |   |   |               |   |
| Non-current liabilities                                                  |   |   |               |   |   |               |   |
|      Deferred income taxes                      | 15     |   | 30,188             |   |   | 20,704             |   |
|      Provision for mine closure and reclamation | 16     |   | 23,614             |   |   | 18,013             |   |
|                                                                     |   |   | 53,802             |   |   | 38,717             |   |
| Total liabilities                                                        |   |   | 102,364            |   |   | 110,411            |   |
|                                                                     |   |   |               |   |   |               |   |
| Equity                                                                   |   |   |               |   |   |               |   |
|      Share capital                              | 17     |   | 405,979            |   |   | 404,960            |   |
|      Share-based payments reserve               |   |   | 14,843             |   |   | 13,145             |   |
|      Retained earnings                          |   |   | 187,795            |   |   | 201,698            |   |
|      Equity attributable to Nevsun shareholders |   |   | 608,617            |   |   | 619,803            |   |
|                                                                     |   |   |               |   |   |               |   |
|      Non-controlling interest                   | 10     |   | 159,879            |   |   | 143,482            |   |
| Total equity                                                             |   |   | 768,496            |   |   | 763,285            |   |
| Total liabilities and equity                                             |   | $      | 870,860            |   | $      | 873,696            |   |

Commitments and contingencies (notes 23, 29)  The accompanying notes form an integral part of these consolidated  financial statements.  Approved on behalf of the Board:

| ***“Robert J. Gayton”*** |   | Director |   | ***“R. Stuart Angus”*** |   | Director |
|--------------------------------------|--------|----------|--------|-------------------------------------|--------|----------|
| Robert J. Gayton                     |   |     |   | R. Stuart Angus                     |   |     |

2

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| **NEVSUN RESOURCES LTD.**    Consolidated Statements of Comprehensive Income    (Expressed in thousands of United States dollars, except per share amounts)    Years ended December 31, 2013 and 2012 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       | Note   |   | 2013    |   |   | 2012     |   |
|------------------------------------------------------------|--------|--------|---------|--------|--------|----------|--------|
|                                                       |   |   |    |   |   |     |   |
| Revenues                                                   | 18     | $      | 155,698 |   | $      | 566,039  |   |
| Cost of sales                                              |   |   |    |   |   |     |   |
|        Operating expenses         | 19     |   | (62,848 | )      |   | (103,432 | )      |
|        Royalties                  |   |   | (8,070  | )      |   | (27,898  | )      |
|        Depreciation and depletion | 12     |   | (13,385 | )      |   | (29,035  | )      |
| Operating income                                           |   |   | 71,395  |   |   | 405,674  |   |
|                                                       |   |   |    |   |   |     |   |
| Administrative expenses                                    | 20     |   | (14,537 | )      |   | (8,261   | )      |
| Finance income                                             | 21     |   | 3,464   |   |   | 3,956    |   |
| Finance costs                                              | 22     |   | (882    | )      |   | (624     | )      |
| Income before taxes                                        |   |   | 59,440  |   |   | 400,745  |   |
|                                                       |   |   |    |   |   |     |   |
| Income taxes                                               | 15     |   | (30,186 | )      |   | (154,049 | )      |
| Net income and comprehensive income                        |   | $      | 29,254  |   | $      | 246,696  |   |
|                                                       |   |   |    |   |   |     |   |
| Net income and comprehensive income attributable  to:      |   |   |    |   |   |     |   |
|        Nevsun shareholders        |   | $      | 12,857  |   | $      | 145,262  |   |
|        Non-controlling interest   |   |   | 16,397  |   |   | 101,434  |   |
|                                                       |   | $      | 29,254  |   | $      | 246,696  |   |
|                                                       |   |   |    |   |   |     |   |
| Earnings per share attributable to Nevsun shareholders:    | 17     |   |    |   |   |     |   |
|        Basic                      |   | $      | 0.06    |   | $      | 0.73     |   |
|        Diluted                    |   | $      | 0.06    |   | $      | 0.72     |   |

The accompanying notes form an integral part of these  consolidated financial statements.

3

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| **NEVSUN RESOURCES LTD.**    Consolidated Statements of Cash Flows     (Expressed in thousands of United States dollars)     Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                 | Note   |   | 2013     |   |   | 2012     |   |
|------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
| Cash provided by (used in)                                                                           |   |   |     |   |   |     |   |
| Operating                                                                                            |   |   |     |   |   |     |   |
| Net income                                                                                           |   | $      | 29,254   |   | $      | 246,696  |   |
| Items not involving the use of cash                                                                  |   |   |     |   |   |     |   |
|        Provision for inventory obsolescence                                 |   |   | 2,808    |   |   | -        |   |
|        Accretion on reclamation liability                                   | 16, 22 |   | 882      |   |   | 612      |   |
|        Depreciation and depletion                                           |   |   | 13,436   |   |   | 29,045   |   |
|        Income taxes                                                         |   |   | 30,186   |   |   | 154,049  |   |
|        Share-based payments and stock appreciation  rights                  | 17     |   | 3,187    |   |   | 996      |   |
|        Interest income on due from non-controlling  interest                | 10     |   | (3,314   | )      |   | (3,677   | )      |
|        Reduction of finance lease obligation                                |   |   | (329     | )      |   | -        |   |
|        Gain on disposal of plant and equipment                              |   |   | (36      | )      |   | -        |   |
|                                                                                                 |   |   |     |   |   |     |   |
|                                                                                                 |   |   | 76,074   |   |   | 427,721  |   |
| Changes in non-cash operating capital                                                                |   |   |     |   |   |     |   |
|        Accounts receivable and prepaids                                     |   |   | 12,617   |   |   | (7,381   | )      |
|        Inventories                                                          |   |   | (25,459  | )      |   | (12,999  | )      |
|        Accounts payable and accrued liabilities                             |   |   | 12,842   |   |   | (3,940   | )      |
|        Income taxes paid                                                    | 15     |   | (60,484  | )      |   | (209,586 | )      |
|                                                                                                 |   |   |     |   |   |     |   |
| Net cash provided by operating activities                                                            |   |   | 15,590   |   |   | 193,815  |   |
| Investing                                                                                            |   |   |     |   |   |     |   |
|        Loan to non-controlling interest                                     |   |   | (16,750  | )      |   | -        |   |
|        Loan to supplier                                                     |   |   | (7,000   | )      |   | -        |   |
|        Expenditures on mineral properties, plant and  equipment             |   |   | (117,741 | )      |   | (75,201  | )      |
|        Pre-commercial production copper sales receipts                      |   |   | 71,255   |   |   | -        |   |
|        Expenditures on exploration and evaluation                           |   |   | (15,720  | )      |   | (11,263  | )      |
|        Proceeds on disposal of equipment                                    |   |   | 98       |   |   | -        |   |
|        Changes in non-cash working capital related to  investing activities |   |   | -        |   |   | (1,627   | )      |
|                                                                                                 |   |   |     |   |   |     |   |
| Net cash used in investing activities                                                                |   |   | (85,858  | )      |   | (88,091  | )      |
| Financing                                                                                            |   |   |     |   |   |     |   |
|        Dividends paid to Nevsun shareholders                                | 14     |   | (23,880  | )      |   | (19,989  | )      |
|        Distribution to non-controlling interest                             | 10     |   | -        |   |   | (68,000  | )      |
|        Receipt of purchase price settlement from  non-controlling interest  | 10     |   | -        |   |   | 34,223   |   |
|        Interest received on due from non-controlling  interest              | 10     |   | -        |   |   | 1,773    |   |
|        Issuance of common shares, net of issue costs                        | 17     |   | 468      |   |   | 1,363    |   |
|        Repurchase and cancellation of common shares                         | 17     |   | -        |   |   | (6,272   | )      |
|                                                                                                 |   |   |     |   |   |     |   |
| Net cash used in financing activities                                                                |   |   | (23,412  | )      |   | (56,902  | )      |
| Increase (decrease) in cash and cash equivalents                                                     |   |   | (93,680  | )      |   | 48,822   |   |
| Cash and cash equivalents, beginning of year                                                         |   |   | 396,404  |   |   | 347,582  |   |
| Cash and cash equivalents, end of year                                                               |   | $      | 302,724  |   | $      | 396,404  |   |
| Non-cash investing and financing transactions                                                        |   |   |     |   |   |     |   |
| Dividends declared, paid after year end                                                              |   | $      | 13,943   |   | $      | 9,949    |   |
| Reclassification of share-based payments  reserve to share capital upon exercise of options          |   |   | 551      |   |   | 382      |   |
| Change in accounts receivable related to  pre-commercial production copper sales                     |   |   | 41,661   |   |   | -        |   |
| Closure and reclamation increase in mineral  properties, plant and equipment                         |   |   | 4,719    |   |   | 4,168    |   |
| Capital assets under finance  lease                                                                  |   |   | 4,659    |   |   | -        |   |
| Depreciation recorded in inventory                                                                   |   | $      | 3,040    |   | $      | 1,526    |   |

The accompanying notes form an integral part of these  consolidated financial statements.

4

----

 
| **NEVSUN RESOURCES LTD.**    Consolidated Statements of Changes in Equity    (Expressed in thousands of United States dollars)     Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   | Number of  shares  (note 17) |   |   | Share capital  (note 17) |   |   | Share-based  payments  reserve |   |   | Retained  earnings   (deficit) |   |   | Equity attributable to Nevsun shareholders |   |   | Non-controlling  interest |   |   | Total   equity |   |
|----------------------------------------------------|--------|------------------------------|--------|--------|--------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------------|--------|--------|--------------------------------------------|--------|--------|---------------------------|--------|--------|---------------------|--------|
| December 31, 2011                                  |   | 200,254,715                  |   | $      | 409,305                  |   | $      | 11,736                         |   | $      | 76,383                              |   | $      | 497,424                                    |   | $      | 110,048                   |   | $      | 607,472             |   |
| Exercise of stock options                          |   | 460,700                      |   |   | 1,545                    |   |   | -                              |   |   | -                                   |   |   | 1,545                                      |   |   | -                         |   |   | 1,545               |   |
| Transfer to share capital on exercise of  options  |   | -                            |   |   | 382                      |   |   | (382                           | )      |   | -                                   |   |   | -                                          |   |   | -                         |   |   | -                   |   |
| Repurchase and cancellation of shares              |   | (1,732,600                   | )      |   | (6,272                   | )      |   | -                              |   |   | -                                   |   |   | (6,272                                     | )      |   | -                         |   |   | (6,272              | )      |
| Share-based payments                               |   | -                            |   |   | -                        |   |   | 1,791                          |   |   | -                                   |   |   | 1,791                                      |   |   | -                         |   |   | 1,791               |   |
| Income for the year                                |   | -                            |   |   | -                        |   |   | -                              |   |   | 145,262                             |   |   | 145,262                                    |   |   | 101,434                   |   |   | 246,696             |   |
| Dividends declared (note 14)                       |   | -                            |   |   | -                        |   |   | -                              |   |   | (19,947                             | )      |   | (19,947                                    | )      |   | -                         |   |   | (19,947             | )      |
| Distribution to non-controlling interest (note 10) |   | -                            |   |   | -                        |   |   | -                              |   |   | -                                   |   |   | -                                          |   |   | (68,000                   | )      |   | (68,000             | )      |
| December 31, 2012                                  |   | 198,982,815                  |   | $      | 404,960                  |   | $      | 13,145                         |   | $      | 201,698                             |   | $      | 619,803                                    |   | $      | 143,482                   |   | $      | 763,285             |   |
| Exercise of stock options                          |   | 325,000                      |   |   | 468                      |   |   | -                              |   |   | -                                   |   |   | 468                                        |   |   | -                         |   |   | 468                 |   |
| Transfer to share capital on exercise of  options  |   | -                            |   |   | 551                      |   |   | (24                            | )      |   | -                                   |   |   | 527                                        |   |   | -                         |   |   | 527                 |   |
| Transfer on forfeiture of vested options           |   | -                            |   |   | -                        |   |   | (1,113                         | )      |   | 1,113                               |   |   | -                                          |   |   | -                         |   |   | -                   |   |
| Return to treasury of fractional shares            |   | (13                          | )      |   | -                        |   |   | -                              |   |   | -                                   |   |   | -                                          |   |   | -                         |   |   | -                   |   |
| Share-based payments                               |   | -                            |   |   | -                        |   |   | 2,835                          |   |   | -                                   |   |   | 2,835                                      |   |   | -                         |   |   | 2,835               |   |
| Income for the year                                |   | -                            |   |   | -                        |   |   | -                              |   |   | 12,857                              |   |   | 12,857                                     |   |   | 16,397                    |   |   | 29,254              |   |
| Dividends declared (note 14)                       |   | -                            |   |   | -                        |   |   | -                              |   |   | (27,873                             | )      |   | (27,873                                    | )      |   | -                         |   |   | (27,873             | )      |
| December 31, 2013                                  |   | 199,307,802                  |   | $      | 405,979                  |   | $      | 14,843                         |   | $      | 187,795                             |   | $      | 608,617                                    |   | $      | 159,879                   |   | $      | 768,496             |   |

The accompanying notes form an integral part of  these consolidated financial statements.

