NEVSUN RESOURCES LTD.

Supplementary Information, Page 1

Reconciliation with United States Generally Accepted Accounting Principles

(Dollar amounts expressed in thousands of United States dollars, except per share amounts)



Years ended December 31, 2005 and 2004







Nevsun Resources Ltd. (the Company) follows generally accepted accounting principles in Canada (Canadian GAAP) which are different in certain respects from those applicable in the United States (U.S. GAAP) and from practices prescribed by the United States Securities and Exchange Commission.  The material measurement differences between Canadian GAAP and U.S. GAAP with respect to the Companys consolidated financial statement are as follows:

(a)

Investments:

Under Financial Accounting Standards No. 115 Accounting for Certain Investments in Debt and Equity Securities (FAS 115), the Companys portfolio of short-term investments would be classified as available-for-sale securities and carried at fair value.  Unrealized holding gains and losses on available-for-sale securities are excluded from operations under U.S. GAAP and reported as a net amount in a separate component of shareholders equity until realized.

Under Canadian GAAP, unrealized losses on short-term investments are charged to operations as incurred and unrealized gains are not recognized.  On a cumulative basis, this difference would decrease total assets and shareholders equity by $17 (2005 - $266).

(b)

Stock-based compensation:

In 2004, FASB issued revised Statement of Financial Accounting Standards 123R (FAS 123R) Share-Based Payment.  This statement clarifies and expands existing guidance in several areas, including measuring fair value, classifying an award as equity or as a liability, and attributing compensation cost to reporting periods.  This amended statement is effective for the Company on January 1, 2006.  The Company is currently evaluating the implications of the adoption of FAS 123R to this reconciliation with U.S. GAAP.

(c)

Variable interest entities:

At December 31, 2004, for U.S. GAAP purposes, the Company adopted FIN 46R, Consolidation of Variable Interest Entities.  Pursuant to FIN 46R, under U.S. GAAP the Company is required to consolidate variable interest entities (VIEs), where it is the entitys Primary Beneficiary.  VIEs are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  The Primary Beneficiary is the party that has exposure to a majority of the expected losses and/or expected residual returns of the VIE.  To December 31, 2005, there has been no impact from the adoption of FIN 46R.  As disclosed in Note 2(n), a similar standard was adopted in Canada in 2005.



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NEVSUN RESOURCES LTD.

Supplementary Information, Page 2

Reconciliation with United States Generally Accepted Accounting Principles

(Dollar amounts expressed in thousands of United States dollars, except per share amounts)



Years ended December 31, 2005 and 2004







(d)  Reconciliation:

The effect of the material measurement differences between Canadian GAAP and U.S. GAAP on the amounts reported in the statements of operations are as follows:



Statements of Operations
      
      2005
      
      
      2004Loss for the year, Canadian GAAP
      $
      (9,852)
      
      $
      (12,452)Adjustment for unrealized holding loss, net of 
           amounts
        realized (a)
      
      (249)
      
      
      121Loss for the year, U.S. GAAP
      
      (10,101)
      
      
      (12,331)Other comprehensive income:Adjustment for unrealized holding loss, net of 
           amounts realized (a)
      
      249
      
      
      (121)Comprehensive loss, U.S. GAAP
      $
      (9,852)
      
      $
      (12,452)Loss per share, basic and diluted, under U.S. GAAP
      $
      (0.12)
      
      $
      (0.16)Weighted average number of thousands common 
           shares
outstanding
      
      84,202,756
      
      
      75,221,220




Accumulated other comprehensive income for U.S. GAAP purposes is $17 (2004 - $266).



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