----

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**ANNUAL INFORMATION FORM**

**FOR THE FISCALYEAR ENDED DECEMBER 31, 2013**

**Dated: March 24, 2014**

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|   |             ANNUAL  INFORMATION FORM - 2013 |
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**TABLE OF CONTENTS**

| **PRELIMINARY NOTES.**                                                                                  | 3  |
|---------------------------------------------------------------------------------------------------------|----|
|      Incorporation of Financial Statements and MD&A.                       | 3  |
|      Currency and Exchange Rates.                                              | 3  |
|      Forward Looking Statements.                                               | 3  |
|      Information Concerning Preparation of Reserve and Resource Estimates.     | 4  |
|      Glossary and Defined Terms.                                               | 6  |
| **CORPORATE STRUCTURE.**                                                                                | 12 |
|      Name and Incorporation.                                                   | 12 |
|      Intercorporate Relationships.                                             | 12 |
| **GENERAL DEVELOPMENT OF THE BUSINESS.**                                                                | 13 |
|      Three Year History.                                                       | 13 |
| **DESCRIPTION OF THE BUSINESS.**                                                                        | 16 |
|      The Bisha Mine.                                                           | 16 |
|      Gold, Silver and Copper Sales.                                            | 16 |
|      Methods of Production.                                                    | 16 |
|      Skill and Knowledge.                                                      | 17 |
|      Employees.                                                                | 17 |
|      Corporate Social Responsibility.                                          | 17 |
| **MINERAL PROPERTIES.**                                                                                 | 19 |
|      Project Description and Location.                                         | 19 |
|      Accessibility, Climate, Local Resources, Infrastructure and Physiography. | 21 |
|      Mineral Property History.                                                 | 23 |
|      Geological Setting.                                                       | 23 |
|      Exploration.                                                              | 23 |
|      Mineralization.                                                           | 25 |
|      Drilling.                                                                 | 27 |
|      Sampling and Analysis.                                                    | 27 |
|      Security of Samples.                                                      | 29 |
|      Mineral Resource Estimate.                                                | 30 |
|      Mineral Reserves.                                                         | 35 |
|      Mining Operations.                                                        | 38 |
|      Metallurgical Test Work and Process Plant Design.                         | 40 |
|      Mine Waste and Water Management.                                          | 41 |
|      Socioeconomic and Environmental Assessment and Approval.                  | 41 |
|      Other Expansion Plans.                                                    | 42 |
|      Exploration and Development.                                              | 42 |
|      Risk Factors.                                                             | 43 |
|      DIVIDENDS.                                                                | 52 |
| **DESCRIPTION OF CAPITAL STRUCTURE.**                                                                   | 52 |
| **MARKET FOR SECURITIES.**                                                                              | 53 |
| **DIRECTORS AND OFFICERS.**                                                                             | 54 |
|      Name, Occupation and Security Holding.                                    | 54 |
|      Cease Trade Orders, Bankruptcies, Penalties or Sanctions.                 | 55 |
|      Conflicts of Interest.                                                    | 56 |
|      Audit Committee.                                                          | 56 |
|      Audit Committee Charter.                                                  | 56 |
|      Independent Advice and Funding.                                           | 57 |
|      Composition of Audit Committee.                                           | 57 |
|      Pre-Approval Policies and Procedures.                                     | 57 |
|      External Auditor Fees.                                                    | 59 |
| **LEGAL PROCEEDINGS AND REGULATORY ACTIONS.**                                                           | 59 |
| **INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS.**                                         | 60 |
| **TRANSFER AGENTS AND REGISTRARS.**                                                                     | 60 |
| **MATERIAL CONTRACTS.**                                                                                 | 60 |
| **NAMES AND INTERESTS OF EXPERTS.**                                                                     | 60 |
| **ADDITIONAL INFORMATION.**                                                                             | 61 |
| **SCHEDULE A: AUDIT COMMITTEE CHARTER.**                                                                | 62 |