5

----

 
| **NEVSUN RESOURCES LTD.**    Notes to Consolidated Financial Statements     (Expressed in thousands of United States dollars, unless otherwise stated)     Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **1.** | **Nature of business** |
|--------|------------------------|

|   | Nevsun Resources Ltd. and its  subsidiaries (collectively, Nevsun or the Company) are in the mineral  property exploration, development, extraction and processing business in  Africa. The Company’s principal operation is the Bisha Mine, held via the  Eritrean registered corporation, Bisha Mining Share Company (BMSC or the  Bisha Mine), in which Nevsun has a 60% interest. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Commissioning of the copper flotation  plant at the Bisha Mine commenced in late June 2013 and achieved commercial  production for accounting purposes on December 1, 2013. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Nevsun is a public company which is  listed on the Toronto Stock Exchange and the NYSE MKT LLC. Nevsun is  incorporated in Canada and maintains its head office and registered office at  Suite 760 – 669 Howe Street, Vancouver, British Columbia, Canada, V6B 0C4. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s continuing operations and  the underlying value and recoverability of amounts shown for its mineral  properties, plant and equipment are dependent upon continuing profitable  production or proceeds from the disposition of its mineral property  interests. Future profitable production is primarily dependent on the  quality of ore resources, future metals prices, operating and environmental  costs, fluctuations in currency exchange rates, political risks and varying levels  of taxation. While the Company actively tries to manage these risks, certain  of these factors are beyond its control. The Company has not entered into  derivative financial instruments to manage foreign exchange or commodity  price exposure. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **2.** | **Basis of preparation** |
|--------|--------------------------|

|   | (a) | Statement  of compliance |
|--------|-----|--------------------------|

|   | These consolidated financial statements have been  prepared in accordance with International Financial Reporting Standards  (IFRS) as issued by the International Accounting Standards Board (IASB). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Approval  of the financial statements |
|--------|-----|---------------------------------------|

|   | The consolidated financial statements of Nevsun for the  year ended December 31, 2013 were reviewed by the Audit Committee and  approved and authorized for issue by the Board of Directors on March 11, 2014. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies** |
|--------|------------------------------------------------|

|   | The accounting policies set out below  have been applied consistently for all periods presented in these  consolidated financial statements, and have been applied consistently by the  Company and its subsidiaries. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | Basis  of measurement |
|--------|-----|-----------------------|

|   | These consolidated financial statements have been  prepared on a historical cost basis except that liabilities for cash settled  share-based payment arrangements are measured at fair value. In addition  these consolidated financial statements have been prepared using the accrual  basis of accounting. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Currency  translation |
|--------|-----|-----------------------|

|   | The functional and reporting currency of the Company and  all its subsidiaries is the United States dollar. Transactions in currencies  other than the functional currency are recorded at the rate of exchange  prevailing on the date of the transaction. Monetary assets and liabilities  that are denominated in foreign currencies are translated at the rate  prevailing at each reporting date. Non-monetary assets and liabilities  denominated in foreign currencies that are measured at fair value are  retranslated to the functional currency at the exchange rate at the date the  fair value was determined. Non-monetary items that are measured at  historical cost in a foreign currency are translated at the exchange rate on  the date of the transaction. Foreign currency translation differences are  recognized in profit or loss. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

6

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (c) | Basis  of consolidation |
|--------|-----|-------------------------|

|   | These consolidated financial statements  include the accounts of the Company and its subsidiaries. Subsidiaries are  entities controlled by the Company. Control is the power to govern the  financial and operating policies of an entity so as to obtain benefits from  its activities. All intercompany transactions and balances are eliminated on  consolidation. For partially owned subsidiaries, the interest attributable  to non-controlling shareholders is reflected in non-controlling interest. Adjustments  to non-controlling interests are accounted for as transactions with owners  and adjustments that do not involve the loss of control are based on a  proportionate amount of the net assets of the subsidiary. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Significant subsidiaries of Nevsun Resources Ltd. are as  follows: |
|--------|--------------------------------------------------------------------|

|   |                            |                      |                | Nevsun’s effective  interest |   |
|--------|---------------------------------|---------------------------|---------------------|------------------------------------|--------|
|   | Name                            | Country of  incorporation | Principal  activity | (%)                                |   |
|   |                            |                      |                |                               |   |
|   | Nevsun (Barbados) Holdings Ltd. | Barbados                  | Holding company     | 100                                |   |
|   | Nevsun Africa (Barbados) Ltd.   | Barbados                  | Holding company     | 100                                |   |
|   | Nevsun Resources (Eritrea) Ltd. | Barbados                  | Holding company     | 100                                |   |
|   | Bisha Mining Share Company      | Eritrea                   | Mining              | 60                                 |   |

|   | (d) | Revenue  recognition |
|--------|-----|----------------------|

|   | Revenue from the sale of goods is measured at the fair  value of the consideration received or receivable. Revenue is recognized  when persuasive evidence, usually in the form of an executed sales agreement,  of an arrangement exists, indicating there has been a transfer of risks and  rewards of ownership to the customer, no further work or processing is  required by the Company, the quantity and quality of the goods has been  determined with reasonable accuracy, the price can be measured reliably, and  collectability is probable  In most cases for copper sales, the sales price is  determined on a provisional basis at the date of sale; adjustments to the  sales price subsequently occurs based on movements in quoted forward or  contractual prices up to the date of final pricing. The period between  provisional invoicing and final pricing is typically between 60 and 120 days.  Revenue on provisionally priced sales is recognized based on the estimated  fair value of the total consideration receivable. As a result, the value of  the copper concentrate sales and receivables changes as the underlying  commodity market price varies and this adjustment mechanism has the  characteristics of a derivative. Accordingly, the fair value of the  receivable is adjusted each reporting period by reference to forward market  prices and the changes in fair value are recorded as an adjustment to  revenue. The fair value of copper concentrate sales receivables have been  adjusted as of December 31, 2013. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Earnings  per share |
|--------|-----|---------------------|

|   | Earnings per share calculations are  based on the weighted average number of common shares outstanding during the year.  Diluted earnings per share is calculated using the treasury stock method.  The weighted average number of common shares outstanding for the calculation  of diluted earnings per share assumes all in-the-money stock options and  stock appreciation rights are exercised at the beginning of the year and that  the proceeds to be received on their exercise are used to repurchase common  shares at the average market price during the year. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Cash  and cash equivalents |
|--------|-----|----------------------------|

|   | Cash and cash equivalents are comprised      of cash on deposit with banks and highly liquid short-term investments having      maturities at the date of purchase of 90 days or less. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

7

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (g) | Inventories |
|--------|-----|-------------|

|   | Inventories are valued at the lower of cost and net  realizable value, on a weighted average cost basis. Average costs are  calculated by reference to the cost levels experienced in the current month  together with those in opening inventory. Cost for raw materials and  supplies is purchase price and freight, and for partly processed and finished  goods is the cost of production. For this purpose, the costs of production  include: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | fuel, power,  labour costs, materials and contractor expenses which are directly  attributable to the extraction and processing of ore; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the depreciation of  mineral properties and plant and equipment used in the extraction and  processing of ore; and |
|--------|------|--------------------------------------------------------------------------------------------------------------------|

|   | (iii) | production overheads. |
|--------|-------|-----------------------|

|   | Work-in-progress inventory includes ore stockpiles and  other partly processed material. Stockpiles represent ore that has been  extracted and is available for further processing. Quantities are assessed  primarily through surveys and assays. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (h) | Mineral  properties, plant and equipment |
|--------|-----|------------------------------------------|

|   | (i) | Exploration  and evaluation |
|--------|-----|-----------------------------|

|   | Once the legal rights to explore an  area have been secured, expenditures on exploration and evaluation activities  are capitalized to exploration and evaluation, and are included within  mineral properties, plant and equipment. Costs incurred prior to the  Company obtaining the legal rights are expensed. Exploration  expenditures relate to the initial search for deposits with economic  potential and to detailed assessments of deposits or other projects that have  been identified as having economic potential. Obligations for removal  and restoration as a result of undertaking the exploration and evaluation are  capitalized. Management reviews the carrying value of capitalized  exploration costs at least annually. The review is based on the Company’s  intentions for further exploration and development of the undeveloped  property. Subsequent recovery of the resulting carrying value depends on  successful development or sale of the undeveloped project. If a project does  not prove viable, all irrecoverable costs associated with the project net of  any impairment provisions are written off. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Development |
|--------|------|-------------|

|   | When economically viable reserves have  been determined and the decision to proceed with development has been  approved, exploration and evaluation assets are first assessed for  impairment, then reclassified to construction-in-progress or mineral  properties. The expenditures related to development and  construction are capitalized as construction-in-progress and are included  within properties, plant and equipment. Costs associated with the  commissioning of new assets incurred in the year before they are operating in  the way intended by management, are capitalized. Development expenditure is  net of the proceeds of the sale of metals from ore extracted during the  development phase. Interest on borrowings related to the construction and  development of assets are capitalized until substantially all the activities  required to make the asset ready for its intended use are complete. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The costs of removing overburden to  access ore are capitalized as pre-production stripping costs and are included  within mineral properties, plant and equipment. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | When developed or constructed assets are operating in  the way intended by management, construction-in-progress costs are  reclassified to mineral properties or plant and equipment. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

8

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (h) | Mineral  properties, plant and equipment (continued) |
|--------|-----|------------------------------------------------------|

|   | (iii) | Plant  and equipment |
|--------|-------|----------------------|

|   | Plant and equipment is carried at cost, less accumulated  depreciation and accumulated impairment losses. Cost comprises the fair  value of consideration given to acquire or construct an asset and includes  the direct charges associated with bringing the asset to the location and  condition necessary for putting it into use, along with the future cost of  dismantling and removing the asset. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | When parts of an item of plant and  equipment have different useful lives, they are accounted for as separate  items, i.e. major components, of plant and equipment. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The cost of major overhauls of parts of  plant and equipment is recognized in the carrying amount of the item if it is  probable that the future economic benefits embodied within the part will flow  to the Company, and its cost can be measured reliably. The carrying amount  of the replaced part is derecognized. The costs of the routine servicing of  plant and equipment are recognized in profit or loss as incurred. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Depreciation |
|--------|------|--------------|

|   | Mineral properties, plant and equipment associated with  mining operations are depreciated over the estimated useful lives of the  assets, either on a units-of-production basis or declining balance basis at  rates of 20% to 30% per annum, as appropriate. All other equipment is  depreciated over the estimated useful life of the assets using the declining  balance method at rates of 20% to 30% per annum, as appropriate.  Depreciation methods and useful lives are reviewed at each reporting date and  adjusted as required. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | Stripping  costs in the production phase |
|--------|-----|------------------------------------------|

|   | Where production stripping activity does not result in  inventory produced, but does provide improved access to the ore body, the  costs are deferred when the stripping activity meets the following criteria:  (1) it is probable the Company will be the future beneficiary of the stripping  activity; (2) the Company can identify the component of the ore body for  which access has been improved; and (3) the costs relating to the stripping  activity associated with that component can be measured reliably. Deferred  stripping costs are capitalized to mineral properties or  construction-in-progress and are depreciated on a units-of-production basis  over the expected useful life of the identified component of the ore body to  which access has been improved as a result of the stripping activity. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | Impairment  of non-financial assets |
|--------|-----|-------------------------------------|

|   | Non-financial assets are evaluated at  least annually by management for indicators that carrying value is impaired  and may not be recoverable. When indicators of impairment are present, the  recoverable amount of an asset is evaluated at the level of a cash generating  unit (CGU), the smallest identifiable group of assets that generates cash  inflows that are largely independent of the cash inflows from other assets or  groups of assets. The recoverable amount of a CGU is the greater of the  CGU’s fair value less costs to sell and its value in use. An impairment loss  is recognized in profit or loss to the extent the carrying amount exceeds the  recoverable amount. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

