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**MANAGEMENT’S DISCUSSION & ANALYSIS – FISCAL 2014**

This Management’s Discussion and Analysis (MD&A) was prepared  by management as at February 25, 2015, and was reviewed and approved by the Board  of Directors.  The following discussion of performance, financial condition  and future prospects should be read in conjunction with the audited annual consolidated  financial statements of Nevsun Resources Ltd. and notes thereto for the year  ended December 31, 2014.  All references in this MD&A to “Nevsun” or the  “Company” include Nevsun Resources Ltd. and each of its wholly and partially  owned subsidiaries on a consolidated basis, unless otherwise stated.  The  information provided herein supplements but does not form part of the  financial statements.  This discussion covers the year and the subsequent  period up to the date of issue of this MD&A.  Unless otherwise noted, all  dollar amounts are stated in thousands of United States dollars, except per  ounce, per tonne, per pound, per litre and per share data.  Information on  risks associated with investing in the Company’s securities as well as  information about mineral resources and reserves under National Instrument  43-101 are contained in the Company’s most recently filed Annual Information  Form which is available on the Company’s website at www.nevsun.com or on SEDAR at  www.sedar.com. 

| **Contents** |
|--------------|

| Business of the Company.                                                   | 2  |
|----------------------------------------------------------------------------|----|
| 2014 annual highlights.                                                    | 2  |
| Outlook for 2015.                                                          | 3  |
| Operating review.                                                          | 4  |
| Results of operations for the year  ended December 31, 2014.               | 5  |
| Results of operations for the  fourth quarter 2014.                        | 7  |
| Selected annual financial  information.                                    | 8  |
| Selected quarterly financial  information.                                 | 10 |
| Reconciliation of realized copper  price.                                  | 12 |
| Liquidity and capital resources.                                           | 12 |
| Commitments and contractual  obligations.                                  | 13 |
| Off-balance sheet arrangements.                                            | 13 |
| Contingencies.                                                             | 13 |
| Outstanding share data.                                                    | 14 |
| Financial instruments and risk  management                                 | 14 |
| Proposed transactions.                                                     | 15 |
| Use of judgements and estimates in  applying critical accounting policies. | 15 |
| Disclosure controls and procedures.                                        | 18 |
| Changes in internal control over  financial  reporting.                    | 18 |
| Limitations of controls and  procedures.                                   | 18 |
| Accounting changes and recent  accounting pronouncements.                  | 19 |
| Quality assurance.                                                         | 19 |
| Non-GAAP performance measure.                                              | 19 |
| Additional information and risk  factors.                                  | 20 |
| Forward looking statements.                                                | 20 |
| NYSE MKT corporate governance.                                             | 21 |
| Cautionary note regarding  preparation of reserves and resources.          | 21 |

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2

| **Business of the Company** |
|-----------------------------|

Nevsun Resources Ltd. and its  subsidiaries (collectively, Nevsun or the Company) are engaged in the  acquisition, exploration, development and operation of mineral property  interests.  Nevsun is a public company which is listed on the TSX and the  NYSE MKT LLC, under the trading symbol “NSU”.  Nevsun was incorporated under  the laws of the Province of British Columbia under the Company Act (British  Columbia), is currently governed by the Business Corporations Act (British  Columbia) and maintains its head office at Suite 760 – 669 Howe Street,  Vancouver, British Columbia, Canada, V6B 0C4 and its registered and records  office at 1000 – 840 Howe Street, Vancouver, British Columbia, Canada, V6Z  2M1 and its website address is www.nevsun.com.

The Company’s principal mining operation is the Bisha  Mine and the Company’s principal mineral property is the Bisha Property owned  by Bisha Mining Share Company (BMSC), an Eritrean registered corporation.  Nevsun is a 60% shareholder of BMSC with the remaining 40% ownership in BMSC  held by the State-owned Eritrean National Mining Corporation (ENAMCO).  BMSC  is governed under the terms of a shareholder agreement between Nevsun and  ENAMCO.  Under Eritrean Mining Law, ENAMCO initially held a 10% free carried  interest in the property.  In October 2007, ENAMCO agreed to purchase an  additional 30% interest in BMSC, the terms of which were finalized in 2011.   BMSC was granted a 20 year mining license for the Bisha project on December  12, 2007.  BMSC was granted a 10 year mining license for the Harena property on  July 6, 2012.  BMSC renewed the Mogoraib River exploration license in Q3 2014  which includes the Hambok deposit.  This exploration license is valid until  July 2, 2015, but can be extended subject to a license renewal application.

The Bisha Mine hosts a gold, copper and zinc deposit and  the overall Bisha district includes satellite VMS deposits known as Harena,  Northwest and Hambok.  The Bisha Mine was in commercial production of gold  from February 2011 to June 2013 which allowed an early payback of gold phase  capital and allowed for funding of the copper phase expansion.  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, as the Company determined the commissioning phase of the copper expansion  had been completed as the copper plant and facilities were operating in the  manner intended by management.  Mining of the supergene copper ore is  expected to continue until the first half of 2016 at which time the Bisha  Mine plans to begin to process ore from the primary phase.  The primary phase  ore contains a significant amount of zinc and copper.  Construction of the  zinc plant began in 2014 with the zinc plant scheduled for commissioning in  the first half of 2016.  The Bisha Mine has the full support of the Eritrean  Government.  

| **2014 annual highlights** |
|----------------------------|

-  Exceeded 21.6 million    hours without a lost time injury (now over 3 years without an LTI)
-  Earnings per share of    $0.47
-   Cash provided by  operating activities of $217 million
-  Working capital of $520    million, including $442 million of cash
-  Produced 196 million    pounds of copper in concentrate against guidance of 180 to 200 million pounds
-  Achieved industry    lowest quartile C1 cash costs (1)  of $1.05 per pound
-  Executed a successful    27,300 metre exploration program
-  Progressed zinc plant    expansion – on time and on budget
-  Announced a 14% increase    to the annualized dividend, from $0.14 to $0.16 per share (approximately 34%    of earnings per share)

(1)  C1 cash cost per pound is a non-GAAP measure – see page 19 of the 2014 Annual MD&A for discussion of non-GAAP measures.

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3

|                                                          |   | Q4 2014 |   |   | Q3 2014 |   |   | Q2 2014    |   |   | Q1 2014 |   |   | 2014   |   |
|---------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|------------|--------|--------|---------|--------|--------|--------|--------|
| Revenues (millions)                                           | $      | 138.7   |   | $      | 147.9   |   | $      | 169.2      |   | $      | 99.2    |   | $      | 555.0  |   |
| Operating income  (millions)                                  |   | 70.3    |   |   | 78.1    |   |   | 94.9       |   |   | 52.0    |   |   | 295.3  |   |
| Net income (millions)                                         |   | 40.1    |   |   | 44.6    |   |   | 53.7       |   |   | 28.2    |   |   | 166.6  |   |
| Net income attributable  to Nevsun shareholders (millions)    |   | 21.9    |   |   | 25.5    |   |   | 30.5       |   |   | 15.5    |   |   | 93.4   |   |
| Basic earnings per share  attributable to Nevsun shareholders |   | 0.11    |   |   | 0.13    |   |   | 0.15       |   |   | 0.08    |   |   | 0.47   |   |
| Working capital  (millions)                                   |   | 520.0   |   |   | 519.0   |   |   | 497.8      |   |   | 462.2   |   |   | 520.0  |   |
|                                                          |   |    |   |   |    |   |   |       |   |   |    |   |   |   |   |
| Copper price realized,  per payable pound sold                |   | 2.87    |   |   | 2.98    |   |   | 3.21       |   |   | 3.01    |   |   | 3.02   |   |
| C1 cash cost per payable  pound sold (1)                      | $      | 1.07    |   | $      | 1.07    |   | $      |  1.05 |   | $      | 0.98    |   | $      | 1.05   |   |

| **Outlook for 2015** |
|----------------------|

2015 Objectives

-      Maintain top quartile    safety performance and social license to operate    Produce 160 to 175    million pounds of copper at C1 cash costs (1)  of $1.20 to $1.40 per    pound payable  
-  Extend the Bisha mine    life through exploration and optimize mine plan
-  Keep zinc expansion    project on time and on budget for H1 2016 commissioning
-  Opportunistically    monetize stockpiled gold ore
-  Continue to pay peer    leading dividends
-  Continue to pursue    M&A opportunities supported by our strong balance sheet 

  We are in the process of preparing our 2014 Corporate  Social Responsibility (CSR) report and it will include detailed disclosure on  key strategies we employ and the key metrics we use to monitor progress in  this area. BMSC will continue its ongoing efforts to provide training at its  Bisha operations, employment opportunities and localization in Eritrea to  promote and enhance our collective corporate social responsibility program  initiatives to reflect evolving international standards. 