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

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**PRELIMINARY NOTES**

**Incorporationof Financial Statements and MD&A**

The following documents are incorporated by referenceand form part of this annual information form (the “Annual Information Form” or“AIF”) which is prepared in accordance with Form 51-102F2 – *AnnualInformation Form*(“Form 51-102F2”).  These documents may be accessed usingthe System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and the Electronic Data GatheringAnalysis and Retrieval (“EDGAR”) at http://www.sec.gov/edgar.shtml: 

|   | Consolidated financial statements for the year ended      December 31, 2013, together with the auditors’ report thereon dated March 24,      2014; and

Management’s Discussion and Analysis (“MD&A”) for    the year ended December 31, 2013 and 2012. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Currency and Exchange Rates**

All dollar amounts in this AIF are expressed in USD,unless otherwise indicated (“USD” denotes United States dollars and “CAD”denotes Canadian dollars).  The following table sets forth the value of the CADexpressed in USDs on December 31 of each year and the average, high and lowexchange rates during the year indicated based on the noon rate of exchange asreported by the Bank of Canada:

| **CADs into********USDs** | **2013** | **2012** | **2011** |
|---------------------------|----------|----------|----------|
| Closing                   | 0.94     | 1.01     | 0.98     |
| Average                   | 0.97     | 1.00     | 1.01     |
| High                      | 1.02     | 1.03     | 1.06     |
| Low                       | 0.93     | 0.96     | 0.94     |

The noon rate of exchange on March 24, 2014, as reported by the Bank of Canada for the conversion of CADs into USDs was CAD$1.00 equals US$0.8915.

For ease of reference, the following factors forconverting metric measurements to imperial equivalents are provided:

| **To Convert from Metric** | **To Imperial**     | **Multiply  by** |
|----------------------------|---------------------|------------------|
| Hectares                   | Acres               | 2.471            |
| Metres                     | Feet                | 3.281            |
| Kilometres                 | Miles               | 0.621            |
| Tonnes                     | Tons (2,000 pounds) | 1.102            |
| Grams/tonne                | Ounces (troy/ton)   | 0.029            |

**Forward-Looking Statements**

This AIFcontains forward-looking statements within the meaning of the United States Private Securities LitigationReform Act of 1995 and applicable Canadian securities legislation concerning anticipated developments in the Company’s continuing andfuture operations in Eritrea and in the putative class action lawsuit, theadequacy of the Company’s financial resources and financial projections. Forward-looking statements include, but are not limited to, statementsconcerning or the assumptions related to estimates of capital and operatingcosts, the timing, nature and extent of future copper and gold production,expanding exploration licenses, theestimation of mineral reserves and resources, 

|   | **3**| Nevsun Resources Ltd. |
|--------|------------------------------|

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methodologies and models used toprepare resource and reserve estimates, the realization of mineral reserveestimates, the conversion of mineralproperties 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, miningand development plans and activities, construction and production targets andtimetables, grades, processing rates, life of mine, net cash flows, metalprices, exchange rates, reclamation costs, results of drill programs, dividendplans and policy, litigation matters, integration or expansion of operations, requirements for additional capital,government regulation of mining operations, environmental risks, politicalrisks and uncertainties, unanticipated reclamation expenses, and other events or conditions that may occur in thefuture.  Forward-looking statements are frequently, but not always, identifiedby words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,”“potential,” “possible,” “budget” and similar expressions, or statements thatevents, conditions or results “will,” “may,” “could” or “should” occur or beachieved.  Information concerning the interpretation of drill results andmineral resource and reserve estimates also may be deemed to be forward-lookingstatements, as such information constitutes a prediction of what mineralizationmight be found to be present if and when a project is actually developed, andin the case of mineral reserves, such statements reflect the conclusion basedon certain assumptions that the mineral deposit can be economically exploited. 