9

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (i) | Impairment of non-financial assets  (continued) |
|--------|-----|-------------------------------------------------|

|   | In calculating recoverable amount, the  Company uses discounted cash flow techniques to determine value in use when  it is not possible to determine fair value either by quotes from an active  market or a binding sales agreement. The determination of discounted cash  flows is dependent on a number of factors, including future metal prices, the  amount of reserves, the cost of bringing the project into production,  production schedules, production costs, sustaining capital expenditures, and  site closure, restoration and environmental rehabilitation costs and the  discount rate used. Additionally, the reviews take into account factors such  as political, social and legal, and environmental regulations. These factors  may change due to changing economic conditions or the accuracy of certain  assumptions and, hence, affect the recoverable amount. The Company uses its  best efforts to fully understand all of the aforementioned to make an  informed decision based upon historical and current facts surrounding the  projects. Discounted cash flow techniques require management to make  estimates and assumptions concerning reserves and expected future production  revenues and expenses. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (j) | Reserve  estimates |
|--------|-----|--------------------|

|   | The Company estimates its ore reserves and mineral  resources based on information compiled by Qualified Persons as defined in  accordance with Canadian Securities Administrators National Instrument 43-101*Standards for Disclosure of Mineral Projects*(NI 43-101). Reserves  are used in the calculation of depreciation, impairment assessment and for  forecasting the timing of payment of mine closure, reclamation and  rehabilitation costs. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | There are numerous uncertainties inherent in estimating  ore reserves, and assumptions that are valid at the time of estimation may  change significantly when new information becomes available. Changes in the  forecasted prices of commodities, exchange rates, production costs or  recovery rates may change the economic status of reserves and may,  ultimately, result in the reserves being restated. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (k) | Provision  for mine closure and reclamation |
|--------|-----|---------------------------------------------|

|   | The Company records a liability based  on the best estimate of costs for site closure and reclamation activities  that the Company is legally or constructively required to remediate. The  liability is recognized at the time environmental disturbance occurs and the  resulting costs are capitalized to the corresponding asset. The provision  for mine closure and reclamation liabilities is estimated using expected cash  flows based on engineering and environmental reports prepared by third-party  industry specialists and discounted at a pre-tax rate specific to the  liability. The capitalized amount is depreciated on the same basis as the  related asset. The liability is adjusted for the accretion of the discounted  obligation and any changes in the amount or timing of the underlying future  cash flows. Significant judgments and estimates are involved in forming  expectations of the amounts and timing of future closure and reclamation cash  flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Additional disturbances and changes in mine closure and  reclamation estimates are accounted for as incurred with a change in the  corresponding capitalized cost. Costs of rehabilitation projects for which a  provision has been recorded are recorded directly against the provision as  incurred, most of which are incurred at the end of the life of mine. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

10

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (l) | Financial  instruments |
|--------|-----|------------------------|

|   | (i) | Financial  assets |
|--------|-----|-------------------|

|   | The Company initially recognizes loans  and receivables on the date that they originate. All other financial assets  are recognized initially on the trade date, which is the date that the  Company becomes a party to the contractual provisions of the instrument. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company derecognizes a financial  asset when the contractual rights to the cash flows from the asset expire, or  it transfers the rights to receive the contractual cash flows in a  transaction in which substantially all the risks and rewards of ownership of  the financial asset are transferred. Any interest in such transferred  financial assets that is created or retained by the Company is recognized as  a separate asset or liability.  The Company classifies its financial  assets in the following categories: loans and receivables and  available-for-sale. The classification depends on the purpose for which the  financial assets were acquired. Management determines the classification of  financial assets at recognition. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans and receivables |
|--------|-----------------------|

|   | Loans and receivables are  non-derivative financial assets with fixed or determinable payments that are  not quoted in an active market. They are classified as current assets or  non-current assets based on their maturity date. Loans and receivables are  initially recognized at fair value and subsequently carried at amortized cost  less any impairment. Loans and receivables are comprised of cash and cash  equivalents, trade and other receivables, and loan to supplier. Included in  trade receivables are provisionally priced receivables measured at fair value  with changes recognized in profit or loss. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Available-for-sale financial assets  Available-for-sale (AFS) financial  assets are non-derivative financial assets that are either designated as  available-for-sale or not classified in any of the other financial asset  categories. AFS financial assets are recognized initially at fair value plus  any directly attributable transaction costs. Subsequently, they are measured  at fair value. Changes in the fair value of AFS financial assets other than  impairment losses are recognized as other comprehensive income and classified  as a component of equity. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Management assesses the carrying value  of AFS financial assets at least annually and any impairment charges are  recognized in profit or loss. When financial assets classified as  available-for-sale are sold, the accumulated fair value adjustments recognized  in other comprehensive income are included in profit and loss. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Financial  liabilities |
|--------|------|------------------------|

|   | The Company classifies all of its  financial liabilities as other financial liabilities. Other financial  liabilities are non-derivatives and are recognized initially at fair value,  net of transaction costs incurred and are subsequently stated at amortized  cost. Any difference between the amounts originally received, net of  transaction costs, and the redemption value is recognized in profit and loss  over the period to maturity using the effective interest method. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Other financial liabilities are classified as current or  non-current based on their maturity date. Financial liabilities include  trade accounts payable, other payables, liability associated with stock  appreciation rights (SARs), restricted share units (RSUs)  and performance share units (PSUs), and loans. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

11

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (m) | Lease  arrangements |
|--------|-----|---------------------|

|   | Leases that transfer substantially all of the benefits  and risks incidental to the ownership of property to the Company are accounted  for as finance leases. Assets under finance lease are originally capitalized  at the lower of the fair market value of the leased property and the net  present value of the minimum lease payments. Each lease payment is allocated  between the finance lease obligation and finance charge. The plant and  equipment acquired under finance lease is depreciated over the shorter of the  asset’s useful life and the lease term. All other leases are accounted for as  operating leases wherein rental payments are expensed as incurred. Where a  lease is prepaid, the obligation is offset against the prepayment. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company enters into arrangements that are in  substance leasing arrangements and are accounted for in accordance with this  policy. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | (n) | Share  capital |
|--------|-----|----------------|

|   | Common shares are classified as  equity. The Company records proceeds from share issuances net of issue costs  and any tax effects. When share capital recognized as equity is repurchased,  the amount of the consideration paid, which includes directly attributable  costs, net of any tax effects, is recognized as a deduction from equity.  Common shares issued for consideration other than cash are valued based on  their market value on the date of issuance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (o) | Income  taxes |
|--------|-----|---------------|

|   | Current tax is the expected tax payable or receivable on  the taxable income or loss for the year, using tax rates enacted or  substantively enacted at the reporting date, and any adjustment to tax  payable in respect of previous years. The Company uses the balance sheet  method of accounting for deferred income taxes. Under the balance sheet  method, deferred tax assets and liabilities are recognized for the future tax  consequences attributable to differences between the financial statement  carrying amounts of existing assets and liabilities and their respective tax  bases. Deferred tax is not recognized for temporary differences on the  initial recognition of assets or liabilities in a transaction that is not a  business combination and that affects neither accounting nor taxable profit  or loss. Deferred tax assets and liabilities are measured using  substantively enacted tax rates expected to apply to taxable income in the  years in which those temporary differences are expected to be recovered or  settled. Deferred tax assets also result from unused loss carried forward,  resource related pools and other deductions. A deferred tax  asset is recognized for unused tax losses, tax credits and deductible  temporary differences to the extent that it is probable that future taxable  profits will be available against which they can be utilized. Deferred tax  assets are reviewed at each reporting date and are reduced to the extent that  it is no longer probable that the related tax benefit will be realized. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In determining the amount of current  and deferred tax the Company takes into account the impact of uncertain tax  positions and whether additional taxes and interest may be due. The Company  believes that its accruals for tax liabilities are adequate for all open tax  years based on its assessment of many factors, including interpretations of  tax law and prior experience. This assessment relies on estimates and  assumptions and may involve a series of judgments about future events. New  information may become available that causes the Company to change its judgment  regarding the adequacy of existing tax liabilities. Such changes to tax  liabilities will impact tax expenses in the year that such a determination is  made. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Deferred tax assets and liabilities are  offset if there is a legally enforceable right to offset current tax  liabilities and assets, and they relate to taxes levied by the same tax  authority on the same taxable entity, or on different tax entities, but they  intend to settle current tax liabilities and assets on a net basis or their  tax assets and liabilities will be realized simultaneously. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

12

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Summary of significant accounting policies (continued)** |
|--------|------------------------------------------------------------|

|   | (p) | Share-based  payments |
|--------|-----|-----------------------|

|   | The Company has a stock option plan  that is described in note 17(c). Share-based payments to employees are measured at the grant  date fair value of the instruments issued and amortized over the vesting  periods. Share-based payments to non-employees are measured at the grant  date fair value of the goods or services received or the fair value of the  equity instruments issued if it is determined the fair value of the goods or  services cannot be reliably measured, and are recorded at the date the goods  or services are received. The amount recognized as an expense is adjusted to  reflect the number of awards expected to vest. The offset to the recorded  cost is to share-based payments reserve. Consideration received on the  exercise of stock options is recorded as share capital and the related  share-based payments reserve is transferred to share capital. Charges for  options that are forfeited before vesting are reversed from share-based  payment reserve. For those options that expire or are forfeited after vesting,  the recorded value is transferred to retained earnings. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (q) | Stock  appreciation rights |
|--------|-----|----------------------------|

|   | SARs allow the holder to receive cash or common shares  of the Company in the amount of the underlying value of the associated stock  option. When the holder has the option of settling in cash or shares, the fair  value of the SAR is recorded as a liability with no value assigned to an  equity component. Changes to the fair value of the liability are recognized  in profit or loss. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Where the holder elects to take common shares instead of  cash, the value of the related liability is transferred directly to retained  earnings; where the holder elects to settle SARs in cash instead of common  shares, the value of the related liability is extinguished when the cash is  paid. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (r) | Restricted  and Performance Share Units |
|--------|-----|-----------------------------------------|

|   | RSUs and PSUs allow the holder to receive cash in the  amount of the underlying value of the Company’s share price, adjusted for  market conditions when applicable. The RSUs and PSUs are recorded at the fair  value of the debt component, with changes in the fair value of the liability  recognized in profit or loss. The liability is extinguished when the units  vest and cash is paid to the holder or when the units otherwise expire. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4.** | **Changes in accounting standards** |
|--------|-------------------------------------|

|   | The  following changes in accounting standards were adopted by the Company on  January 1, 2013: |
|--------|-------------------------------------------------------------------------------------------------|

|   | (a) | Consolidation |
|--------|-----|---------------|

|   | In May 2011, the IASB issued IFRS 10 –*Consolidated  Financial Statements*(IFRS 10), which supersedes SIC 12 –*Consolidation  – Special Purpose Entities*and the requirements relating to consolidated  financial statements in IAS 27 –*Consolidated and Separate Financial  Statements*. IFRS 10 is effective for annual periods beginning on or  after January 1, 2013, with earlier application permitted. IFRS 10  establishes control as the basis for an investor to consolidate its investees  and defines control as an investor’s power over an investee with exposure, or  rights, to variable returns from the investee and the ability to affect the  investor’s returns through its power over the investee. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In addition, the IASB issued IFRS 12 –*Disclosure of  Interests in Other Entities*(IFRS 12), which combines and enhances the  disclosure requirements for subsidiaries and associates. The requirements of  IFRS 12 include enhanced reporting of the nature of risks associated with the  Company’s interests in other entities, and the effects of those interests on  the Company’s consolidated financial statements. IFRS 12 is also effective  for annual periods beginning on or after January 1, 2013, with early adoption  permitted. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The adoption of IFRS 10 and IFRS 12 has not had a  significant impact on the Company’s consolidated financial statements. |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