  BMSC expects to produce between 160 and 175 million  pounds of copper in concentrate in 2015 through the processing of  approximately 2,300,000 tonnes of ore from the Bisha Main pit averaging about  3.9 percent copper feed grade.  We expect our C1 cash cost(1) for  2015 will be $1.20 to $1.40 per payable pound sold.  Key assumptions include a  delivered diesel fuel price of $1.13 per litre and by-product revenues based  on $1,100 per ounce of gold and $15 per ounce of silver.  We expect there may  be some opportunity to improve on these assumptions. 

  As a result of the successful regional exploration  program in 2014, the Company announced a revised mineral resource on February  3, 2015.  The primary change to the current estimate revolved around the  successful southern down-dip drilling at the Harena deposit announced over  the last half of 2014.  The accompanying mineral reserve as a subset of this  mineral resource was impacted mainly by mine depletion, updated reverse  circulation drilling in 2014 creating an improved understanding of the  supergene to primary transition zone, and an opportunity to further deepen  the Bisha main pit in the primary zone.  As disclosed in the 2014 Annual  Information Form, apart from mine depletion during 2014, the  Company identified a further 30 million pounds of copper and 300 million pounds  of zinc in mineral reserves.  Commencing  in early Q2 2015 an independent mining engineering firm will assist in  further optimizing the life of mine production schedule which will include  scoping work for potential underground mining scenarios at the Hambok, Bisha  Main and Harena deposits. 

  The zinc expansion remains on track for commissioning by  mid-2016.  We are confident the total capital costs will not exceed the  budget estimate of $89.5 million.  Our sustaining and expansion capital  expenditures are expected to range from $20 to $30 million in 2015.  The  Company has made a strategic decision to increase the capacity of the mining  fleet to mitigate any potential risk on delayed waste mining and to provide  us with greater flexibility to increase tonnes mined in future years should  zinc prices increase. 

(1)  C1 cash cost per pound is a non-GAAP measure – see page 19 of the 2014 Annual MD&A for discussion of non-GAAP measures.

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4

  A further $10 million in exploration investment is  planned for 2015.  Key 2015 exploration objectives, which will be prioritized  on a success basis for additional work, include:

-  Expanding and upgrading the resource at Harena through drilling    and down-hole geophysics;
-  Drilling high priority targets at depth and on strike from    Bisha Main; and
-  Continued testing of high priority greenfield targets on the    Mogoraib River exploration license.

We expect to drill in excess of 25,000 metres during the  year. 

  The Company has considerable additional value held in  stockpiles to be monetized. This includes 6,500 tonnes of precious metals  concentrate containing about 7,000 ounces of gold with high silver content,  which will be monetized in 2015.  The Company has also mined and stockpiled  approximately 130,000 tonnes of oxide ore at over 5 g/t Au containing over  20,000 ounces of gold.  In addition, nearly 400,000 tonnes of pyrite sand  material estimated to contain over 60,000 ounces of gold with significant  silver content has been stockpiled.  Over half of these contained ounces in  the pyrite sands are considered economic and the Company is finalizing  alternative methods to monetize this portion commencing in 2015. Further  economic assessment of the remaining pyrite sands will be performed over the  next 18 months. 

  The Company continues to dedicate significant management  time and effort for external growth.  The Company’s approach to M&A is  based on capital discipline and staying true to our commitment of generating  a financial return on our investment for shareholders that will allow us to  maintain and grow our dividend in the future. 

| **Operating review** |
|----------------------|

Key  operating information – Bisha Mine: 

|                                                       |   | Q4 2014   |   |   | 2014       |   |   | Q4 2013(4) |   |   | 2013(4)   |   |
|------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
| Ore mined, tonnes(1)                                       |   | 617,000   |   |   | 2,282,000  |   |   | 533,000    |   |   | 1,992,000 |   |
| Waste mined, tonnes                                        |   | 3,380,000 |   |   | 12,277,000 |   |   | 2,664,000  |   |   | 9,038,000 |   |
| Strip ratio, (using  tonnes)                               |   | 5.5       |   |   | 5.4        |   |   | 5.0        |   |   | 4.5       |   |
| Ore  milled tonnes                                         |   | 573,000   |   |   | 1,789,000  |   |   | 401,000    |   |   | 767,000   |   |
| Copper  feed grade, %                                      |   | 4.9       |   |   | 5.9        |   |   | 5.1        |   |   | 3.9       |   |
| Recovery,  % of copper                                     |   | 85.7      |   |   | 85.0       |   |   | 79.7       |   |   | 73.5      |   |
| Copper  concentrate grade, %(2)                            |   | 25.8      |   |   | 26.3       |   |   | 25.9       |   |   | 24.3      |   |
| Copper  in concentrate produced, millions of pounds        |   | 52.5      |   |   | 196.0      |   |   | 36.0       |   |   | 48.0      |   |
| Copper  in concentrate produced, tonnes                    |   | 23,800    |   |   | 88,900     |   |   | 16,300     |   |   | 21,800    |   |
| Payable  copper in concentrate sold, millions of pounds(3) |   | 49.4      |   |   | 184.7      |   |   | 30.6       |   |   | 30.6      |   |
| Payable  copper in concentrate sold, tonnes(3)             |   | 22,400    |   |   | 83,800     |   |   | 13,800     |   |   | 13,800    |   |

| (1) | Ore tonnes mined for the year ended December 31, 2014 included 225,000   tonnes of oxide ore including pyrite sand, 1,936,000 tonnes of supergene ore   and 121,000 tonnes of primary ore. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | When provisional adjustments for the quantity of contained copper sold, based on final assay results are considered, the realized copper grade for 2014 becomes 26.3%. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Q1 2014 included 4.5 million pounds or 2,000 tonnes (Q4 2013 – 30.6   million pounds or 13,800 tonnes) of pre-commercial production. Receipts from   pre-commercial production sales were credited against mineral property, plant   and equipment, net of cost of sales. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | During Q3 2013 and most of Q4 2013, the Company was considered to be   in pre-commercial production of its copper phase. For the year ended December   31, 2013, the Company milled 887,000 tonnes of oxide ore at 3.43 g/t Au at   recovery of 79.4%, producing 92,000 ounces of gold in doré (Q4 2013 – 1,500)   and selling 96,700 ounces of gold (Q4 2013 – 1,200) at a realized price per   ounce of $1,471 (Q4 2013 – $1,246). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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5

| **Results of operations for the  year ended December 31, 2014** |
|-----------------------------------------------------------------|

***Operating income***

******The Company generated operating income of $295.3 million  for the year ended December 31, 2014, which was an increase of $223.9 million  from 2013.  The two years are not comparable as 2014 was the first full year  of commercial production of the supergene copper phase of the Bisha Mine.   The supergene copper phase is expected to continue until 2016 when the Bisha Mine  will enter into the primary phase.  During the primary phase, the Bisha Mine will  produce both a copper and zinc concentrate.  During 2013 there were six  months of gold oxide mining and five months of pre-commercial production of  the supergene copper phase. 

***Production and sales***

******The Company produced 196.0 million pounds of copper in  concentrate by processing approximately 1,789,000 tonnes of ore averaging  about 5.9% copper during 2014.  The total 2014 production was at the high end  of our annual guidance of between 180 and 200 million pounds of copper in  concentrate.

We mined approximately 14,559,000 tonnes of total  material during 2014 at a 5.4 strip ratio.  Of the 2,282,000 tonnes of ore  mined, 1,936,000 tonnes were supergene ore. The remaining tonnes related to 225,000  of oxide ore, including pyrite sand, and 121,000 of primary ore, all of which  have been stockpiled for future periods.  The mining rate during 2014 was  sufficient to meet the plant capacity.  We experienced lower than planned  mobile equipment availability throughout 2014 which negatively impacted our  strip of waste tonnes.  During the fourth quarter, we mined nearly 4,000,000  tonnes of material demonstrating that improvements in the extraction of waste  material are beginning to take effect.  The shortfall of waste movement is  not expected to affect 2015 copper ore production.

Copper feed grades significantly exceeded our  expectations due to a combination of positive metal reconciliation and a  variance to the original mine plan.  The copper concentrator was designed for  an average copper feed grade of 4.5%.  Accordingly, mill feeds were purposely  reduced in order to maintain good copper recoveries.  Copper recoveries have  steadily increased throughout 2014 with an average recovery of 85.0%.