Forward-looking statements arestatements about the future and are inherently uncertain, and actualachievements of the Company or other future events or conditions may differmaterially from those reflected in the forward-looking statements due to avariety of risks, uncertainties and other factors, including, withoutlimitation, the risks more fully described under the Section titled “RiskFactors”. 

Although the Companyhas attempted to identify important factors that could cause actual results todiffer materially from those contained in forward-looking statements, there maybe other factors that cause results not to be as anticipated, estimated orintended. The Company’s forward-lookingstatements are based on the beliefs, expectations and opinions of management onthe date the statements are made and the Company assumes no obligation toupdate such forward-looking statements in the future, except as required bylaw.  There can be noassurance that such statements will prove to be accurate, as actual results andfuture events could differ materially from those anticipated in suchstatements. For the reasons set forthabove, investors should not place undue reliance on forward-looking statements.

**Information ConcerningPreparation of Reserve and Resource Estimates**

The disclosure in this AIF usesmineral resource and mineral reserve classification terms that comply withreporting standards in Canada, and, unless otherwise indicated, all mineralresource and mineral reserve estimates included in this AIF have been preparedin accordance with Canadian National Instrument 43-101 – *Standards ofDisclosure for Mineral Projects*(“NI 43-101”) and the Canadian Institute ofMining, Metallurgy and Petroleum’s Classification System.  The SEC’s disclosurestandards normally do not permit the inclusion of information concerning“measured mineral resources”, “indicated mineral resources” or “inferredmineral resources” in documents filed with the SEC, unless such information isrequired to be disclosed by the law of the Company’s jurisdiction ofincorporation or of a jurisdiction in which its securities are traded. 

The NI 43-101 is a rule developedby the Canadian Securities Administrators that establishes standards for allpublic disclosure an issuer makes of scientific and technical informationconcerning mineral projects. These standards differ significantly from the disclosurerequirements of the SEC set forth in Industry Guide 7. Consequently, mineralresource and mineral reserve information contained in this AIF is notcomparable to similar information that would generally be disclosed by UScompanies in accordance with the rules of the SEC. 

In particular, the SEC’s IndustryGuide 7 applies different standards in order to classify mineralization as areserve. As a result, the definitions of proven and probable reserves used inNI 43-101 differ from the definitions in Industry Guide 7. Under SEC standards,mineralization may not be classified as a “reserve” unless the determinationhas been made that the mineralization could be economically and legallyproduced 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. 

|   | **4**| Nevsun Resources Ltd. |
|--------|------------------------------|

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In addition, this AIF uses theterms “measured mineral resources”, “indicated mineral resources” and “inferredmineral resources” to comply with the reporting standards in Canada. The SEC’sIndustry Guide 7 does not recognize mineral resources and US companies aregenerally not permitted to disclose resources in documents they file with theSEC. Investors are cautioned not to assume that any part or all of the mineraldeposits in these categories will ever be converted into SEC defined mineral“reserves.” Further, “inferred mineral resources” have a great amount ofuncertainty as to their existence and as to whether they can be mined legallyor economically. 

Therefore, investors are also cautioned not to assumethat all or any part of an inferred mineral resource exists. In accordance withreporting standards in Canada, estimates of “inferred mineral resources” cannotform the basis of feasibility or other economic studies, except in rare cases.In addition, disclosure of “contained ounces” in a mineral resource estimate ispermitted disclosure under NI 43-101 provided that the grade or quality and thequantity of each category is stated; however, the SEC normally only permitsissuers to report mineralization that does not constitute “reserves” by SECstandards as in place tonnage and grade without reference to unit measures. Forthe above reasons, information contained in this AIF containing descriptions ofmineral resource and mineral reserve estimates is not comparable to similarinformation made public by US companies subject to the reporting and disclosurerequirements of the SEC.

|   | **5**| Nevsun Resources Ltd. |
|--------|------------------------------|

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**Glossary and Defined Terms**