13

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4.** | **Changes in accounting standards (continued)** |
|--------|-------------------------------------------------|

|   | (b) | Fair  value measurement |
|--------|-----|-------------------------|

|   | In May 2011, the IASB issued IFRS 13 -*Fair Value  Measurement*(IFRS 13) as a single source of guidance for all fair value  measurements required by IFRS to reduce the complexity and improve  consistency across its application. The standard provides a definition of  fair value and guidance on how to measure fair value as well as a requirement  for enhanced disclosures. IFRS 13 requires that when using a valuation  technique to measure fair value, the use of relevant observable inputs should  be maximized while unobservable inputs should be minimized. IFRS 13 is  effective for annual periods beginning on or after January 1, 2013, with  early adoption permitted. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The adoption of IFRS 13 has not had a significant impact  on the Company’s consolidated financial statements. |
|--------|---------------------------------------------------------------------------------------------------------------------|

|   | Accounting  standards issued by the IASB but not yet effective: |
|--------|-----------------------------------------------------------------|

|   | (a) | IFRS 9 Financial  instruments |
|--------|-----|-------------------------------|

|   | The IASB intends to replace IAS 39 –*Financial  Instruments: Recognition and Measurement*(IAS 39) in its entirety with  IFRS 9 –*Financial Instruments*(IFRS 9) in three main phases. IFRS 9  will be the new standard for the financial reporting of financial instruments  that is principles-based and less complex than IAS 39. In November 2009 and  October 2010, phase 1 of IFRS 9 was issued and amended, respectively, which  addressed the classification and measurement of financial assets and  financial liabilities. IFRS 9 requires that all financial assets be  classified as subsequently measured at amortized cost or at fair value based  on the Company’s business model for managing financial assets and the  contractual cash flow characteristics of the financial assets. Financial  liabilities are classified as subsequently measured at amortized cost except  for financial liabilities classified as at fair value through profit and  loss, financial guarantees and certain other exceptions. In November 2013,  IFRS 9 was amended to include guidance on hedge accounting and to allow  entities to early adopt the requirement to recognize changes in fair value  attributable to changes in the entity’s own credit risk, from financial  liabilities designated under the fair value option, in OCI, without having to  adopt the remainder of IFRS 9. In July 2013, the IASB tentatively decided to  defer the mandatory effective date of IFRS 9. The IASB agreed that the  mandatory effective date should no longer be annual periods beginning on or  after January 1, 2015, but rather be left open pending the finalization of  the impairment and classification of measurement requirements. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company is evaluating the impact the final standard  is expected to have on its consolidated financial statements. |
|--------|------------------------------------------------------------------------------------------------------------------------|

|   | (b) | IFRIC  21 Levies |
|--------|-----|------------------|

|   | In May 2013, the IASB issued IFRIC 21 –*Levies*(IFRIC  21), which sets out the accounting treatment for an obligation to pay a levy  that is not an income tax. The interpretation addresses what the obligating  event is that gives rise to pay a levy and when it should a liability be  recognized. IFRIC 21 is effective for annual periods beginning on or after  January 1, 2014. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company does not anticipate the application of IFRIC  21 to have a significant impact on its consolidated financial statements. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

| **5.** | **Significant accounting estimates and judgements** |
|--------|-----------------------------------------------------|

|   | The critical judgments that the  Company’s management has made in the process of applying the Company’s  accounting policies, apart from those involving estimations (note 6), that have the most significant effect on  the amounts recognized in the Company’s consolidated financial statements are  as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

14

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5.** | **Significant accounting estimates and judgements (continued)** |
|--------|-----------------------------------------------------------------|

|   | (a) | Commercial  production |
|--------|-----|------------------------|

|   | Costs incurred to construct and develop  mineral properties, plant and equipment are capitalized until the assets are  brought into the location and condition necessary to be capable of operating  in the manner intended by management. Net proceeds from mineral sales  realized during this period are offset against costs capitalized. Depletion  of capitalized costs for mineral properties and related plant and equipment  begins when operating levels intended by management have been reached. The  results of operations of the Company during the years presented in these  audited consolidated financial statements have been impacted by management’s  determination that the Bisha Mine reached the operating levels intended by  management with regards to copper production on December 1, 2013. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Economic  recoverability and probability of future economic benefits of exploration,  evaluation and development costs |
|--------|-----|------------------------------------------------------------------------------------------------------------------------|

|   | Management has determined that exploration drilling,  evaluation, development and related costs incurred which have been  capitalized are economically recoverable. Management uses several criteria in  its assessments of economic recoverability and probability of future economic  benefit including geologic and metallurgic information, history of conversion  of mineral deposits to proven and probable reserves, scoping and feasibility  studies, accessible facilities, existing permits and life of mine plans. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Functional  currency |
|--------|-----|----------------------|

|   | The functional currency for each of the Company’s  subsidiaries is the currency of the primary economic environment in which the  entity operates. The Company has determined the functional currency of each  entity is the US dollar. Assessment of functional currency involves certain  judgements to determine the primary economic environment and the Company  reconsiders the functional currency of its entities if there is a change in  events and conditions which determined the primary economic environment. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6.** | **Key sources of estimation uncertainty** |
|--------|-------------------------------------------|

|   | The preparation of consolidated  financial statements requires that the Company’s management make assumptions  and estimates of effects of uncertain future events on the carrying amounts  of the Company’s assets and liabilities at the end of the reporting period. Actual  results may differ from those estimates as the estimation process is  inherently uncertain. Actual future outcomes could differ from present  estimates and assumptions; potentially having material future effects on the  Company’s consolidated financial statements. Estimates are reviewed on an  ongoing basis and are based on historical experience and other facts and circumstances.  Revisions to estimates and the resulting effects on the carrying amounts of  the Company’s assets and liabilities are accounted for prospectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The significant assumptions about the  future and other major sources of estimation uncertainty as at the end of the  reporting period that have a significant risk of resulting in a material  adjustment to the carrying amounts of the Company’s assets and liabilities  are as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | Impairment  of mineral properties, plant and equipment |
|--------|-----|--------------------------------------------------------|

|   | The Company considers both external and internal sources  of information in assessing whether there are any indications that mineral properties,  plant and equipment are impaired. External sources of information the Company  considers include changes in the market, economic and legal environment in  which the Company operates that are not within its control and affect the  recoverable amount of mineral properties, plant and equipment. Internal  sources of information the Company considers include the manner in which  mineral properties, plant and equipment are being used or are expected to be  used and indications of economic performance of the assets. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

15

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6.** | **Key sources of estimation uncertainty (continued)** |
|--------|-------------------------------------------------------|

|   | (a) | Impairment  of mineral properties, plant and equipment (continued) |
|--------|-----|--------------------------------------------------------------------|

|   | In determining the recoverable amounts of the Company’s  mineral properties, plant and equipment, the Company’s management makes  estimates of the discounted future after-tax cash flows expected to be  derived from the Company’s mineral properties using an appropriate discount  rate. Reductions in metal price forecasts, increases in estimated future  costs of production, increases in estimated future non-expansionary capital  expenditures, reductions in the amount of recoverable reserves, resources,  and exploration potential, and/or adverse current economics can result in a  write-down of the carrying amounts of the Company’s mineral properties, plant  and equipment. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Operating  expenses and costing of work-in-progress inventory |
|--------|-----|---------------------------------------------------------------|

|   | In determining operating expenses recognized in the  Consolidated Statements of Comprehensive Income, the Company’s management  makes estimates of quantities of ore on stockpiles and in process and the  recoverable gold and copper in this material to determine the cost of  finished goods sold during the year. Changes in these estimates can result in  a change in operating expenses in future periods and carrying amounts of  inventories. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Deferred  stripping costs |
|--------|-----|---------------------------|

|   | In determining whether stripping costs incurred during  the production phase of a mineral property relate to reserves and resources  that will be mined in a future operating period and therefore should be  capitalized, the Company estimates whether it is probable the future economic  benefit associated with the stripping activity will flow to the Company. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Where production stripping activity does not result in  inventory produced, but does provide improved access to the ore body, the  costs are deferred when the stripping activity meets the following: (1) it is  probable the Company will be the future beneficiary of the stripping  activity; (2) the Company can identify the component of the ore body for  which access has been improved; and (3) the costs relating to the stripping  activity associated with that component can be measured reliably. Deferred  stripping costs are capitalized to mineral properties, plant and equipment  and are depreciated on a units of production basis. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Estimated  recoverable copper pounds, gold ounces, and ore reserve tonnes |
|--------|-----|---------------------------------------------------------------------------|

|   | The carrying amounts of the Company’s mineral properties,  plant and equipment are depleted based on recoverable copper pounds, gold  ounces, and ore reserve tonnes. Changes to estimates of recoverable copper  pounds, gold ounces, ore reserve tonnes and depletable costs, including  changes resulting from revisions to the Company’s mine plans and changes in  metals prices forecasts, can result in a change to future depletion rates and  impairment analysis. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Trade  Receivables |
|--------|-----|--------------------|

|   | The value of copper concentrate trade receivables is  based on the forward market price of copper as at the balance sheet date.  Fluctuations in the underlying market price of copper can cause significant  changes to the ultimate final settlement value of the receivables and the final  revenue recorded can vary significantly as a result. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Classification  of current and non-current portion of due from non-controlling interest |
|--------|-----|-----------------------------------------------------------------------------------------|

|   | In determining the classification of current and  non-current portion of due from non-controlling interest, the Company makes  estimates of the future after-tax cash flows expected to be derived from the  Bisha mining operation. Changes in metal price forecasts, estimated future  costs of production, and estimated future capital expenditures could result  in a change in the classification of the current and non-current portions of  the due from non-controlling interest. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

16

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6.** | **Key sources of estimation uncertainty (continued)** |
|--------|-------------------------------------------------------|

|   | (g) | Estimated  mine closure and reclamation costs |
|--------|-----|-----------------------------------------------|

|   | The Company’s provision for mine closure and reclamation  cost obligations represents management’s best estimate of the present value  of the future cash outflows required to settle the liability which reflects  estimates of future costs, inflation, movements in foreign exchange rates and  assumptions of risks associated with the future cash outflows, and the  applicable risk-free interest rates for discounting the future cash outflows.  Changes in the above factors can result in a change to the provision recognized  by the Company. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Changes  to mine closure and reclamation cost obligations are recorded with a  corresponding change to the carrying amounts of related mineral properties,  plant and equipment for the year. Adjustments to the carrying amounts of related  mineral properties, plant and equipment can result in a change to future  depletion expense. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (h) | Income taxes |
|--------|-----|--------------|

|   | In assessing the probability of realizing income tax  assets recognized, management makes estimates related to expectations of  future taxable income, applicable tax opportunities, expected timing of  reversals of existing temporary differences and the likelihood that tax  positions taken will be sustained upon examination by applicable tax  authorities. In making its assessments, management gives additional weight to  positive and negative evidence that can be objectively verified. Estimates of  future taxable income are based on forecasted income from operations and the  application of existing tax laws in each jurisdiction. Forecasted income from  operations is based on life of mine projections internally developed and  reviewed by management. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Weight  is attached to tax planning opportunities that are within the Company’s  control, and are feasible and implementable without significant obstacles.  The likelihood that tax positions taken will be sustained upon examination by  applicable tax authorities is assessed based on individual facts and  circumstances of the relevant tax position evaluated in light of all  available evidence. Where applicable tax laws and regulations are either  unclear or subject to ongoing varying interpretations, it is reasonably  possible that changes in these estimates can occur that materially affect the  amounts of income tax assets recognized. At the end of each reporting period,  the Company reassesses unrecognized income tax assets. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | Share-based  payments |
|--------|-----|-----------------------|

|   | The factors affecting share-based payments include  estimates of when stock options might be exercised and the stock price  volatility. The timing for exercise of options is out of the Company’s  control and will depend, among other things, upon a variety of factors  including the market value of Company shares and financial objectives of the  holders of the options. The Company has used historical data to determine  volatility in accordance with Black-Scholes modeling, however future  volatility is inherently uncertain and the model has its limitations. While  these estimates can have a material impact on the share-based payments  expense and hence, results of operations, there is no impact on the Company’s  financial condition or liquidity. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (j) | Contingencies |
|--------|-----|---------------|

|   | Due to the nature of the Company’s operations, various contingent  matters may be unresolved as at the balance sheet date. In the event that  management’s estimate of the future resolution of these matters changes, the  Company will recognize the effects of the changes in its consolidated  financial statements on the date such changes occur. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7.** | **Cash and cash equivalents** |
|--------|-------------------------------|

|   |             |   | 2013    |   |   | 2012    |   |
|--------|------------------|--------|---------|--------|--------|---------|--------|
|   | Cash             | $      | 42,224  |   | $      | 64,404  |   |
|   | Cash equivalents |   | 260,500 |   |   | 332,000 |   |
|   |             | $      | 302,724 |   | $      | 396,404 |   |