 Accordingly the Company has been able to draw down its  copper concentrate stockpile to approximately 15,000 dry metric tonnes (DMT) containing  10 million pounds of copper from 25,000 DMT at Q3 2014 (15 million pounds of  copper).  At December 31, 2014, a further 10 million pounds of copper (4,500  tonnes) are either at the port of Massawa or in-transit to a customer.   Similar to Q1 2014, the sale to this particular customer is not eligible for  revenue recognition but will be recorded in Q1 2015. 

***Cash costs***

******Our copper cash costs per payable pound sold for the  year was $1.05 which was firmly within our guidance of lowest quartile cash  costs for the industry.  Cash costs have increased slightly each quarter as  our copper feed and copper concentrate grades have decreased throughout the  year.  We have also experienced higher treatment and refining charges during  the second of half of 2014.  Q1 2014 also included particularly higher  precious metal by-product credits. 

***Stockpiled material***

******The Company has considerable additional value held in  stockpiles that has yet to be monetized.  The Company has already encountered  some primary zone material which has been stockpiled for the primary phase.   There are three other distinct types of stockpiled material.

There are approximately 6,500 tonnes of precious metals  concentrate containing an estimated 7,000 ounces of gold with high silver  content that will be monetized via a combination of direct sales and blending  with copper concentrate during 2015.  

There are approximately 400,000 tonnes of pyrite sand material  that is estimated to contain over 60,000 ounces of gold with significant  silver content and 130,000 tonnes of oxide ore at over 5 g/t Au containing  over 20,000 ounces of gold.  For precious metal concentrate, this material  will be sold in 2015 by either direct sales or blending with other material.  For the pyrite sands material, the Company is finalizing alternative methods  to best monetize this asset in the near term.  Once a final decision has been  made, we will provide more detailed guidance on the estimated additional  value that can be extracted and the timing of the monetization.  A blending  facility was purchased for minimal cost during 2014 to ensure we maximize the  value of this asset.  With lower trucking needs expected in 2015 and the  existence of the blending facility, we believe a significant portion of the  higher grade pyrite sands containing approximately 50% of the estimated  contained ounces could be monetized over the next 18 months. 

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6

***Exploration***

******The Company continues its exploration efforts in the  largely underexplored Bisha district.  A key element of our organic growth  strategy is to leverage opportunities in the immediate mine area to optimize  and extend the mine life of Bisha.  We believe these near term exploration  targets, which can be quickly permitted and could take advantage of existing  processing facilities, are an excellent allocation of capital.

In 2014, the Company spent $9.4 million to fund 27,300  meters of exploration diamond drilling (91 holes), 230 kilometers of ground  geophysics, geophysical surveying of 44 drill holes and 2,500 line kilometers  of airborne geophysics, in addition to other geological work. This total  includes $3.7 million of activities related to the Harena deposit, which are  classified as capitalized expenditures on mineral properties. 

  During Q4 2014, exploration drilling continued at the  Harena deposit.  A total of 5,902 meters of diamond drilling was completed in  12 holes during the quarter.  The Harena ore body is located approximately 10  kilometers south of the Bisha Mine and processing plant.  A highlight during  the quarter was hole HX-040 which returned 1.78% Cu, 5.78% Zn, 0.53 g/t Au  and 31 g/t Ag over 32.0 meters including a section with 4.19% Cu over 11.90 meters  at a down hole depth of 407.2 meters.  This hole encountered significantly  better grade than the average at Harena.  Our work in 2014 has been  successful in extending the Harena deposit from a depth of 220 meters to  nearly 450 meters below surface while increasing strike length from 300  meters to 600 meters.  Borehole geophysics indicates the deposit still has  further considerable down plunge extent that has yet to be drill tested.    Drilling will continue in 2015 to assess the excellent potential at Harena.   Significant drill results were obtained at Harena, and this work was incorporated  in a new resource estimate which was announced February 3, 2015. 

  The success achieved at Harena by combining the  understanding of host geology, mineralization and alteration with borehole  geophysics has led to a re-evaluation of our other deposits.  In 2015, we  will continue to utilize this methodology in our exploration efforts at Bisha  and the Northwest deposits.  Work will also continue to explore for  greenfield deposits on the Mogoraib River Exploration License initially  focusing in the Asheli area where there are a number of high potential  targets. 

***Bisha Zinc Expansion Plan***

******During 2014, the BMSC board approved the zinc expansion  phase budget for $89.5 million, including a $9.0 million contingency.  The  commissioning of the plant is expected to be completed by the end of H1  2016.  As at December 31, 2014, $51.4 million of the budget has been awarded  to contractors, of which $16.3 million has been incurred and a further $23.3  million committed.

The majority of the engineering for the flotation cells  and the IsaMill is complete, most procurement is arranged, civil works for  all required foundations are nearing completion and tenders have been  received for the required steel, mechanical, piping and platework, with the  contract award imminent.  The owners’ team is now predominantly located on  site and principal construction with steel erection is soon to commence. 

***Updated Mineral Reserves and Resource Estimate***

******As announced on February 3, 2015, the Company has significantly expanded the mineral resource estimate at Harena based on the successful exploration efforts of 2014.  As disclosed in the 2014 Annual Information Form, apart from mine depletion during 2014, the Company identified a further 30 million pounds of copper and 300 million pounds of zinc in mineral reserves.  Details of the mineral reserves and resources are included in our Annual Information Form. 

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7

| **Results of operations for the  fourth quarter 2014** |
|--------------------------------------------------------|

***Operating income***

******The Company generated operating income of $70.3 million  for the quarter ended December 31, 2014.  The Q4 2013 quarter is not  comparable as 2014 was the first full year of commercial production of the  supergene copper phase of the Bisha Mine.  Quarterly operating income  decreased from Q3 2014 despite a 4% increase in volumes of DMT of copper sold  as copper feed grade and copper concentrate grades declined by 22% and 14%  respectively, which impacted unit cost.  The other significant impact on Q4  2014 operating income was the lower realized copper prices which decreased by  2%. 

***Production and sales***

******The Company produced 52.5 million pounds of copper in  concentrate by processing approximately 617,000 tonnes of ore averaging about  4.9% copper.  Q4 2014 was a strong quarter as we mined nearly 4.0 million  tonnes and achieved our highest quarterly plant throughput rate despite a  shutdown due to a power shortage in December. This result provides additional  confidence that the plant can run at its designed rate which will be required  in 2015 as the copper feed grades decrease.

Q4 2014 was the first quarter where we saw our copper  feed grades decrease below 6%.  We have steadily increased the number of dry  metric tonnes (DMT) of copper concentrate sold, resulting in a total of 331,200  tonnes for 2014. The Q4 2014 total sold of 94,500 tonnes is a 4% increase  from the 90,900 tonnes sold in Q3 2014, resulting in sales of 49.4 million  pounds of payable copper. 

***Cash costs***

******Our copper cash costs per pound sold for the quarter was  $1.07, which was firmly within our guidance of lowest quartile cash costs for  the industry.  Cash costs have increased slightly each quarter as our copper  feed and copper concentrate grades have decreased throughout the year.  We  have incurred higher trucking costs during Q4 2014 as our copper concentrate  grades decreased to 25.8%.  We saw our fuel charges decrease during Q4 2014  to an average of $1.00 per litre of diesel fuel delivered.  We hope to see  further decreases in this cost in 2015. 

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8

| **Selected annual financial  information** |
|--------------------------------------------|

The following annual  financial information for the years ended December 31, 2014, 2013, and 2012,  were prepared in accordance with International Financial Reporting Standards  (IFRS).  