Unless otherwise defined in this AIF or the context  requires otherwise, certain mining terms and capitalized terms used in this AIF  shall have the following meanings:

| 2003 Phase I Program: | The drilling      program conducted between February and June, 2003. |
|-----------------------|----------------------------------------------------------------------|

| 2012 Technical      Report: | The NI 43-101 technical report on the Bisha Mine titled      “Bisha Polymetallic Operation, Eritrea Africa” with an effective date of August      31, 2012, prepared by AGP . |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2013 Technical      Report: | The NI 43-101 technical report on the Bisha Mine titled      “Bisha Mine NI 43-101 Technical Report” with an effective date of December 31,      2013. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Ag: | Atomic      symbol for silver. |
|-----|--------------------------------|

| AGP: | AGP      Mining Consultants, Inc. |
|------|-----------------------------------|

| AIF: | This      Annual Information Form. |
|------|------------------------------------|

| alteration: | Refers to      process of changing primary rock minerals (such as quartz, feldspar and hornblende)      to secondary minerals (quartz, carbonate, and clay minerals) by hydrothermal      fluids (hot water). |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| arsenic: | Means      in geology, the general term for a grayish-white element having a metallic lustre,      vaporizing when heated with atomic symbol As. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| Assay: | An      analysis of the contents of metals in mineralized rocks. |
|--------|------------------------------------------------------------------|

| Au: | Atomic      symbol for gold. |
|-----|------------------------------|

| Bisha      Feasibility Study: | The feasibility study dated November 15, 2006 on      the Bisha Property prepared by AMEC Americas Limited titled “Bisha Property,      Gash-Barka District, Eritrea”. |
|-------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Bisha Mine: | Refers      to both the Bisha Polymetallic Operation inclusive of Bisha Main Pit, Harena      Pit, and to the Northwest deposit and the Hambok deposit. |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| Bisha Mining      License: | The mining license issued to BMSC in 2008 and valid for 20      years covering an area of 16.5 square kilometres over the Bisha Main and NW      Zone deposits. |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Bisha Property      or Bisha: | The Company’s principal property located in Eritrea in Northeast      Africa. |
|-------------------------------|-------------------------------------------------------------------------------------|

| BMSC: | Bisha      Mining Share Company, an Eritrean entity that owns and operates the Bisha Mine      and is a 60% owned indirect subsidiary of Nevsun with the 40% balance of the      outstanding shares owned by ENAMCO. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Board: | Board      of directors of Nevsun Resources Ltd. |
|--------|--------------------------------------------------|

| chalcopyrite: | A      very common mineral, copper iron sulphide, CuFeS2 , an ore of      copper; copper pyrites. |
|---------------|---------------------------------------------------------------------------------------------------|

| CIL: | A      carbon-in-leach process where soluble complexes of gold and silver attach      (without a chemical reaction) to the surfaces of activated carbon particles. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| CIM: | Canadian      Institute of Mining, Metallurgy and Petroleum. |
|------|--------------------------------------------------------------|

| concentrate: | Powdery      product of high grade ore which has the majority of the waste removed. |
|--------------|-------------------------------------------------------------------------------------|

| Cu: | Atomic symbol for copper. |
|-----|---------------------------|

|   | **6**| Nevsun Resources Ltd. |
|--------|------------------------------|

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| deposit: | Natural      mineralization in the ground in sufficient quantities to warrant further      studies. |
|----------|-----------------------------------------------------------------------------------------------------|

| Diamond drill holes (DDH): | Holes drilled by a      method whereby rock is drilled with a diamond impregnated, hollow drilling bit      which produces a continuous, in-situ record of the rock mass intersected in the      form of solid cylinders of rock which are referred to as core. |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| disseminated: | A texture in      which minerals occur as scattered particles in the rock. |
|---------------|----------------------------------------------------------------------------|

| doré: | A semi-pure      alloy of gold and silver, usually created at the site of a mine; it is then      transported to a refinery for further purification. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| dyke: | An intrusive      tabular body of igneous rock that cuts across the layering or fabric of the      host rock. |
|-------|---------------------------------------------------------------------------------------------------------------|