17

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7.** | **Cash and cash equivalents (continued)** |
|--------|-------------------------------------------|

|   | Cash and cash equivalents  deposited with financial institutions located outside of Africa at December  31, 2013, equal $298,776 (December 31, 2012 - $376,129). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **8.** | **Accounts receivable and prepaids** |
|--------|--------------------------------------|

|   |                                |   | 2013   |   |   | 2012   |   |
|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|
|   | Trade receivables                   | $      | 43,632 |   | $      | 4,736  |   |
|   | Advances to vendors                 |   | 11,672 |   |   | 20,808 |   |
|   | Current portion  of loan receivable |   | 125    |   |   | -      |   |
|   | Prepaid expenses                    |   | 1,435  |   |   | 1,829  |   |
|   | Other receivables                   |   | 316    |   |   | 497    |   |
|   |                                | $      | 57,180 |   | $      | 27,870 |   |

| **9.** | **Inventories** |
|--------|-----------------|

|   |                                            |   | 2013   |   |   | 2012   |   |
|--------|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   | Materials and supplies                          | $      | 41,043 |   | $      | 36,950 |   |
|   | Work-in-progress                                |   | 13,318 |   |   | 6,368  |   |
|   | Finished goods – Precious metals          |   | -      |   |   | 2,546  |   |
|   | Finished goods – Copper  concentrate      |   | 13,504 |   |   | -      |   |
|   | Total inventory                                 | $      | 67,865 |   | $      | 45,864 |   |
|   | Less: non-current portion of ore  in stockpiles |   | (6,841 | )      |   | -      |   |
|   | Inventory recorded as a current asset           | $      | 61,024 |   | $      | 45,864 |   |

|   | During the year ended December 31,  2013, an inventory obsolescence provision of $2,808 was recorded in relation  to gold phase materials and supplies. The non-current portion of ore in  stockpiles is not expected to be further processed in 2014 and consists of  oxide ore and pyrite sand ore. Depreciation of $4,566 is included in  work-in-progress and finished goods inventories at December 31, 2013  (December 31, 2012 – $1,526). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **10.** | **Due from non-controlling interest** |
|---------|---------------------------------------|

|   | The  non-controlling interest represents a 40% ownership in BMSC, held by the  State owned Eritrean National Mining Corporation (ENAMCO). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | In October  2007, the Company entered into an agreement with ENAMCO whereby the State  increased its interest in BMSC by 30%, to add to its 10% free carried  interest provided by Eritrean mining legislation, resulting in a total  participation of 40%. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The amount  receivable from ENAMCO mainly relates to the sale of the interest in BMSC.  The receivable bears interest at US dollar LIBOR plus 4% and the receivable  and interest is collected from cash flow from the Bisha Mine that would  otherwise be distributed to ENAMCO in accordance with its share ownership. Interest  of $3,314 has been accrued on this receivable and recorded for the year ended  December 31, 2013, as finance income (year ended December 31, 2012 - $3,677). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During the  year ended December 31, 2012, the Company collected $34,223 of the purchase  price receivable and $1,773 of related interest. The Company made no  collections during the year ended December 31, 2013. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During 2013  the Company loaned $16,750 to ENAMCO. These funds are expected to be  collected during the first half of 2014 and are recorded in the current  portion of the due from non-controlling interest. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

18

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **10.** | **Due from non-controlling interest (continued)** |
|---------|---------------------------------------------------|

|   |                                                         |   |   2013 |   |   |   2012 |   |
|--------|--------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|   | Current asset –  due from non-controlling interest     | $      | 46,691           |   | $      | -                |   |
|   | Non-current  asset – due from non-controlling interest |   | 36,503           |   |   | 63,130           |   |
|   | Due from  non-controlling interest                           | $      | 83,194           |   | $      | 63,130           |   |

|   |                                                                                         |   |   Equity  (deficit)  attributable to non-controlling interest |   |   |   Due from (to)  non-controlling  interest |   |
|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
|   | December 31,  2011                                                                           | $      | 110,048                                                                 |   | $      | 95,449                                               |   |
|   |                                                                                         |   |                                                                    |   |   |                                                 |   |
|   | 2012 activity:                                                                               |   |                                                                    |   |   |                                                 |   |
|   | Accrued interest  on purchase price receivable                                               |   | -                                                                       |   |   | 3,677                                                |   |
|   | Principal and  interest received by Nevsun from      non-controlling interest |   | -                                                                       |   |   | (35,996                                              | )      |
|   | Share of income  for the year                                                                |   | 101,434                                                                 |   |   | -                                                    |   |
|   | Distribution to  non-controlling interest                                                    |   | (68,000                                                                 | )      |   | -                                                    |   |
|   | December 31,  2012                                                                           |   | 143,482                                                                 |   |   | 63,130                                               |   |
|   |                                                                                         |   |                                                                    |   |   |                                                 |   |
|   | 2013 activity:                                                                               |   |                                                                    |   |   |                                                 |   |
|   | Accrued interest  on purchase price receivable                                               |   | -                                                                       |   |   | 2,948                                                |   |
|   | Share of income  for the year                                                                |   | 16,397                                                                  |   |   | -                                                    |   |
|   | Advances to  non-controlling interest                                                        |   | -                                                                       |   |   | 16,750                                               |   |
|   | Interest on  advances to non-controlling interest                                            |   | -                                                                       |   |   | 366                                                  |   |
|   | December 31,  2013                                                                           | $      | 159,879                                                                 |   | $      | 83,194                                               |   |

|   | The following table presents the financial position and results of  BMSC as at and for the years ended December 31, 2013, and 2012, respectively: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                              |   |   2013 |   |   |  2012  |   |
|--------|-----------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|   | Current assets                                                                    | $      | 152,522          |   | $      | 122,856          |   |
|   | Non-current      assets                                                           |   | 332,870          |   |   | 333,604          |   |
|   | Current      liabilities                                                          |   | (32,232          | )      |   | (59,039          | )      |
|   | Non-current      liabilities                                                      |   | (53,463          | )      |   | (38,717          | )      |
|   | Net assets                                                                        | $      | 399,697          |   | $      | 358,704          |   |
|   | Net assets      attributable to non-controlling interest                          | $      | 159,879          |   | $      | 143,482          |   |
|   |                                                                              |   |             |   |   |             |   |
|   | Revenue                                                                           | $      | 155,698          |   | $      | 566,039          |   |
|   | Net income and      comprehensive income                                          | $      | 40,993           |   | $      | 253,584          |   |
|   | Net income and      comprehensive income attributable to non-controlling interest | $      | 16,397           |   | $      | 101,434          |   |
|   | Net cash provided by operating      activities                                    | $      | 25,702           |   | $      | 199,302          |   |
|   | Net cash used in investing      activities                                        |   | (85,856          | )      |   | (83,658          | )      |
|   | Net cash provided by (used in) financing      activities                          |   | 33,250           |   |   | (169,944         | )      |
|   | Decrease in cash and cash equivalents                                             | $      | (26,904          | )      | $      | (54,300          | )      |

| **11.** | **Loan   receivable** |
|---------|-----------------------|

|   | For the   year ended December 31, 2013, the Company made a loan of $7,000 to a transport   company for equipment that is used in the transport of copper concentrate from   mine site to port within Eritrea. The loan is repayable in equal instalments   over a five year period. A portion of the loan receivable has been recorded as   a prepayment of an associated finance lease obligation related to the   transport equipment. The loan bears interest at US LIBOR plus 4%. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

19

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **12.** | **Mineral properties, plant and equipment** |
|---------|---------------------------------------------|

|   | Year ended December 31, 2013                               |   | Exploration  and evaluation |   |   | Construction-  in-progress |   |   | Mineral  properties |   |   | Plant and  equipment |   |   | Total   |   |
|--------|------------------------------------------------------------|--------|-----------------------------|--------|--------|----------------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|---------|--------|
|   | **Cost**                                                   |   |                        |   |   |                       |   |   |                |   |   |                 |   |   |    |   |
|   | December 31, 2012                                          | $      | 8,309                       |   | $      | 87,255                     |   | $      | 38,688              |   | $      | 268,242              |   | $      | 402,494 |   |
|   |        Additions                  |   | 15,720                      |   |   | 34,513                     |   |   | 191                 |   |   | 28,915               |   |   | 79,339  |   |
|   |        Disposals                  |   | -                           |   |   | -                          |   |   | -                   |   |   | (263                 | )      |   | (263    | )      |
|   |        Transfers                  |   | (9,251                      | )      |   | (116,019                   | )      |   | 14,427              |   |   | 74,144               |   |   | (36,699 | )      |
|   | December 31, 2013                                          |   | 14,778                      |   |   | 5,749                      |   |   | 53,306              |   |   | 371,038              |   |   | 444,871 |   |
|   | **Accumulated depreciation**                               |   |                        |   |   |                       |   |   |                |   |   |                 |   |   |    |   |
|   | December 31, 2012                                          |   | -                           |   |   | -                          |   |   | 3,623               |   |   | 58,443               |   |   | 62,066  |   |
|   |        Charge for the year        |   | -                           |   |   | -                          |   |   | 2,816               |   |   | 22,722               |   |   | 25,538  |   |
|   |        Disposals                  |   | -                           |   |   | -                          |   |   | -                   |   |   | (57                  | )      |   | (57     | )      |
|   | December 31, 2013                                          |   | -                           |   |   | -                          |   |   | 6,439               |   |   | 81,108               |   |   | 87,547  |   |
|   | Net book value       December 31, 2013 | $      | 14,778                      |   | $      | 5,749                      |   | $      | 46,867              |   | $      | 289,930              |   | $      | 357,324 |   |

|   | Transfers  of construction-in-progress for the year ended December 31, 2013, to mineral  properties, plant and equipment are comprised as follows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                 |   |     |   |
|--------|----------------------------------------------------------------------|--------|----------|--------|
|   | Copper  construction-in-progress costs, cumulative to date:          |   |     |   |
|   |        Copper phase  plant and equipment    | $      | 106,187  |   |
|   |        Copper phase  pre-construction costs |   | 4,656    |   |
|   |        Deferred  stripping                  |   | 5,176    |   |
|   | Total copper  phase costs incurred                                   |   | 116,019  |   |
|   | Less:                                                                |   |     |   |
|   |        Pre-commercial  production sales     |   | (112,916 | )      |
|   |        Pre-commercial  production costs     |   | 76,217   |   |
|   |                                                                 |   | 79,320   |   |
|   | Deferred  stripping transferred to mineral properties                |   | (5,176   | )      |
|   | Transferred to plant and equipment                                   | $      | 74,144   |   |

|   | Depreciation  charges for the year ended December 31, 2013, were allocated as follows: |
|--------|----------------------------------------------------------------------------------------|

|   |                                                                                                              |   |   |   |
|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|   | Total  depreciation charges for the year                                                                          | $      | 25,538 |   |
|   |        Depreciation  capitalized to copper phase pre-commercial costs during 2013        |   | (8,223 | )      |
|   |        Depreciation remaining  in pre-commercial production copper concentrate inventory |   | (842   | )      |
|   |        Depreciation recorded  to post-commercial production inventory during 2013        |   | (3,040 | )      |
|   |        Depreciation charged  in administrative expenses                                  |   | (48    | )      |
|   |        Depreciation charged to cost of sales                                             | $      | 13,385 |   |