  Fiscal years ended: 

| In US $000s (except per  share data)                                          |   | December 31,2014 |   |   | December 31,     2013(1) |   |   | December 31,2012 |   |
|-------------------------------------------------------------------------------|--------|------------------|--------|--------|--------------------------|--------|--------|------------------|--------|
| Revenues                                                                      | $      | 555,012          |   | $      | 155,698                  |   | $      | 566,039          |   |
| Operating income                                                              |   | 295,337          |   |   | 71,395                   |   |   | 405,674          |   |
| Net  income for the year                                                      |   | 166,565          |   |   | 29,254                   |   |   | 246,696          |   |
|                                                                          |   |             |   |   |                     |   |   |             |   |
| Net  income attributable to Nevsun shareholders                               | $      | 93,394           |   | $      | 12,857                   |   | $      | 145,262          |   |
| Earnings  per share attributable to Nevsun shareholders – basic         |   | 0.47             |   |   | 0.06                     |   |   | 0.73             |   |
| Earnings  per share attributable to Nevsun shareholders – fully diluted |   | 0.47             |   |   | 0.06                     |   |   | 0.72             |   |
|                                                                          |   |             |   |   |                     |   |   |             |   |
| Cash                                                                          | $      | 442,418          |   | $      | 302,724                  |   | $      | 396,404          |   |
| Working  capital                                                              | $      | 519,980          |   | $      | 419,057                  |   | $      | 394,444          |   |
| Total  assets                                                                 | $      | 986,686          |   | $      | 870,860                  |   | $      | 873,696          |   |
| Total  non-current liabilities                                                | $      | 91,102           |   | $      | 53,802                   |   | $      | 38,717           |   |
| Dividends  declared, per share                                                | $      | 0.145            |   | $      | 0.140                    |   | $      | 0.100            |   |

| 1) | Copper commercial   operations commenced December 1, 2013.  Figures for the year ended December   31, 2013 only reflect gold phase operating results. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

  The following variances result when comparing operations  for the year ended December 31, 2014, with the same period of the prior year  (in US$000s, except per pound and per ounce data).  Most of the variances for  revenues, operating expenses, royalties and depreciation and depletion are  attributable to the Company’s transition from a gold producer through  mid-2013 to a copper producer thereafter.  Another important factor impacting  the results was the determination that the Company had achieved commercial  production for the copper phase on December 1, 2013. 

***Revenues***

******The Company’s revenues for the year ended December 31,  2014, of $555,012 (2013 – $155,698) are comprised of copper concentrate sales  of $544,232 (2013 - $nil), copper concentrate by-product sales of $60,323  (2013 - $nil), and other revenue of $5,467 (2013 - $2,008), net of copper concentrate  treatment and refining charges of $55,010 (2013 - $nil).  Other revenue  consists of sales of high-grade precious metals ore directly to buyers and  price adjustments on those sales. Revenues for the year ended December 31,  2014, included sales of 180.2 million payable pounds of copper (2013 – nil)  at an average realized price of $3.02 per pound (2013 - $nil).  During 2014, 4.5  million pounds of pre-commercial production receipts were credited against  mineral property, plant and equipment, net of costs of sale.  Copper  concentrate revenue for the year ended December 31, 2014, is net of $29,406 (2013  – $nil) of provisional and final pricing and physical quantity adjustments.   Copper concentrate by-product revenues for the year ended December 31, 2014,  included sales of 27,000 ounces of gold at an average realized price of $1,216  per ounce and 1,523,900 ounces of silver at an average realized price of $18.04  per ounce.  Revenues on gold doré sales for the year ended December 31, 2013,  of $153,690 included sales of 96,700 ounces of gold at an average realized  price of $1,471 per ounce, and 507,935 ounces of silver at an average  realized price of $24.63 per ounce. 

***Operating expenses***

******The Company recorded operating expenses for the year  ended December 31, 2014, of $194,522 (2013 - $62,848).  The increase from the  comparative period results from the Company having been in pre-commercial  production for a large portion of the year. The Company expects total  operating costs to be higher during the copper phase.  Consistent with prior  disclosure, our per-unit costs on a per pound basis (see page 19 for a  reconciliation of our C1 cash cost per payable pound sold) increased  throughout 2014 but remain in the lowest quartile for copper producers.  The  reason for the increase in costs is primarily due to expected lower copper  feed grade and reduced by-product credits.  Included in operating expenses  was a Q3 2014 charge of $4,274 for material and supplies inventory  adjustments for obsolescence and freight cost estimates. A charge of $2,808  was recorded during 2013 for a materials and supplies adjustment for  obsolescence, comprised mainly of gold phase chemical processing reagents. 

----

 

9

***Royalties ***

The Company incurs a 3.5% royalty on base metal  shipments and a 5% precious metals royalty on its gold and silver sales.  In the  year ended December 31, 2014, royalty expenses of $25,072 (2013 - $8,070)  were recorded. The increase in royalties is attributable to higher sales  recorded during 2014. Royalties are payable at the time concentrate shipments  leave the mine, which precedes the revenue recognition point, and are based  on estimated values of contained metal at the time of shipment without  subsequent adjustment. 

***Depreciation and depletion ***

******In the year ended December 31, 2014, depreciation and  depletion of $40,081 (2013 - $13,385) was recorded. The increase in this  amount is attributable to a higher value of depreciable assets, primarily  related to the addition of the copper phase assets, as well as to higher  units of production over which depreciation and depletion are recognized. 

***Administrative***

******Administrative costs comprising head office costs  including salaries and employee benefits, share-based payments, business  development and other general administrative expenses for the year ended  December 31, 2014, were $17,363, up from $14,537 in the year ended December  31, 2013. Salaries and employment benefits, including share-based payments  and long-term incentive compensation, increased from $8,732 for the year  ended December 31, 2013 to $11,941 for the year ended December 31, 2014. The  increase relates to employee additions as well as higher short-term and  long-term incentive compensation  based on the Company’s absolute and relative share price  performance versus its peer group. Other administrative expenses increased slightly  from $3,893 during the year ended December 31, 2013, to $3,931 during the  year ended December 31, 2014, as a result of higher travel, CSR and general  office expenses offset by fewer consultants used in our business development  activities. 

***Finance costs***

Finance costs for the year ended December 31, 2014,  total $1,906 and are comprised of $1,203 of accretion expense related to the  Company's reclamation liability, and a one-time charge in Q2 2014 of $703 related  to the loan to a supplier. Finance costs of $882 for the year ended December  31, 2013, are comprised entirely of accretion expense. 

***Finance income***

******Finance income for the year ended December 31, 2014,  totals $2,974 (2013 – $3,464) and is comprised of net interest accrued on  amounts receivable from the non-controlling interest of $2,621 (2013 –  $3,314), and other finance income of $353 (2013 – $150), comprised  predominantly of interest earned on cash and cash equivalent balances. 

***Income taxes***

******Income tax expense for the year ended December 31, 2014,  of $112,477 (2013 - $30,186) was comprised of current income tax expense of $85,759  (2013 - $20,702) related to the BMSC mining operations and deferred income  tax expense of $26,718 (2013 - $9,484). 

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10

| **Selected quarterly financial  information** |
|-----------------------------------------------|

Selected  consolidated financial information from continuing operations for the most  recent eight quarters, prepared in accordance with IFRS, are presented  below:  

| In US  $000s (except per share data)                                           |   | **2014  4th** |   |   | **2014  3rd** |   |   | **2014  2nd** |   |   | **2014  1st** |   |
|--------------------------------------------------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
| Revenues                                                                       | $      | 138,695       |   | $      | 147,943       |   | $      | 169,223       |   | $      | 99,151        |   |
| Operating  income                                                              |   | 70,323        |   |   | 78,076        |   |   | 94,955        |   |   | 51,983        |   |
| Net  income for the period                                                     |   | 40,098        |   |   | 44,599        |   |   | 53,688        |   |   | 28,180        |   |
|                                                                           |   |          |   |   |          |   |   |          |   |   |          |   |
| Net  income attributable to Nevsun shareholders                                |   | 21,878        |   |   | 25,548        |   |   | 30,528        |   |   | 15,440        |   |
| Earnings  per share attributable to Nevsun shareholders – basic          |   | 0.11          |   |   | 0.13          |   |   | 0.15          |   |   | 0.08          |   |
| Earnings  per share attributable to Nevsun shareholders – diluted        |   | 0.11          |   |   | 0.13          |   |   | 0.15          |   |   | 0.08          |   |
|                                                                           |   |          |   |   |          |   |   |          |   |   |          |   |
| In US $000s (except per share data)                                            |   | **2013  4th** |   |   | **2013  3rd** |   |   | **2013  2nd** |   |   | **2013  1st** |   |
| Revenues                                                                       | $      | 4,000         |   | $      | 25,783        |   | $      | 54,785        |   | $      | 71,130        |   |
| Operating  income                                                              |   | 587           |   |   | 12,980        |   |   | 20,049        |   |   | 37,779        |   |
| Net  income (loss) for the period                                              |   | (4,860        | )      |   | 4,306         |   |   | 10,305        |   |   | 19,503        |   |
|                                                                           |   |          |   |   |          |   |   |          |   |   |          |   |
| Net  income (loss) attributable to Nevsun shareholders                         |   | (4,212        | )      |   | 1,170         |   |   | 5,274         |   |   | 10,625        |   |
| Earnings  (loss) per share attributable to Nevsun shareholders – basic   |   | (0.03         | )      |   | 0.01          |   |   | 0.03          |   |   | 0.05          |   |
| Earnings (loss) per share attributable  to Nevsun shareholders – diluted |   | (0.03         | )      |   | 0.01          |   |   | 0.03          |   |   | 0.05          |   |

The following variances result when comparing operations  for the three months ended December 31, 2014, with the same period of the  prior year (in US $000s, except per ounce and per pound data).  Most of the  variances for revenues, operating expenses, royalties and depreciation and  depletion are attributable to the Company completing the mining of the gold  oxide phase by June 30, 2013, and being in pre-commercial production for most  of Q4 2013, as compared to being in full copper production phase during Q4  2014.  Accordingly, the explanations of the variances from the comparative  period are not as useful as in prior periods. 