| EITI: | Extractive      Industries Transparency Initiative. |
|-------|-----------------------------------------------------|

| ENAMCO: | Eritrean      National Mining Corporation, an Eritrean entity owned by the State of Eritrea. |
|---------|----------------------------------------------------------------------------------------------|

| fault: | A      fracture in a rock across which there has been displacement. |
|--------|---------------------------------------------------------------------|

| feasibility study: | A feasibility      study is a comprehensive technical and economic study of the selected      development option for a mineral project that includes appropriately detailed      assessments of realistically assumed mining, processing, metallurgical,      economic, marketing, legal, environmental, social and governmental      considerations together with any other relevant operational factors and      detailed financial analysis, that are necessary to demonstrate at the time of      reporting that extraction is reasonably justified (economically mineable). The      results of the study may reasonably serve as the basis for a final decision by      a proponent or financial institution to proceed with, or finance, the      development of the project. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| flotation: | Milling      process that uses bubbles to capture valuable mineral particles that float to      the surface, thereby separating them from waste which sinks to the bottom. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| geotechnical work: | Tasks that      provide representative data of the geological rock quality in a known volume. |
|--------------------|-----------------------------------------------------------------------------------------------|

| gossan: | An      iron-bearing weathered product overlying a sulphide deposit. It is formed by      the oxidation of sulphides and the leaching-out of the sulphur and most metals,      leaving hydrated iron oxides and rarely sulphates. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| grade: | The      amount of valuable mineral in each tonne of ore, expressed as g/t for precious      metal and as a percentage by weight for other metals such as copper and zinc. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| gravity: | A      methodology using instrumentation allowing the accurate measuring of the      difference between densities of various geological units in-situ. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| g/t: | Grams      per metric tonne. |
|------|------------------------------|

|   | **7**| Nevsun Resources Ltd. |
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| Harena Mining License: | A conditional      license issued to BMSC in 2012 for the Harena deposit and valid for 10 years,      covering an area of 7.5 square kilometres located approximately 9 kilometres      from the Bisha Mine. |
|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| HW Copper Zone: | The Bisha Hanging      Wall Copper Zone. |
|-----------------|------------------------------------------|

| hydrothermal: | Applied to      metamorphic and magmatic emanations high in water content; the processes in      which they are concerned; and the rocks or ore deposits, alteration products,      and springs produced by them. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| IFC: | International      Finance Corporation. |
|------|-----------------------------------------|

| IFC Performance Standards: | IFC Social and      Environmental Performance Standards of April, 2006. |
|----------------------------|-------------------------------------------------------------------------|

| igneous: | A type of      rock that is crystallized from a liquid magma. |
|----------|---------------------------------------------------------------|

| indicated mineral resource: | That part of a mineral resource for which      quantity, grade or quality, densities, shape and physical characteristics can      be estimated with a level of confidence sufficient to allow the appropriate      application of technical and economic parameters, to support mine planning and      evaluation of the economic viability of the deposit. The estimate is based on      detailed and reliable exploration and testing information gathered through      appropriate techniques from locations such as outcrops, trenches, pits,      workings and drill holes that are spaced closely enough for geological and      grade continuity to be reasonably assumed. |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| inferred mineral resource: | That part of a mineral resource for which      quantity and grade or quality can be estimated on the basis of geological      evidence and limited sampling and reasonably assumed, but not verified,      geological and grade continuity. The estimate is based on limited information      and sampling gathered through appropriate techniques from locations such as      outcrops, trenches, pits, workings and drill holes. |
|----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| in-situ: | Natural material or processes prior to      transport. |
|----------|--------------------------------------------------------|

| IRC: | Impact      Review Committee. |
|------|-------------------------------|

| ISO: | International      Organization for Standardization |
|------|-----------------------------------------------------|