20

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **12.** | **Mineral properties, plant and equipment (continued)** |
|---------|---------------------------------------------------------|

|   | Year ended December 31, 2012                               |   | Exploration  and evaluation |   |   | Construction-  in-progress |   |   | Mineral  properties |   |   | Plant and  equipment |   |   | Total   |   |
|--------|------------------------------------------------------------|--------|-----------------------------|--------|--------|----------------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|---------|--------|
|   | **Cost**                                                   |   |                        |   |   |                       |   |   |                |   |   |                 |   |   |    |   |
|   | December 31, 2011                                          | $      | 8,158                       |   | $      | 25,202                     |   | $      | 29,630              |   | $      | 248,893              |   | $      | 311,883 |   |
|   |        Additions                  |   | 11,263                      |   |   | 62,053                     |   |   | -                   |   |   | 17,323               |   |   | 90,639  |   |
|   |        Disposals                  |   | -                           |   |   | -                          |   |   | -                   |   |   | (28                  | )      |   | (28     | )      |
|   |        Transfers                  |   | (11,112                     | )      |   | -                          |   |   | 9,058               |   |   | 2,054                |   |   | -       |   |
|   | December 31, 2012                                          |   | 8,309                       |   |   | 87,255                     |   |   | 38,688              |   |   | 268,242              |   |   | 402,494 |   |
|   | **Accumulated  depreciation**                              |   |                        |   |   |                       |   |   |                |   |   |                 |   |   |    |   |
|   | December 31, 2011                                          |   | -                           |   |   | -                          |   |   | 1,818               |   |   | 30,459               |   |   | 32,277  |   |
|   |        Charge for the year        |   | -                           |   |   | -                          |   |   | 1,805               |   |   | 28,005               |   |   | 29,810  |   |
|   |        Disposals                  |   | -                           |   |   | -                          |   |   | -                   |   |   | (21                  | )      |   | (21     | )      |
|   | December 31, 2012                                          |   | -                           |   |   | -                          |   |   | 3,623               |   |   | 58,443               |   |   | 62,066  |   |
|   | Net book value       December 31, 2012 | $      | 8,309                       |   | $      | 87,255                     |   | $      | 35,065              |   | $      | 209,799              |   | $      | 340,428 |   |

|   | As at December 31, 2013, plant and equipment includes $4,532  (2012 - $nil) of capitalized pre-commercial production copper concentrate  inventory, and finance leased assets with a net book value of $4,271 (2012 -  $nil). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s  properties are located in western Eritrea, a country located in north-eastern  Africa. The mineral properties include the Bisha Mine, the Harena mining  license and the Mogoraib River exploration license. The Bisha Mine consists  of a 39 km2 mining agreement area that is inclusive of a 16.5 km2 mining  license. The mining license for the gold-silver-copper-zinc Bisha Mine was  granted in 2008 for an initial period of 20 years. The Harena mining license  is a 7.5 km2, 10 year license that was conditionally granted, pending final  approval of application materials by the Ministry of Energy and Mines of  Eritrea. The Mogoraib River exploration license, renewed on January 20,  2014, now consists of 73.1km2, valid until July 2, 2014. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Mining commenced on the Harena  mining license in the fourth quarter of 2012. |
|--------|-------------------------------------------------------------------------------|

|   | Commercial copper production was achieved on December 1,  2013, and construction-in-progress amounts related to the copper phase were  transferred to the appropriate categories of mineral properties, plant and  equipment. Depreciation of these assets commenced on a units of production  basis at this time. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Costs classified as mineral properties represent  historic acquisition, exploration, evaluation and development costs at the  Bisha Mine and Harena mining license. Construction-in-progress at December  31, 2013, represents costs associated with tailings dam expansion and  preliminary zinc phase planning. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **13.** | **Accounts payable and accrued liabilities** |
|---------|----------------------------------------------|

|   |                   |   | 2013   |   |   | 2012   |   |
|--------|------------------------|--------|--------|--------|--------|--------|--------|
|   | Trade accounts payable | $      | 18,705 |   | $      | 5,675  |   |
|   | Accrued royalties      |   | 4,629  |   |   | 4,964  |   |
|   | Accrued liabilities    |   | 7,453  |   |   | 7,491  |   |
|   |                   | $      | 30,787 |   | $      | 18,130 |   |

21

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **14.   Dividends** |
|--------|---------------------|

|   | On November 15, 2013, the Company declared a dividend   of $0.07 per share for shareholders of record on December 31, 2013, and paid   $13,943 on January 15, 2014. On May 16, 2013, the Company declared a   dividend of $0.07 per share for shareholders of record on June 28, 2013, and   paid $13,930 on July 15, 2013. Subsequent to December 31, 2013, the Company   declared a dividend of $0.035 per share for shareholders of record on March   31, 2014. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On November 15, 2012, the Company declared a dividend   of $0.05 per share for shareholders of record on December 31, 2012, and paid   $9,949 on January 15, 2013. Dividends of $9,976 were declared on May 15,   2012, and paid on July 16, 2012. Dividends of $10,013 were declared on   November 21, 2011, and paid on January 16, 2012. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **15.** | **Income taxes** |
|---------|------------------|

|   | (a) | Income tax expense |
|--------|-----|--------------------|

|   | Income tax expense was recorded for income earned in the  years ended December 31, 2013, and 2012. |
|--------|----------------------------------------------------------------------------------------------------|

|   |                        |   |   2013 |   |   |   2012 |   |
|--------|-----------------------------|--------|------------------|--------|--------|------------------|--------|
|   | Current income tax expense  | $      | (20,702          | )      | $      | (149,532         | )      |
|   | Deferred income tax expense |   | (9,484           | )      |   | (4,517           | )      |
|   | Income tax expense          | $      | (30,186          | )      | $      | (154,049         | )      |

|   | (b) | Reconciliation of  income taxes |
|--------|-----|---------------------------------|

|   | A  reconciliation of the income tax expense to the amount calculated using the  Company’s statutory tax rate is as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                |   |   2013 |   |   | 2012     |   |
|--------|---------------------------------------------------------------------|--------|------------------|--------|--------|----------|--------|
|   | Income tax expense at statutory rate of 26.0%  (2012 – 25.0%) | $      | (15,960          | )      | $      | (100,186 | )      |
|   | Tax effect of:                                                      |   |             |   |   |     |   |
|   | Difference in tax rates of foreign  jurisdictions(1)                |   | (8,063           | )      |   | (52,431  | )      |
|   | Benefit of tax losses not recognized                                |   | (2,753           | )      |   | (2,007   | )      |
|   | Non-deductible and other items                                      |   | (3,410           | )      |   | 575      |   |
|   |                                                                | $      | (30,186          | )      | $      | (154,049 | )      |

|   | (1) | The  Eritrean statutory mining income tax rate is 38%. |
|--------|-----|--------------------------------------------------------|

|   | The Company commenced payment of quarterly income tax  instalments in Eritrea in the fourth quarter of 2011. During the year ended  December 31, 2013, the Company paid $60,484 of income tax (year ended  December 31, 2012 - $209,586). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

22

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Recognized deferred tax assets and liabilities |
|--------|-----|------------------------------------------------|

|   | The  tax effects of temporary differences that give rise to deferred tax assets  and liabilities are as follows: |
|--------|------------------------------------------------------------------------------------------------------------------|

|   |                                     |   |   2013 |   |   | 2012    |   |
|--------|------------------------------------------|--------|------------------|--------|--------|---------|--------|
|   | Deferred tax assets                      |   |             |   |   |    |   |
|   | Losses carried forward                   | $      | 951              |   | $      | 1,766   |   |
|   | Mineral properties, plant and equipment  |   | -                |   |   | 259     |   |
|   |                                     |   | 951              |   |   | 2,025   |   |
|   | Deferred tax  liabilities                |   |             |   |   |    |   |
|   | Mineral properties, plant and  equipment |   | (31,139          | )      |   | (22,729 | )      |
|   |                                     |   | (31,139          | )      |   | (22,729 | )      |
|   | Net deferred tax  liabilities            | $      | (30,188          | )      | $      | (20,704 | )      |

|   | (d) | Unrecognized  tax losses and tax assets |
|--------|-----|-----------------------------------------|

|   | At December 31, 2013, the Company has available losses  for income tax purposes in Canada totaling approximately $41,343 (2012 - $35,754)  and losses carried forward in foreign jurisdictions of approximately $6,764  (2012 - $5,687) which, if not utilized to reduce income in future periods,  expire through 2028. The benefits of these available tax losses and tax  assets have not been recognized. Access to the losses carried forward in the  future may be restricted. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Deferred tax assets have not been recognized in respect  of the following items: |
|--------|----------------------------------------------------------------------------------|

|   |                                    |   |   2013 |   |   | 2012   |   |
|--------|-----------------------------------------|--------|------------------|--------|--------|--------|--------|
|   | Mineral properties, plant and equipment | $      | 992              |   | $      | 953    |   |
|   | Tax losses carried forward              |   | 11,464           |   |   | 9,576  |   |
|   |                                    | $      | 12,456           |   | $      | 10,529 |   |

| **16.** | **Provision for mine closure and reclamation** |
|---------|------------------------------------------------|

|   |                       |   | 2013   |   |   | 2012   |   |
|--------|----------------------------|--------|--------|--------|--------|--------|--------|
|   | Balance, beginning of year | $      | 18,013 |   | $      | 13,233 |   |
|   | Accretion                  |   | 882    |   |   | 612    |   |
|   | Additional liability       |   | 4,719  |   |   | 4,168  |   |
|   | Balance, end of year       | $      | 23,614 |   | $      | 18,013 |   |

|   | The Company’s provision for mine closure and reclamation  consists of costs accrued based on the current best estimate of mine closure  and reclamation activities that will be required at the Bisha and Harena sites  upon completion of mining. These activities include costs for earthworks,  including land re-contouring and re-vegetation, water treatment and  demolition. The Company’s provision for future site closure and reclamation  costs is based on the level of known disturbance at the reporting date, known  legal requirements and cost estimates prepared by a third party specialist. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During 2012 estimates prepared by the third-party  specialist were updated to include the Harena mining license area as well as  increases in cost estimates for certain reclamation activities. This report  was updated as at December 31, 2013, to reflect additional disturbances incurred  during the year. Management used a pre-tax discount rate of 4.63% and an  inflation factor of 3.0% in preparing the Company’s provision for mine closure  and reclamation. Although the ultimate amount to be incurred is uncertain,  based on development, legal requirements and estimated costs as at December  31, 2013, the undiscounted inflation-adjusted liability for provision for mine  closure and reclamation is estimated to be approximately $37,000 (December  31, 2012 – $29,600). The cash expenditures are expected to occur over a  period of time extending several years after the projected closure of the  Bisha and Harena sites. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

23

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **17.** | **Share capital** |
|---------|-------------------|

|   | (a) | Authorized  share capital consists of an unlimited number of common shares without par  value. |
|--------|-----|------------------------------------------------------------------------------------------------|

|   | (b) | For the period March 26, 2012, to September 26, 2012, the Company  carried out a common share repurchase program resulting in the repurchase of  1,732,600 common shares for a cost of $6,272. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Stock options |
|--------|-----|---------------|

|   | The Company’s ability to grant stock  options under its former stock option plan (the Former Plan) expired April  27, 2012. A new stock option plan (the New Plan) was approved by  shareholders at a Special Meeting on September 5, 2012. The Former Plan  remains in existence until all outstanding options have been exercised,  cancelled or otherwise expired. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In accordance with the Company’s intention to reduce the  cost of an equity based plan to shareholders, the New Plan is more  restrictive than the Former Plan in the number of shares which can be issued  (maximum 6.75% of issued and outstanding shares, versus 10% in the Former  Plan) and the length of time before expiry (5 years, versus 10 years in the  Former Plan). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has recorded the fair value of all options  granted using the Black-Scholes model. Share-based payment costs are  amortized over vesting periods ranging between 6 and 24 months. During 2013,  share-based payments costs were calculated using the following weighted  average assumptions: expected life of option 3.3 years (2012 – 2.3 years),  stock price volatility 59% (2012 – 64%), dividend yield 4.3% (2012 – 2.4%),  and a risk-free interest rate yield of 1.3% (2012 – 1.0%). The fair value is  particularly impacted by the Company’s stock price volatility. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The year ended December 31, 2013, includes $2,835 (2012  - $1,791) in share-based payment costs related to stock options, $2,825 (2012  - $740) of which were presented in administrative expenses and $10 (2012 – $1,051)  in operating expenses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                   |   | Number of options |   |   | Weighted average   exercise  price (CAD) |   |
|--------|----------------------------------------|--------|-------------------|--------|--------|------------------------------------------|--------|
|   | Outstanding, December 31, 2011         |   | 8,828,200         |   | $      | 4.06                                     |   |
|   | Granted                                |   | 2,865,000         |   |   | 4.21                                     |   |
|   | Exercised                              |   | (460,700          | )      |   | 2.96                                     |   |
|   | Forfeited                              |   | (375,000          | )      |   | 5.82                                     |   |
|   | Outstanding, December 31, 2012         |   | 10,857,500        |   |   | 4.08                                     |   |
|   | Granted                                |   | 2,006,000         |   |   | 3.44                                     |   |
|   | Exercised as stock options             |   | (325,000          | )      |   | 1.49                                     |   |
|   | Exercised as stock appreciation rights |   | (250,000          | )      |   | 3.53                                     |   |
|   | Forfeited                              |   | (1,150,000        | )      |   | 5.09                                     |   |
|   | Outstanding, December 31, 2013         |   | 11,138,500        |   | $      | 3.95                                     |   |

|   | Type                 | Range of exercise  price (CAD) | Number of options | Average remaining  life in years |
|--------|----------------------|--------------------------------|-------------------|----------------------------------|
|   | Vested (exercisable) | $1.70                          | 300,000           | 0.7                              |
|   | Vested (exercisable) | $3.14 - $4.81                  | 5,917,500         | 2.0                              |
|   | Vested (exercisable) | $5.58 - $6.34                  | 1,987,500         | 2.2                              |
|   | Unvested             | $3.14 - $4.81                  | 2,933,500         | 4.5                              |
|   | Total                | $1.70 - $6.34                  | 11,138,500        | 2.7                              |

|   | The weighted average share price of the Company on the dates  options were exercised in 2013 was CAD $3.38 (2012 – CAD $5.31). The  weighted average price of options exercisable at the end of the year was CAD  $4.04 (December 31, 2012 – CAD $3.92). The majority of options vest over a  service period of one to three years. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