***Revenues***

******The Company’s Q4 2014 revenues of $138,695 (Q4 2013 - $4,000)  are comprised of copper concentrate sales of $141,739 (Q4 2013 - $nil) and  copper concentrate by-product sales of $14,143 (Q4 2013 - $nil), net of  copper concentrate treatment and refining charges of $17,187 (Q4 2013 - $nil).  Revenues included sales of 49.4 million payable pounds of copper (Q4 2013 – 30.6  million) at an average realized price of $2.87 per pound (Q4 2013 - $3.20).   Copper concentrate revenue is net of $7,832 of provisional and final pricing  and physical quantity adjustments.  Copper concentrate by-product revenues  for Q4 2014 included sales of 7,000 ounces of gold at an average realized  price of $1,164 per ounce and 385,000 ounces of silver at an average realized  price of $15.57 per ounce. Q4 2013 revenue of $4,000 included sales of 1,200  ounces of gold at an average realized price of $1,246 per ounce, and 5,706  ounces of silver at an average realized price of $19.41 per ounce.  Q4 2014  revenues were impacted by the decrease in copper prices during the quarter  culminating with the quarter end closing price of copper of $2.87 per pound.   Copper concentrate treatment and refining charges, which are accounted for as  a reduction of revenues, increased slightly on a per pound basis reflecting a  tightening in the market.  Copper concentrate by-product credits decreased on  a per pound basis as expected in the mine plan (see page 19 for a  reconciliation of C1 cash cost sold) and due to decreased by-product metal  prices. 

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11

***Operating expenses***

******The Company recorded operating expenses for Q4 2014 of $49,807  (Q4 2013 - $2,521).  The increase from the comparative period is due to the  Company having been in pre-commercial production for two months in Q4 2013,  and commercial copper phase operating costs having not yet been realized.   The Company expects total operating costs to be higher during the copper  phase than during the gold phase.  Q4 2014 operating expenses and selling  costs have increased slightly on a per-pound of payable copper sold basis  (see page 19 for a reconciliation of C1 cash cost sold) with prior quarters  as copper feed grades have decreased and treatment and refining charges have  increased.  

***Royalties***

******The Company incurs a 3.5% royalty on base metal  shipments and a 5% precious metals royalty on its gold and silver sales.  In Q4  2014 royalty expenses of $7,201 (Q4 2013 - $320) were recorded.  In Q4 2014,  the Company incurred higher royalties as compared to Q4 2013 as a result of having  recognized commercial sales in the current quarter, as compared to the  comparative quarter when royalties were capitalized.  Royalties are payable  at the time concentrate shipments leave the mine, which precedes the revenue  recognition point, and are based on estimated values of contained metal at  the time of shipment without subsequent adjustment. 

***Depreciation and depletion***

******In Q4 2014 depreciation and depletion of $11,364 (Q4  2013 - $572) was recorded. Depreciation is primarily calculated using the  units-of-production method with copper pounds produced and ore tonnes mined  as the basis for the calculation.  The increase from Q4 2013 to Q4 2014 is  the result of depreciation and depletion incurred during Q4 2013 having been  capitalized as it was incurred during the pre-commercial production phase. 

***Administrative:***

******Administrative costs in Q4 2014 were $4,838, up from $4,577  in Q4 2013.  Salaries and employees benefits including long-term incentive compensation  increased from $3,034 in Q4 2013 to $3,445 in Q4 2014, consistent with the  overall trend primarily due to higher long-term incentive compensation based on the  Company’s absolute and relative share price performance versus its peer group.  Business development expenses were $786 for Q4 2014 as compared to $403 in Q4  2013. Other administrative costs decreased from $1,140 in Q4 2013 to $607 in Q4  2014. 

***Finance costs***

******Finance costs in Q4 2014 of $384 are comprised entirely  of accretion expense on the Company's reclamation liability. Finance costs of  $270 recorded during Q4 2013 also related only to accretion expense on the  Company's reclamation liability. 

***Finance income***

******Finance income for Q4 2014, totals $756 (Q4 2013 – $959)  and is comprised of net interest accrued on amounts receivable from the  non-controlling interest of $603 (Q4 2013 – $892), and other finance income  of $153 (Q4 2013 – $67), comprised predominantly of interest earned on cash  and cash equivalent balances. 

***Income taxes***

******Income tax expense for Q4  2014 of $25,759 (Q4 2013 - $1,559) is comprised of current income tax expense  of $15,954 (Q4 2013 - $7,085) related to the BMSC mining operations and  deferred income tax expense of $9,805 (Q4 2013 – recovery of $5,526). 

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12

| **Reconciliation  of realized copper price** |
|----------------------------------------------|

| in U.S. $000s (except  pounds of payble copper and per payable pound data)                                              |   | Q4 2014 |   |   | 2014                                       |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------------------------------------------|--------|
| Total revenues                                                                                                          | $      | 138,695 |   | $      | 555,012                                    |   |
|                                                                                                                    |   |    |   |   |                                       |   |
| Add (less):                                                                                                             |   |    |   |   |                                       |   |
|      Copper concentrate  by-product sales                                                      |   | (14,143 | )      |   | (60,323                                    | )      |
|      Other revenues                                                                            |   | -       |   |   | (5,467                                     | )      |
|      Treatment and refining  charges                                                           |   | 17,187  |   |   | 55,010                                     |   |
|      Provisional  and final pricing  and quantity adjustments on copper concentrate sales |   | 7,832   |   |   | 29,406                                     |   |
| Copper concentrate revenues,  before pricing adjustments                                                                | $      | 149,571 |   | $      | 573,638                                    |   |
| Pounds of payable copper  sold (millions)                                                                               |   | 49.4    |   |   | 180.2                                      |   |
| Realized copper price  per payable pound sold, before pricing adjustments                                               | $      | 3.03    |   | $      | 3.18                                       |   |
| Provisional and final pricing  and quantity adjustments per payable pound sold                                          | $      | (0.16   | )      | $      |        (0.16 | )      |
| Realized copper price  per payable pound sold                                                                           | $      | 2.87    |   | $      | 3.02                                       |   |
| LME average copper price per pound                                                                                      | $      | 2.98    |   | $      | 3.10                                       |   |

| (1) | Pounds of payable copper sold during the year ended December 31, 2014, do not   include 4.5 million pounds of copper sold during the pre-commercial   production phase. Receipts from pre-commercial production sales were credited   against mineral property, plant and equipment, net of cost of sales. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Liquidity and  capital resources** |
|--------------------------------------|

The Company’s cash and cash  equivalents at December 31, 2014, was $442,418 (December 31, 2013 –  $302,724).  Working capital, including cash and cash equivalents, was $519,980  (December 31, 2013 – $419,057).  Accounts receivable of $32,188 (December 31,  2013 - $57,180) include one shipment for which revenue was recognized but  provisional payments were not yet received by year end (December 31, 2013 –  two shipments). 

  During the year  ended December 31, 2014, cash generated from operating activities was  $306,480, compared to $76,172 in the prior year. The Company paid $88,983 in  income taxes for the year ended December 31, 2014 (2013 - $60,484). 

  The Company used $4,258 in investing activities during the year ended December 31, 2014 (2013 – used  $69,206).  The Company spent $55,118 on mineral properties, plant and  equipment compared to $133,423 during the prior year. Included in these  expenditures is $5,668 spent on exploration and evaluation work during the year ended December 31, 2014, compared to  $15,720 in the prior year.  Expenditures on mineral properties, plant and  equipment were offset in the year ended December 31, 2014, in part by $50,936  (2013 - $71,255) of proceeds received on the sale of pre-commercial  production copper concentrate inventory during the year. Changes in non-cash  working capital related to investing activities increased from a credit of  $38 during the year ended December 31, 2013, to an increase of $2,124 during  the year ended December 31, 2014. 