| Lerchs-Grossmann      (LG): | A method used to determine the optimal open pit limit within the      ground including the mineralized material,  founded in 3-dimensional graph      theory and relying upon a regular system of blocks which defines the value      (profit, loss) and type (ore, waste) of material contained in the blocks. Each      block receives a positive or negative value representing the dollar value      (profit/loss) that would be expected by excavating and extracting the mineral.      The LG method uses the geologic mineral resource block model for its basis and      requires wall slope constraints as determined by the geotechnical analysis. The      positive and negative block values are derived from metal prices, recoveries,      and operating costs.  LG pit shells are used as design guidance for mineable      pit designs, and to apply the ‘reasonable prospects for economic extraction’      test to mineral resources. |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| lithologic: | Pertaining      to lithology. |
|-------------|-------------------------------|

| lithology: | The study      of rocks, with particular emphasis on their description and classification. |
|------------|--------------------------------------------------------------------------------------------|

| LOM: | Life of      mine. |
|------|--------------------|

|   | **8**| Nevsun Resources Ltd. |
|--------|------------------------------|

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| masl: | Metres      above sea level. |
|-------|------------------------------|

| measured mineral resource: | That part of a mineral resource for which quantity,      grade or quality, densities, shape, physical characteristics are so well      established that they can be estimated with confidence sufficient to allow the      appropriate application of technical and economic parameters, to support      production planning and evaluation of the economic viability of the deposit.      The estimate is based on detailed and reliable exploration, sampling and      testing information gathered through appropriate techniques from locations such      as outcrops, trenches, pits, workings and drill holes that are spaced closely      enough to confirm both geological and grade continuity. |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| mineralization: | An      anomalous occurrence of metal or other commodity of value defined by any method      of sampling (surface outcrops, drill core, underground channels). |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| mineralogic: | Pertaining      to mineralogy. |
|--------------|--------------------------------|

| mineralogy: | The study      of chemistry, crystal structure, and physical (including optical) properties of      minerals. Specific studies within mineralogy include the processes of mineral      origin and formation, classification of minerals, their geographical      distribution, as well as their utilization. |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| mineral reserve: | The      economically mineable part of a measured mineral resource or indicated mineral      resource demonstrated by at least a preliminary feasibility study.  This study      must include adequate information on mining, processing, metallurgical,      economic and other relevant factors that demonstrate, at the time of reporting,      that economic extraction can be justified.  A mineral reserve includes diluting      materials and allowances for losses that may occur when the material is mined. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| mineral      resource: | A concentration or occurrence of diamonds,      natural solid inorganic material, or natural solid fossilized organic material      including base and precious metals, coal and industrial minerals in or on the      earth’s crust in such form and quantity and of such a grade or quality that it      has reasonable prospects for economic extraction. The location, quantity,      grade, geological characteristics and continuity of a mineral resource are      known, estimated or interpreted from specific geological evidence and      knowledge. |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Mining      Agreement: | The mining agreement between BMSC and the Government      of the State of Eritrea dated December, 2007 covering the future development      and operations for the Bisha Property, including all substantive requirements      of international financial institutions. |
|------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Morgoraib River Exploration License: | The exploration      license acquired by the Company from Sanu Resources, a subsidiary of NGEx      Resources, containing 73.1 square kilometres of area located 16 kilometres      southwest of the Bisha Mine. |
|--------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NAG: | Non-acid      generating. |
|------|---------------------------|

| Nevsun or Company: | Nevsun Resources      Ltd. and its wholly and partially owned subsidiaries unless the context      requires otherwise. |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| NSR: | Net      Smelter Return used in mineral resource and reserve calculations is the net      value per tonne of ore, inclusive of all recoveries and costs outside the mine      gate.  It does not include operating costs inside the mine gate. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **9**| Nevsun Resources Ltd. |
|--------|------------------------------|