24

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **17.** | **Share capital (continued)** |
|---------|-------------------------------|

|   | (d) | Stock appreciation  rights |
|--------|-----|----------------------------|

|   | In November 2012, 1,016,000 cash-settled SARs were  granted with no attachment to stock options. |
|--------|--------------------------------------------------------------------------------------------------|

|   | At December 31, 2013, $1,369 (December 31, 2012 - $1,804)  was recorded in accounts payable and accrued liabilities to account for the  liability associated with cash-settled SARs and SARs which may be settled in  cash or equity at the option of the holder. The intrinsic value of vested  SARs outstanding as at December 31, 2013, is $516. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During the year ended December 31, 2013, the Company  recorded $352in administrative expenses related to changes in the fair  value of the stock appreciation rights during the year (2012 – credit of  $795). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Restricted  and performance share units |
|--------|-----|-----------------------------------------|

|   | In December 2013, 417,000 RSUs and 417,000 PSUs were  granted. The RSUs vest in thirds, beginning one year after grant date, over a  three year period and are settled in cash upon vesting. The PSUs vest after  three years and are settled in cash upon vesting, with value based on share  price performance, relative to a peer group. Both units are valued with  reference to the Company’s current share price, with changes in value  recognized in profit or loss. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At December 31, 2013, liabilities of $32 and $18 related  to the RSUs and PSUs, respectively, were recorded in accounts payable and  accrued liabilities, and during the year ended December 31, 2013, the Company  recorded an expense of $50 to administrative expenses related to the RSUs and  PSUs. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Shares  reserved for issuance (fully diluted) |
|--------|-----|-----------------------------------------------|

|   |                                                               |   | Number of shares |   |
|--------|--------------------------------------------------------------------|--------|------------------|--------|
|   | Issued and fully paid at December 31, 2013                         |   | 199,307,802      |   |
|   | Reserved for options and SARs  (note 17(c)(d))                     |   | 11,138,500       |   |
|   | Shares reserved for issuance (fully diluted) at December 31,  2013 |   | 210,446,302      |   |

|   | (g) | Earnings per share |
|--------|-----|--------------------|

|   | The  calculations of earnings per share is based on the following data: |
|--------|-------------------------------------------------------------------------|

|   |                                                                                                        |   |   2013 |   |   |   2012 |   |
|--------|-------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|   | Net income  attributable to Nevsun shareholders                                                             | $      | 12,857           |   | $      | 145,262          |   |
|   | Effect of  dilutive securities:                                                                             |   |             |   |   |             |   |
|   | Change in stock  appreciation rights liability                                                              |   | (616             | )      |   | (795             | )      |
|   | Diluted net  income attributable to Nevsun shareholders                                                     | $      | 12,241           |   | $      | 144,467          |   |
|   | Weighted average  number of common shares outstanding for the purpose of basic earnings per  share (000s)   |   | 199,147          |   |   | 199,664          |   |
|   | Dilutive options  and SARs                                                                                  |   | 798              |   |   | 1,347            |   |
|   | Weighted average  number of common shares outstanding for the purpose of diluted earnings per  share (000s) |   | 199,945          |   |   | 201,011          |   |
|   | Earnings per  share (in $’s)                                                                          |   |             |   |   |             |   |
|   |        Basic                                                                       | $      | 0.06             |   | $      | 0.73             |   |
|   |        Diluted                                                                     | $      | 0.06             |   | $      | 0.72             |   |

|   | Basic earnings per share is computed by dividing the net  income or net income attributable to Nevsun shareholders by the weighted  average number of common shares outstanding during the year. Diluted  earnings per share reflects the potential dilution of outstanding SARs and  stock options in the weighted average number of common shares outstanding  during the year, if dilutive. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

25

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **18.** | **Revenues** |
|---------|--------------|

|   |         |   | 2013    |   |   | 2012    |   |
|--------|--------------|--------|---------|--------|--------|---------|--------|
|   | Gold sales   | $      | 142,241 |   | $      | 535,945 |   |
|   | Silver sales |   | 13,457  |   |   | 30,094  |   |
|   | Revenues     | $      | 155,698 |   | $      | 566,039 |   |

|   | For the year ended December 31, 2013,  the Company also recorded pre-commercial production copper sales of $112,916  (2012 - $nil). When offset by pre-commercial production operating costs of  $61,673, depreciation and amortization of $8,223, and royalties of $6,321,  the resultant net credit of $36,699 was offset against copper phase plant and  equipment costs. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **19.** | **Operating expenses** |
|---------|------------------------|

|   |                                                |   | 2013    |   |   | 2012    |   |
|--------|-----------------------------------------------------|--------|---------|--------|--------|---------|--------|
|   | Total operating expenses                            | $      | 143,490 |   | $      | 103,349 |   |
|   | Change in  inventories                              |   | (18,969 | )      |   | 83      |   |
|   | Capitalized  copper pre-commercial production costs |   | (61,673 | )      |   | -       |   |
|   |                                                | $      | 62,848  |   | $      | 103,432 |   |

| **20.** | **Administrative expenses** |
|---------|-----------------------------|

|   |                            |   | 2013   |   |   | 2012  |   |
|--------|---------------------------------|--------|--------|--------|--------|-------|--------|
|   | Salaries and  employee benefits | $      | 5,555  |   | $      | 3,566 |   |
|   | Share-based  payments           |   | 3,177  |   |   | (55   | )      |
|   | Business  development           |   | 1,912  |   |   | 978   |   |
|   | Other                           |   | 3,893  |   |   | 3,772 |   |
|   |                            | $      | 14,537 |   | $      | 8,261 |   |

| **21.** | **Finance income** |
|---------|--------------------|

|   |                                           |   | 2013  |   |   | 2012  |   |
|--------|------------------------------------------------|--------|-------|--------|--------|-------|--------|
|   | Interest on due  from non-controlling interest | $      | 3,314 |   | $      | 3,677 |   |
|   | Other                                          |   | 150   |   |   | 279   |   |
|   |                                           | $      | 3,464 |   | $      | 3,956 |   |

| **22.** | **Finance costs** |
|---------|-------------------|

|   |                                |   | 2013 |   |   | 2012 |   |
|--------|-------------------------------------|--------|------|--------|--------|------|--------|
|   | Accretion of  reclamation liability | $      | 882  |   | $      | 612  |   |
|   | Other                               |   | -    |   |   | 12   |   |
|   |                                | $      | 882  |   | $      | 624  |   |

| **23.** | **Commitments** |
|---------|-----------------|

|   | As  of December 31, 2013, the Company had the following contractual obligations: |
|--------|----------------------------------------------------------------------------------|

|   |                                              |   | Total  |   |   | Less than 1        year |   |   | 2-3 years |   |   | 4-5 years |   |   | Over 5  years |   |
|--------|---------------------------------------------------|--------|--------|--------|--------|-------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|---------------|--------|
|   | Purchase commitments and contractual  obligations | $      | 15,406 |   | $      | 15,406                  |   | $      | -         |   | $      | -         |   | $      | -             |   |
|   | Mine closure and reclamation                      |   | 37,000 |   |   | 280                     |   |   | 1,400     |   |   | 945       |   |   | 34,375        |   |
|   | Minimum operating lease payments                  |   | 5,345  |   |   | 4,722                   |   |   | 623       |   |   | -         |   |   | -             |   |
|   | Total contractual obligations                     | $      | 57,751 |   | $      | 20,408                  |   | $      | 2,023     |   | $      | 945       |   | $      | 34,375        |   |

|   | The Company has arranged an annually  renewable environmental bond for the Bisha Project for $15,000 at a cost of  1% per annum. |
|--------|----------------------------------------------------------------------------------------------------------------------------------|

26

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **24.** | **Segment  information** |
|---------|--------------------------|

|   | The Company conducts its business as a single operating  segment being the mining business in Africa. All mineral properties and  equipment are situated in Africa. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **25.** | **Financial instruments and risk management** |
|---------|-----------------------------------------------|

|   | Financial instruments are agreements  between two parties that result in promises to pay or receive cash or equity  instruments. The Company classified its financial instruments as follows:  cash and cash equivalents and accounts receivable are classified as loans and  receivables and measured at amortized cost; short-term investments as  available-for-sale and measured at fair value; accounts payable and accrued  liabilities as other financial liabilities and measured at amortized cost. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has exposure to the  following risks from its use of financial instruments: |
|--------|-----------------------------------------------------------------------------------------|

|   | -  credit risk, 
-  liquidity risk, and 
-  market risk. |
|--------|--------------------------------------------------------------------|

|   | This note presents information about  the Company’s exposure to each of the above risks, the Company’s objectives,  procedures and processes for measuring and managing risk, and the Company’s  management of capital. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Board of Directors has overall  responsibility for the establishment and oversight of the Company’s risk  management framework. The Company’s risk management procedures are  established to identify and analyze the risks faced by the Company. The  Company, through its training and management standards and procedures, aims  to develop a disciplined and constructive control environment in which all  employees understand their roles and obligations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s Audit Committee oversees  how management monitors compliance with the Company’s financial risk  management procedures and processes and reviews the adequacy of the risk  management framework in relation to the risks faced by the Company. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | Credit  risk |
|--------|-----|--------------|

|   | Credit risk is the risk of financial loss to the Company  if a counterparty to a financial instrument fails to meet its contractual  obligations, and arises principally from the Company’s receivables and its  investment securities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | Cash  equivalents |
|--------|-----|-------------------|

|   | The Company limits its exposure to  credit risk by only investing in highly liquid securities and only with  counterparties that have a strong credit rating. Given these high credit  ratings, management does not expect any counterparty to fail to meet its  obligations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Accounts  receivable |
|--------|------|----------------------|

|   | The Company’s accounts receivable are  due primarily from the smelters and other customers to which the Company  sells copper concentrate and have maximum settlement periods of approximately  120 days. Management does not expect these counterparties to fail to meet  their obligations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Due from non-controlling interest |
|--------|-------|-----------------------------------|

|   | Due from non-controlling interest is collected from cash  flow from the Bisha Mine that would otherwise be distributed to ENAMCO in  accordance with its share ownership. Management expects that Bisha Mine  cash flow will be sufficient to allow collection from non-controlling  interest. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