  The Company used $73,545 in its financing activities in  2014, compared to $40,162 in the prior year.  During the year ended December  31, 2014, the Company paid dividends to Nevsun shareholders of $34,770 (2013  - $23,880), and distributed $76,750 to the non-controlling interest (2013 - $nil).   The increase in dividends to Nevsun shareholders from 2013 is due to  dividends being declared on a quarterly basis for 2014. The Company also  received $37,332 (2013 – loaned $16,750) from the non-controlling interest,  comprised of a partial repayment of the purchase price settlement consisting  of principal of $17,089 and interest of $2,811 (2013 - $nil and $nil), and  full repayment of a loan made in 2013 of $16,750 plus interest of $682. 

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13

| **Commitments and contractual obligations** |
|---------------------------------------------|

As of December 31, 2014, the  Company had the following contractual obligations:  

| In U.S. $000s                                     |   | Total   |   |   | Less than1 year |   |   | 1-3 years |   |   | 3-5 years |   |   | Over 5 years |   |
|---------------------------------------------------|--------|---------|--------|--------|-----------------|--------|--------|-----------|--------|--------|-----------|--------|--------|--------------|--------|
| Purchase commitments and  contractual obligations | $      | 45,813  |   | $      | 45,813          |   | $      | -         |   | $      | -         |   | $      | -            |   |
| Mine closure and reclamation                      |   | 50,400  |   |   | 600             |   |   | 1,400     |   |   | 1,200     |   |   | 47,200       |   |
| Minimum operating lease  payments                 |   | 4,971   |   |   | 4,722           |   |   | 249       |   |   | -         |   |   | -            |   |
| Total contractual obligations                     | $      | 101,184 |   | $      | 51,135          |   | $      | 1,649     |   | $      | 1,200     |   | $      | 47,200       |   |

The Company also has an environmental bond to cover  remediation liabilities for Bisha in the amount of $15,000 at a cost of 1%  per annum.

The above table includes the Company’s  estimated obligation for mine closure and reclamation following completion of  mining activities at the Bisha Mine and is based on the level of known disturbance  at the reporting date, known legal requirements and estimates prepared by  Management with input from a third party specialist.  The undiscounted amount  of the estimated obligation for reclamation and closure of the operations,  adjusted for estimated inflation of 3%, is approximately $50,400.  While the  Company has recorded the fair value for the mine closure and reclamation obligation  using a pre-tax discount rate of 4.57%, the amounts  reflected in the above table represent the undiscounted amounts estimated at  the time of payment.  Ongoing reclamation costs incurred as part of normal  mining operations are expensed as incurred. 

| **Off-balance sheet arrangements** |
|------------------------------------|

The Company has not entered into any specialized  financial arrangements to minimize its commodity price risk, investment risk  or currency risk.  There are no off-balance sheet arrangements. 

| **Contingencies** |
|-------------------|

The Araya Lawsuit 

  A lawsuit was filed in the Supreme Court of British  Columbia against the Company (the "Araya Lawsuit") on November 20,  2014, by three plaintiffs who claim to have once worked with a local  sub-contractor at the Bisha Mine.  The plaintiffs claim that the Company  is legally responsible for breaches of customary international law and British  Columbia law for conduct allegedly engaged in by the local sub-contractor and  the Eritrean Military.  The plaintiffs are also claiming the right to  bring the action in a representative capacity on behalf of certain persons  who they allege were forced to work at the Bisha Mine (the “Group  Members”).  The plaintiffs claim general, aggravated and punitive  damages for themselves and for the Group Members.  No amount of damages is  required to be quantified by the plaintiffs at this time.  No trial date  has been set.

It is not possible at this time to estimate the outcome  of the Araya Lawsuit.  The Company denies the allegations and will  vigorously defend itself in this matter.  No amounts have been recorded  for any potential liability arising from this matter, as the Company cannot  reasonably predict the outcome. 

  Putative class action complaints 

  During May 2014 and July 2014 the Company settled with  United States and Canadian plaintiffs, respectively, two related securities  class actions initiated during 2012.  Settlement agreements release the  Company and all its related parties from any claims described in these class  actions.  The Canadian and U.S. settlements received final court approval on October  6, 2014 and January 22, 2015, respectively.  Both settlements were funded  entirely by the Company’s insurance carriers. 

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14

| **Outstanding share data** |
|----------------------------|

As of February 25,  2015, the Company had 199,657,802 shares and 12,177,000  options issued and outstanding. 

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

The following describes the use of  financial instruments and types of risks that the Company is exposed to and  its objectives and policies for managing such risks: 

***Market risk***

******Price risk:  The Company is, or will be, subject to  price risk from fluctuations in market prices of gold, copper and other  metals.  As discussed above in respect of metals in concentrate, there is a  time lag between the time of initial payment on shipment and final settlement  pricing, and changes in the price of gold, copper and other metals during  this period impact the Company’s revenues and working capital position.  The  Company’s policy is not to hedge precious metals doré or base metal  concentrate sales.  Accordingly, as at December 31, 2014, and as of the date  of this MD&A, the Company has not entered into any hedge contracts or  other financial arrangements to minimize its commodity price risk. 

  Sales of copper concentrate are recognized on a  provisional pricing basis when risks and rewards transfer 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. 

  Fuel price risk:  Fuel consumption  comprises a significant portion of the Company’s operating expenses and the  Company is therefore subject to fuel price risk on fluctuations of the market  price of diesel. Based on an estimated 40 million litres of diesel fuel used  annually, a $0.10 change in the price per litre of fuel would have a $4  million impact on earnings. 

  Currency risk:  Currency risk is the risk that the fair  values or future cash flows of the Company’s financial instruments will  fluctuate because of changes in foreign exchange rates.  Exchange rate  fluctuations may affect the costs that the Company incurs in its operations.   The Company’s functional currency is the United States dollar, and while  metals sales are in U.S. dollars, certain of the Company’s costs will be  incurred in other currencies, namely the Eritrean nakfa, Canadian and  Australian dollars, Euro and South African rand.  Additionally, the Company  also holds cash and cash equivalents that are denominated in currencies that  are subject to currency risk.  Accounts receivable and other current and  non-current assets not denominated in US dollars relate to goods and services  taxes, income taxes and value-added taxes.  

  The Eritrean nakfa is directly tied to the US dollar.   At December 31, 2014, net financial assets (liabilities) denominated in  Canadian dollars are $(6,753), South African rand are $136, Australian  dollars are $(166) and Euros are $(1,825).  A 10% strengthening of the U.S.  dollar against these currencies at December 31, 2014, with all other  variables held constant, would have resulted in an estimated gain on the  Canadian dollar denominated net financial liabilities of $675, an estimated loss  on South African rand denominated net financial assets of $14, an estimated  gain on the Australian dollar denominated net financial liabilities of $17,  and an estimated gain on the Euro denominated net financial liabilities of $182.   As a result, management does not consider currency risk to be significant. 

***Credit risk***

******Financial instruments that potentially subject the  Company to credit risk consist of cash and cash equivalents, trade  receivables, and due from non-controlling interest.  In order to manage  credit risk, the Company deposits cash and cash equivalents kept in highly  liquid instruments with high credit quality financial institutions.  Such  instruments are managed by independent financial managers with ultimate  oversight by the Company.  Given the strong credit ratings of these  institutions, management does not expect any counterparty to fail to meet its  obligations. Additionally, a high percentage of the funds are maintained in  accounts outside of Africa.

----

 

15

As at December 31, 2014, the Company’s credit risk  related to the recovery of trade accounts receivable, including receivables  of $19,403 related to copper concentrate sales due from eight customers.

Copper concentrate sales started in the fourth quarter  of 2013 and are subject to credit risk related to trade receivables from the  sale of metals in concentrate.  The Company tries to limit credit risk  exposure on sales of concentrate by selling its product to large,  international purchasers with high credit ratings, and requiring purchasers  to issue letters of credit with high credit quality financial institutions to  support such purchases.  Additionally, the Company maintains separate and  sufficient insurance and requires the transporters of its concentrates to  carry sufficient insurance to prevent loss during transportation. 

 The Company does not consider credit risk associated  with the recovery of value added taxes (VAT) and other receivables, which at  December 31, 2014, totaled $555, to be a significant risk. 

  The Company is also subject to credit risk related to  due from non-controlling interest, which at December 31, 2014, was $48,483.   Due from non-controlling interest is collected from ENAMCO with collection  terms determined by cash flow from the Bisha Mine with a guarantee from the  State of Eritrea.  Management expects that cash flow will be sufficient to  allow collection in full from the non-controlling interest and, as a result,  credit risk on exposure on due from non-controlling interest is not  considered to be a significant risk. 

***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.  This approach includes a  rigorous planning and budgeting process, which is reviewed and updated on a  regular basis, to help determine the funding requirements to support the  Company’s current operations and expansion and development plans and by managing  its capital structure. 