27

----

 
| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **25.** | **Financial instruments and risk management (continued)** |
|---------|-----------------------------------------------------------|

|   | (iv) | Exposure  to credit risk |
|--------|------|--------------------------|

|   | The carrying amount of financial assets  represents the maximum credit exposure. Cash and cash equivalents held by  the Company have contractual maturities of less than 90 days. The maximum  exposure to credit risk at the reporting date was: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                               |   |   2013 |   |   |   2012 |   |
|--------|------------------------------------|--------|------------------|--------|--------|------------------|--------|
|   | Cash and cash  equivalents         | $      | 302,724          |   | $      | 396,404          |   |
|   | Due from  non-controlling interest |   | 83,194           |   |   | 63,130           |   |
|   | Accounts  receivable               |   | 46,646           |   |   | 5,233            |   |
|   |                               | $      | 432,564          |   | $      | 464,767          |   |

|   | The Company does not have accounts  receivable that it considers impaired or otherwise uncollectible. |
|--------|-------------------------------------------------------------------------------------------------------|

|   | (b) | Liquidity  risk |
|--------|-----|-----------------|

|   | Liquidity risk is the risk that the Company will not be  able to meet its financial obligations as they fall due. The Company’s  approach to managing liquidity is to ensure, as far as possible, that it will  always have sufficient liquid funds to meet its liabilities when due, under  both normal and stressed conditions, without incurring unacceptable losses or  risking damage to the Company’s reputation. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Typically the Company ensures that it has sufficient  cash on hand to meet expected operational expenses including the servicing of  financial obligations, if any; this excludes the potential impact of extreme  circumstances that cannot reasonably be predicted, such as natural disasters. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The contractual financial liabilities of the Company as  of December 31, 2013, equal $30,787 (December 31, 2012 - $18,130). The  undiscounted cash flows of the liabilities are equal to their contractual  amounts. All of the liabilities presented as accounts payable and accrued  liabilities are due within ninety days of December 31, 2013. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Market  risk |
|--------|-----|--------------|

|   | Market risk is the risk that changes in market prices,  such as foreign exchange rates, commodity prices, interest rates and equity  prices will affect the Company’s income or the value of its holdings of  financial instruments. The objective of market risk management is to manage  and control market risk exposures within acceptable parameters, while  optimizing the return on capital. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | Currency  risk |
|--------|-----|----------------|

|   | The Company’s functional currency is  the United States dollar (USD). The Eritrean nakfa (ERN) is directly tied to  the USD and, accordingly, is not a currency risk in terms of the functional  currency. The Company is exposed to currency risk on settlements of  purchases that were denominated in currencies other than the functional  currency. Historically the currency exposures are primarily to the Canadian  dollar (CAD), South African rand (ZAR), Australian dollar (AUD), and Euro  (EUR). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following is a break-down of  financial assets and liabilities denominated in foreign currencies to which  the Company is exposed: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|

28

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **25.** | **Financial instruments and risk management (continued)** |
|---------|-----------------------------------------------------------|

|   | (c) | Market      risk (continued) |
|--------|-----|------------------------------|

|   | (i) | Currency risk (continued) |
|--------|-----|---------------------------|

|   |                                     |   | 2013   |   |
|--------|------------------------------------------|--------|--------|--------|
|   |                                     |   | CAD    |   |   | ZAR |   |   | AUD |   |   | EUR |   |
|   | Cash and cash  equivalents               |   | 198    |   |   | 766 |   |   | 0 |   |   | 0 |   |
|   | Accounts  receivable                     |   | 116    |   |   | 120 |   |   | 0 |   |   | 0 |   |
|   | Payables and  accruals                   |   | (2,278 | )      |   | (2,292 | ) |   | (220 | ) |   | (135 | ) |
|   | Net financial assets  (liabilities)      |   | (1,964 | )      |   | (1,406 | ) |   | (220 | ) |   | (135 | ) |
|   | USD foreign  exchange rate               |   | 0.94   |   |   | 0.10 |   |   | 0.89 |   |   | 1.38 |   |
|   | Balance sheet exposure in equivalent USD |   | (1,846 | )      |   | (134 | ) |   | (195 | ) |   | (186 | ) |

|   |                                     |   | 2012   |   |
|--------|------------------------------------------|--------|--------|--------|
|   |                                     |   | CAD    |   |   | ZAR |   |
|   | Cash and cash  equivalents               |   | 223    |   |   | 2,010 |   |
|   | Accounts  receivable                     |   | 295    |   |   | 20,318 |   |
|   | Payables and  accruals                   |   | (2,662 | )      |   | (2,066 | ) |
|   | Net financial liabilities                |   | (2,144 | )      |   | 20,262 |   |
|   | USD foreign  exchange rate               |   | 1.01   |   |   | 0.12 |   |
|   | Balance sheet exposure in equivalent USD |   | (2,165 | )      |   | 2,392 |   |

|   | Currency risk sensitivity analysis |
|--------|------------------------------------|

|   | A 10 percent strengthening of the US  dollar against the above currencies at December 31 would have increased net  income by the amounts shown below. A 10 percent weakening of the US dollar  against the above currencies would have had an equal and opposite effect.  This analysis assumes that all other variables, in particular interest rates,  remain constant: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2013   |   |   Gain       |   |
|--------|--------|--------|------------------------|--------|
|   | CAD    | $      | 185                    |   |
|   | ZAR    |   | 13                     |   |
|   | AUD    |   | 19                     |   |
|   | EUR    |   | 19                     |   |
|   |   |   |                   |   |
|   |   |   |                   |   |
|   | 2012   |   |   Gain (loss | )      |
|   | CAD    | $      | (217                   | )      |
|   | ZAR    |   | 239                    |   |

29

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Market risk (continued) |
|--------|-----|-------------------------|

|   | (ii) | Price  risk |
|--------|------|-------------|

|   | The Company is subject to price risk  fluctuations in market prices of copper, gold, and silver, and the  profitability of the Company’s operations is highly correlated to the market  prices of these metals. Historically copper, gold, and silver prices  have fluctuated widely and are affected by numerous factors outside the  Company’s control. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company is subject to price risk  from fluctuations in the market price of copper, gold, and silver for sales  that have not yet settled as of the balance sheet date. The commodity price  risk associated with financial instruments relates to changes in fair value caused  by final pricing adjustments to receivables for these metals. A 10% change to  the metals’ price, based on pricing adjustments at December 31, 2013, would  result in a $12,890 change to pre-commercial production concentrate sales and  receivables. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has not hedged any of its concentrate  sales. The quantity of copper, gold, and silver in accounts receivable as at  December 31, 2013, for sales that have not yet settled is as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                           |   | 2013                    |   |
|--------|--------------------------------|--------|-------------------------|--------|
|   |                           |   | Quantity  (000s pounds) |   |   |   Market price   per pound |   |
|   | Copper in  accounts receivable |   | 28,963                  |   | $ | 3.35 |   |

|   |                           |   | Quantity        (ounces) |   |   |   Market price   per ounce |   |
|--------|--------------------------------|--------|--------------------------|--------|--------|--------------------------------------|--------|
|   | Gold in accounts  receivable   |   | 13,383                   |   | $      | 1,202                                |   |
|   | Silver in  accounts receivable |   | 803,778                  |   | $      | 19.50                                |   |

|   | Sales of copper concentrate are  recognized on a provisional pricing basis when risks and rewards, transfers  and the rights and obligations of ownership pass to the customer, which  usually occurs on shipment. However, the final pricing for the product sold  and purchased is not determined at that time as it is contractually linked to  market prices at a subsequent date. These arrangements have the  characteristics of a derivative instrument as the value of the related  receivables will vary as the price for the underlying commodity varies in the  metal markets. These pricing adjustments result in gains in a rising price  environment and losses in a declining price environment and are recorded as a  change in revenue at each balance sheet date and at final settlement. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Interest  rate risk |
|--------|-------|---------------------|

|   | Interest rate risk arises on interest  accruing on the due from non-controlling interest balance (note 10) and loan  receivable. |
|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Fair  value versus carrying amounts |
|--------|-----|-------------------------------------|

|   | The carrying amount of financial assets and liabilities  carried at amortized cost is a reasonable approximation of fair value. |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

| **26.** | **Capital   management** |
|---------|--------------------------|

|   | The Board’s policy is to maintain a  strong capital base so as to maintain investor, creditor and market  confidence and to sustain future development of the business. The capital of  the Company consists of equity attributable to Nevsun shareholders and  amounts related to non-controlling interest. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company manages its capital  structure and makes adjustments in light of the changes in its economic  environment and the risk characteristics of the Company’s assets. To  effectively manage the Company’s capital requirements, the Company has in  place a planning, budgeting and forecasting process to help determine the  funds required to ensure the Company has the appropriate liquidity to meet  its operating and growth objectives. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

30

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **27.** | **Key management personnel compensation** |
|---------|-------------------------------------------|

|   | Key  management personnel compensation is as follows: |
|--------|-------------------------------------------------------|

|   |                                        |   | 2013  |   |   | 2012  |   |
|--------|---------------------------------------------|--------|-------|--------|--------|-------|--------|
|   | Short-term employee benefits                | $      | 5,224 |   | $      | 3,515 |   |
|   | Share-based  payments                       |   | 2,186 |   |   | 981   |   |
|   | Total key management personnel compensation | $      | 7,410 |   | $      | 4,496 |   |

| **28.** | **Related party transactions** |
|---------|--------------------------------|

|   | Except for those transactions with the non-controlling  interest disclosed in note 10, there were no material transactions with related  parties during the years ended December 31, 2013, and 2012. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **29.** | **Contingencies** |
|---------|-------------------|

|   | Putative  class action complaints |
|--------|-----------------------------------|

|   | Two putative class actions were filed  in the United States District Court for the Southern District of New York, on  March 13, 2012, and March 28, 2012, respectively, naming the Company and  certain officers of the Company as defendants (hereafter the US Actions).  The plaintiffs assert claims under Sections 10(b) and 20(a) of the Securities  Exchange Act of 1934, based on alleged misrepresentations and omissions  relating to the amount of gold reserves at the Bisha Mine. The plaintiffs  purport to bring suit on behalf of all purchasers of the Company's publicly  traded securities between March 31, 2011, and February 6, 2012. Plaintiffs  seek unspecified damages, interest, costs and attorneys' fees on behalf of  the putative class. By order of court, the two cases have been consolidated,  and a consolidated amended complaint was filed on August 21, 2012. The  consolidated amended complaint expanded the purported class period to run  from March 28, 2011, until February 6, 2012, and asserted alleged  misrepresentations and omissions relating the Bisha Mine’s “strip ratio”  throughout 2011, the omission of “material negative trends”, allegedly in  violation of a disclosure duty under U.S. Regulation S-K, and the departure  of certain senior executives at the Bisha Mine. On September 20, 2012, the  Company filed a motion to dismiss all claims against the Company and its  officers. On September 27, 2013, the Court granted in part and denied in part  the motion to dismiss. The parties thereafter agreed to suspend the  litigation pending a settlement mediation of the case, in which the parties  will seek to voluntarily resolve the case without further litigation. On  October 22, 2013, the district court ordered that further legal proceedings  would be suspended until February 28, 2014. A mediation was held on December  9, 2013, and the parties were unable to settle the case at that time.  Thereafter, plaintiffs moved the court to lift the stay, and on February 4,  2014, the court granted the motion. Defendants filed their answer to the Complaint  on February 28, 2014. A pre-trial conference is scheduled on April 10, 2014.  The parties are continuing to discuss settlement of the U.S. case, as part of  a global settlement of both the U.S. case and the Canadian case described  below. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A putative class action also was filed  in the Ontario Superior Court of Justice on July 12, 2012, naming the Company  and certain officers of the Company as defendants (hereafter the Canadian  Actions). The plaintiff’s Statement of Claim asserts claims for (i) violation  of certain provisions of the Ontario Securities Act, as well as the  equivalent statutes of other provinces; (ii) negligent misrepresentation; and  (iii) vicarious liability of the Company, based on alleged misrepresentations  and omissions relating to the amount of gold reserves, and the grade of the  mineable gold reserves, at the Bisha Mine. The plaintiffs purport to bring  suit on behalf of all purchasers of the Company’s publicly traded securities  between March 31, 2011, to and including February 6, 2012, including  purchasers of the Company’s stock on the Toronto and American Stock  Exchanges. The plaintiffs amended their claim on February 13, 2013, to add  further detail to their factual allegations. The Canadian Actions are based  on essentially the same set of facts and the same alleged misrepresentations  as the U.S. Actions. The plaintiff seeks damages in the sum of $100 million  plus interest and costs, on behalf of the putative class. The Canadian  Actions are expected to proceed more slowly than the US Actions, due to  differences between US and Canadian procedural rules. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On October 2, 2013, the plaintiffs  filed their motion for class certification and for leave to proceed with a  claim under Part XXIII.1 of the Ontario Securities Act. The hearing of these  motions has not yet been scheduled. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

31

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| **NEVSUN RESOURCES LTD.**      Notes to Consolidated Financial Statements       (Expressed in thousands of United States dollars, unless otherwise stated)       Years ended December 31, 2013 and 2012 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **29.** | **Contingencies (continued)** |
|---------|-------------------------------|

|   | It is not possible at this time to  estimate the ultimate outcome of the US and Canadian Actions, or the costs  associated with the defense of the cases, which are subject to future rulings  in the cases. The Company believes the allegations are without merit  and will vigorously defend itself in these actions. The claims in the cases  have been tendered for coverage under the Company’s directors and officers  insurance policies. Management believes that the insurance available under  such policies will be adequate to cover any costs incurred by the Company in  connection with the defense of the cases. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

32

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