 In the opinion of management, the working capital at  December 31, 2014, of $519,980, together with future cash flows from  operations, is sufficient to support the Company’s operations and expansion  plans. 

***Fair value versus carrying amounts***

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

| **Proposed transactions** |
|---------------------------|

The Company continually reviews opportunities for  growth, however, there are no proposed asset or business acquisitions or  dispositions currently under offer. 

| **Use of judgements and  estimates in applying critical accounting policies** |
|-------------------------------------------------------------------------------|

The Company's consolidated  financial statements are prepared in accordance with IFRS as issued by the  International Accounting Standards Board (IASB).  The significant accounting  policies applied and recent accounting pronouncements are described in Note 3  and Note 4 to the Company's annual consolidated financial statements,  respectively. 

***Judgements***

  The critical judgements that the Company’s management  has made in the process of applying the Company’s accounting policies, apart  from those involving estimation uncertainty, that have the most significant  effect on the amounts recognized in the Company’s consolidated financial  statements are as follows: 

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16

*Achievement of commercial production*

  Costs incurred to construct and develop mineral  properties, plant and equipment, including directly attributable costs of  testing, 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 the 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. 

*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. 

*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. 

***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: 

*Reserve estimates including life of mine plan*

  The Company estimates its ore reserves and mineral  resources based on information compiled by experts. 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.

 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.

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17

*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. 

*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. 

*Fair value of embedded derivative*

  The value of copper concentrate trade receivables is  measured using quoted forward market prices as at the balance sheet date that  correspond to the settlement date of the provisional pricing period for the  estimated metals contained within the copper concentrate.  Fluctuations in  the underlying market price of copper, metal content and concentrate weight  can cause significant changes to the ultimate final settlement value of the  receivables and the final revenue recorded can vary significantly as a  result. 

*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.

 Importance is given 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. 

*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. 

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| **Disclosure controls and  procedures** |
|-----------------------------------------|

The Company’s management, with the participation of the  Chief Executive Officer and Chief Financial Officer, is responsible for  establishing and maintaining the Company’s disclosure controls and  procedures.  Disclosure controls and procedures are designed to provide  reasonable assurance that information required to be disclosed in the Company’s  annual filings, interim filings and other reports filed or submitted is  recorded, processed, summarized and reported, within the appropriate time  periods and is communicated to senior management, including the Chief  Executive Officer and Chief Financial Officer on a timely basis so that the  appropriate decisions can be made regarding public disclosures.

 The Chief Executive Officer and Chief Financial Officer,  after participating with the Company’s management in evaluating the  effectiveness of the Company’s disclosure controls and procedures have  concluded that as of the end of the period covered by this report, the  Company’s disclosure controls and procedures were effective. 

| **Changes in internal control over financial  reporting** |
|----------------------------------------------------------------|

The Company’s management, with the participation of the  Chief Executive Officer and Chief Financial Officer, is responsible for  establishing and maintaining adequate internal control over financial  reporting.  The 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 IFRS.  The Company’s internal control over  financial reporting includes those policies and procedures that: 

-     pertain to the maintenance of records that, in    reasonable detail, accurately and fairly reflect the transactions and    dispositions of assets of the Company;
- rovide reasonable assurance that transactions    are recorded as necessary to permit preparation of financial statements in    accordance with IFRS, and that the Company’s receipts and expenditures are    being made only in accordance with authorizations of management and the    Company’s directors; and
- rovide 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    Company’s consolidated financial statements.

The Company’s management, with the participation  of the Chief Executive Officer and Chief Financial Officer, assessed the  effectiveness of the Company’s internal control over financial reporting using  the criteria set forth in the *Internal Control – Integrated Framework* (2013)  issued by the Committee of Sponsoring Organizations of the Treadway  Commission.  Based on this assessment, management concluded that the  Company’s internal control over financial reporting was appropriately designed  and operating effectively as of December 31, 2014. 

  KPMG LLP, the Company's Independent Registered Public  Accountants, have audited the annual consolidated financial statements of the  Company for the year ended December 31, 2014, and have also issued a report  on the internal controls over financial reporting based on the criteria  established in the Internal Control - Integrated Framework (2013) issued by  the Committee of Sponsoring Organizations of the Treadway Commission. 

| **Limitations of controls and  procedures** |
|---------------------------------------------|

The Company’s management, including the Chief Executive  Officer and the Chief Financial Officer, believe that any disclosure controls  and procedures or internal controls over financial reporting, no matter how  well conceived and operated, can provide only reasonable, not absolute,  assurance that the objectives of the control system are met.  Further, the  design of a control system must reflect the fact that there are resource  constraints, and the benefits of controls must be considered relative to  their costs.  Because of the inherent limitations in all control systems,  they cannot provide absolute assurance that all control issues and instances  of fraud, if any, within the Company have been prevented or detected.  These  inherent limitations include the realities that judgements in decision-making  can be faulty, and that breakdowns can occur because of simple error or  mistake.  Additionally, controls can be circumvented by the individual acts  of some persons, by collusion of two or more people, or by unauthorized  override of the control.  The design of any systems of controls also is based  in part upon certain assumptions about the likelihood of future events, and  there can be no assurance that any design will succeed in achieving its  stated goals under all potential future conditions.  Accordingly, because of  the inherent limitations in a cost effective control system, misstatements  due to error or fraud may occur and not be detected. 

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| **Accounting changes and recent  accounting pronouncements** |
|--------------------------------------------------------------|

In May 2013, the IASB issued IFRIC 21 - *Levies*,  which sets out the accounting treatment for an obligation to pay a levy that  is not an income tax. The interpretation defines the obligating event that  gives rise to the requirement to pay a levy and when a liability should be  recognized. IFRIC 21 is effective for annual periods beginning on or after  January 1, 2014. The application of IFRIC 21 did not have a significant  impact on the Company’s consolidated financial statements. 

  In July 2014, the IASB published IFRS 9 - *Financial  Instruments*, which replaces IAS 39 - *Financial Instruments:   Recognition and Measurement*, the existing guidance of the same name. IFRS  9 includes revised guidance on the classification and measurement of  financial instruments, including a new expected credit loss model for  calculating impairment on financial assets, and the new general hedge  accounting requirements. It also carries forward the guidance on recognition  and derecognition of financial assets from IAS 39.

 IFRS 9 is effective for annual reporting periods  beginning on or after January 1, 2018, and is available for early adoption.  The Company will evaluate the new standard to determine the impact, if any,  it may have on its financial statements. 

  In May 2014, the IASB issued the final revenue standard,  IFRS 15 - *Revenue From Contracts With Customers*, which will replace  IAS 18 - *Revenue*, among other standards that do not currently affect  the Company. The new standard is effective for fiscal years beginning on or  after January 1, 2017, and is available for early adoption. The standard  contains a single model that applies to contracts with customers and two  approaches to recognizing revenue: at a point in time or over time. The new  standard does not apply to insurance contracts, financial instruments or  lease contracts, which fall under the scope of other standards.

 The Company intends to adopt IFRS 15 in its financial  statements for the annual period beginning January 1, 2017. The Company will  evaluate the new standard to determine the impact, if any, it may have on its  financial statements. 

| **Quality assurance** |
|-----------------------|

Mr. Peter Manojlovic, PGeo, and Vice  President Exploration of Nevsun Resources Ltd. is a Qualified Person under  the terms of NI 43-101 and has reviewed the exploration statements of this  MD&A and approved its dissemination. 

| **Non-GAAP  performance measure** |
|-----------------------------------|

This document includes a non-GAAP performance measure  that does not have a standardized meaning prescribed by IFRS. This  performance measure may differ from those used by, and may not be comparable  to such measures as reported by, other issuers.  The Company believes that  this performance measure is commonly used by certain investors, in  conjunction with conventional GAAP measures, to enhance their understanding  of the Company's performance.  The Company uses this performance measure  extensively in our internal decision making process, including to assess how  well the Bisha Mine is performing and to assist in the assessment of the  overall efficiency and effectiveness of the mine site management team.  The  table below provides a reconciliation of this non-GAAP measure to the most  directly comparable IFRS measures as contained within the Company's issued  financial statements. 

C1 cash cost per  payable pound

  C1 cash cost per pound is a non-GAAP measure and  represents the cash cost incurred at each processing stage, from mining  through to recoverable metal delivered to customers, less net by-product  credits.  Royalties are excluded from the calculation of C1 cash cost per  pound.  The costs included in this definition comprise mine site operating  and general and administrative costs, freight, treatment and refining  charges, less by-product credits.  By-product credits are an important factor  in determining the C1 cash costs per pound.  The Company produces by-product  metals, gold and silver, incidentally to copper production activities.  The  gold and silver are considered to be by-products as they only represent 11%  of total revenues during 2014.  The cash cost per payable pound will vary  depending on the volume of by-product credits and the relative price of the  by-products.  The C1 cash cost per payable pound is calculated by dividing  the total costs by payable copper pounds sold.  The calculation method is consistent  on a period to period basis for purposes of meaningful comparison. 

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|                                                                             |   |   | Q4 2014 |   |   | 2014     |   |
|----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|----------|--------|
| C1 cash cost per payable  pound (U.S. $000s, except per pound amounts)           |   |   | Total   |   |   | perpound |   |   | Total |   |   | perpound |   |
| Pounds of payable copper  sold (millions)(1)                                     |   |   |         |   |   | 49.4     |   |   |  |   |   | 180.2 |   |
| Operating expenses and  selling costs                                            | $      |   | 49,807  |   | $      | 1.01     |   | $ | 194,522 |   | $ | 1.08 |   |
| Add:                                                                             |   |   |    |   |   |     |   |   |   |   |   |   |   |
|      Copper concentrate  treatment and refining charges |   |   | 17,187  |   |   | 0.35     |   |   | 55,010 |   |   | 0.31 |   |
| Less:                                                                            |   |   |    |   |   |     |   |   |   |   |   |   |   |
|      Copper concentrate  by-product credits             |   |   | (14,143 | )      |   | (0.28    | )      |   | (60,323 | ) |   | (0.33 | ) |
|      Selling costs not  related to concentrate sales    |   |   | (90     | )      |   | (0.01    | )      |   | (762 | ) |   | (0.01 | ) |
| Total C1 cash cost(2)                                                            |   | $      | 52,761  |   | $      | 1.07     |   | $ | 188,447 |   | $ | 1.05 |   |

| (1) | Pounds of payable copper during the year ended December 31, 2014, do   not include 4.5 million pounds of copper sold during the pre-commercial   production phase. Receipts from pre-commercial production sales were credited   against mineral property, plant and equipment, net of costs of sale. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Additional information and risk factors** |
|---------------------------------------------|

Additional information relating to the Company,  including risk factors, is discussed in the Company’s 2014 Annual Information  Form and other filings available on the Company’s website at www.nevsun.com and on SEDAR at www.sedar.com. 

| **Forward looking statements** |
|--------------------------------|

This Management’s Discussion and Analysis contains  statements and information concerning anticipated developments in the  Company’s continuing and future operations, the adequacy of the Company’s  financial resources and financial projections.  Forward-looking statements  include, but are not limited to, statements concerning or the assumptions  related to estimates of capital and operating costs, the timing, nature and  extent of future copper and gold production, expanding exploration licenses,  the estimation of mineral reserves and resources, methodologies and models  used to prepare resource and reserve estimates, the realization of mineral  reserve estimates, the conversion of mineral properties to reserves and  resources, the potential to expand resources, reserves and mine life, future  exploration budgets, plans, targets and work programs, capital expenditures  and objectives, anticipated timing of grant of permits, mining and  development plans and activities, construction and production targets and  timetables, grades, processing rates, life of mine, net cash flows, metal  prices, exchange rates, reclamation costs, results of drill programs,  dividend plans and policy, litigation matters, integration or expansion of  operations, requirements for additional capital, government regulation of  mining operations, environmental risks, political risks and uncertainties,  unanticipated reclamation expenses, and other events or conditions that may  occur in the future.

Forward-looking statements are frequently, but not always,  identified by words such as “expects,” “anticipates,” “believes,” “intends,”  “estimates,” “potential,” “possible,” “budget” and similar expressions, or  statements that events, conditions or results “will,” “may,” “could” or  “should” occur or be achieved.  Information concerning the interpretation of  drill results and mineral resource and reserve estimates also may be deemed  to be forward-looking statements, as such information constitutes a  prediction of what mineralization might be found to be present if and when a  project is actually developed, and in the case of mineral reserves, such  statements reflect the conclusion based on certain assumptions that the  mineral deposit can be economically exploited. 

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Forward-looking statements are statements about the  future and are inherently uncertain, and actual achievements of the Company  or other future events or conditions may differ materially from those  reflected in the forward-looking statements due to a variety of risks,  uncertainties and other factors including, without limitation, the risks more  fully described in the Company’s 2014 Annual Information Form and other  filings.

Although the Company has attempted to identify important  factors that could cause actual results to differ materially from those contained  in forward-looking statements, there may be other factors that cause results  not to be as anticipated, estimated or intended. The Company’s  forward-looking statements are based on the beliefs, expectations and  opinions of management on the date the statements are made and the Company  assumes no obligation to update such forward-looking statements in the  future, except as required by law.  There can be no assurance that such  statements will prove to be accurate, as actual results and future events could  differ materially from those anticipated in such statements. For the reasons  set forth above, investors should not place undue reliance on forward-looking  statements. 

| **NYSE MKT corporate governance** |
|-----------------------------------|

The Company’s common shares are listed on NYSE MKT.  Section  110 of the NYSE MKT company guide permits NYSE MKT to consider the laws,  customs and practices of foreign issuers in relaxing certain NYSE MKT listing  criteria, and to grant exemptions from NYSE MKT listing criteria based on  these considerations.  A company seeking relief under these provisions is  required to provide written certification from independent local counsel that  the non-complying practice is not prohibited by home country law.  A  description of the significant ways in which the Company’s governance  practices differ from those followed by U.S. domestic companies pursuant to NYSE  MKT standards is posted on the Company’s website at http://www.nevsun.com/corporate/governance/nyse-amex/  and a copy of such description is available by written request made to the  Company. 

| **Cautionary note regarding preparation  of reserves and resources** |
|----------------------------------------------------------------------|

The disclosure in this Management’s Discussion and Analysis  uses mineral resource and mineral reserve classification terms that comply  with Canadian securities laws that differ in certain material respects from  the requirements of United States securities laws.  Disclosure has been made  in accordance with Canadian National Instrument 43-101 – Standards of  Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of  Mining, Metallurgy and Petroleum’s Classification System.  The NI 43-101 is a  rule developed by the Canadian Securities Administrators that establishes  standards for all public disclosure an issuer makes of scientific and  technical information concerning mineral projects. These standards differ  significantly from the disclosure requirements of the SEC.   

  The SEC’s disclosure standards normally do not permit  the inclusion of information concerning “measured mineral resources”,  “indicated mineral resources” or “inferred mineral resources” in documents  filed with the SEC, unless such information is required to be disclosed by  the law of the Company’s jurisdiction of incorporation or of a jurisdiction  in which its securities are traded.  Consequently, mineral resource and  mineral reserve information contained in this AIF is not comparable to  similar information that would generally be disclosed by U.S. companies in  accordance with the rules of the SEC. 

  The SEC’s Industry Guide 7 applies different standards  in order to classify mineralization as a reserve. As a result, the  definitions of proven and probable reserves used in NI 43-101 differ from the  definitions in Industry Guide 7. Under SEC standards, mineralization may not  be classified as a “reserve” unless the determination has been made that the  mineralization could be economically and legally produced or extracted at the  time the reserve determination is made. Accordingly, mineral reserve  estimates contained in this AIF may not qualify as “reserves” under SEC  standards. 

  This Management’s Discussion and Analysis uses the terms  “measured mineral resources”, “indicated mineral resources” and “inferred  mineral resources” to comply with the reporting standards in Canada. The  SEC’s Industry Guide 7 does not recognize these terms and U.S. companies are  generally not permitted to use these terms in documents they file with the  SEC. Investors are cautioned not to assume that any part or all of the  mineral deposits in these categories will ever be converted into SEC defined  mineral “reserves.” Further, “inferred mineral resources” have a great amount  of uncertainty as to their existence and as to whether they can be mined  legally or economically. 

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Therefore, investors are also cautioned not to assume  that all or any part of an inferred mineral resource exists. In accordance  with reporting standards in Canada, estimates of “inferred mineral resources”  cannot form the basis of feasibility or other economic studies, except in  rare cases. In addition, disclosure of “contained ounces” in a mineral  resource estimate is permitted disclosure under NI 43-101 provided that the  grade or quality and the quantity of each category is stated; however, the  SEC normally only permits issuers to report mineralization that does not  constitute “reserves” by SEC standards as in place tonnage and grade without  reference to unit measures.  Accordingly, information concerning descriptions  of mineralization and resources contained in this Management’s Discussion and  Analysis may not be comparable to information made public by US domestic  companies subject to the reporting and disclosure requirements of the SEC. 

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