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| NW Zone: | The northwest polymetallic massive sulphide deposit located two kilometres from the Bisha processing plant within the Bisha Mining License. |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------|

| NYSE MKT: | NYSE MKT LLC. |
|-----------|---------------|

| Ordinary Kriging (OK): | A statistical      method employed when creating a geological block model of interpolation of      geological metal assay data using the spatial correlation structure of the data      in giving the best linear unbiased prediction of the intermediate interpolation      point representing a metal assay value. |
|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ore: | Rock,      generally containing metallic or non-metallic materials, which can be mined and      processed at a profit. |
|------|------------------------------------------------------------------------------------------------------------------------|

| PAG: | Potentially      acid generating. |
|------|-----------------------------------|

| probable mineral reserve: | The economically      mineable part of an indicated mineral resource and, in some circumstances, a      measured mineral resource demonstrated by at least a preliminary feasibility      study.  This study must include adequate information on mining, processing,      metallurgical, economic, and other relevant factors that demonstrate, at the      time of reporting, that economic extraction can be justified. |
|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| proven mineral reserve: | The      economically mineable part of a measured mineral resource demonstrated by at      least a preliminary feasibility study.  This study must include adequate      information on mining, processing, metallurgical, economic, and other relevant      factors that demonstrate, at the time of reporting, that economic extraction is      justified. |
|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| pyrite: | An      iron sulphide mineral (FeS2), the most common naturally occurring sulphide      mineral. |
|---------|--------------------------------------------------------------------------------------------------|

| Qualified Person (QP): | A qualified person as defined in NI 43-101 as an      individual who: |
|------------------------|-----------------------------------------------------------------------|

|   | a) | is an engineer or geoscientist with at      least five years of experience in mineral exploration, mine development or      operation or mineral project assessment, or any combination of these; |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | has      experience relevant to the subject matter of the mineral project and the      technical report; and |
|--------|----|--------------------------------------------------------------------------------------------------------------|

|   | c) | is a      member in good standing of a professional association. |
|--------|----|------------------------------------------------------------------|

| RC drilling: | Reverse      circulation drilling. |
|--------------|------------------------------------|

| reserve: | See      “mineral reserve”. |
|----------|-----------------------------------------|

| resource: | See      “mineral resource”. |
|-----------|------------------------------------------|

| Rights Plan: | Nevsun      Resources Ltd.’s shareholder rights plan dated June 8, 2011. |
|--------------|--------------------------------------------------------------------------------|

| Run of mine (ROM): | Material from a      mine that has not been crushed or screened. |
|--------------------|------------------------------------------------------------------|

| SAG: | Semi-Autogenous      grinding. |
|------|--------------------------------|

| SEC: | United States Securities and Exchange Commission. |
|------|---------------------------------------------------|

| SEIA: | Social      and Environmental Impact Assessment. |
|-------|--------------------------------------------------|

| SEMP: | Social      and Environmental Management Plan. |
|-------|------------------------------------------------|

| sphalerite: | A very      common mineral, zinc sulphide, usually containing some iron and a little      cadmium, (Zn Fe)S: the principal ore of zinc. |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | **10**| Nevsun Resources Ltd. |
|--------|-------------------------------|

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| SRM: | Standard      reference material. |
|------|-----------------------------------|

| strike: | The      direction, or bearing from true north, of a vein or rock formation measured on      a horizontal surface. |
|---------|--------------------------------------------------------------------------------------------------------------------|

| sulphide      (sulfide): | A compound of sulphur (sulfur) and some other      metallic element. |
|--------------------------|----------------------------------------------------------------------|

| supergene: | A word      suggesting an origin literally “from above”. It is used almost exclusively for      processes involving water, with or without dissolved material, percolating down      from the surface. Typical supergene processes are solution, hydration,      oxidation, deposition from solution, reactions of ions in solution with ions in      existing minerals (replacement or enrichment). |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| tailings: | Waste      minerals extracted from ore through various mineral processes and deposited in      an enclosed ground storage area. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------|

| terrane: | A fragment of crustal material formed on,      or broken off from, one techtonic plate and accreted or sutured crust lying on      another plate. |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| TMF: | Tailings      management facility. |
|------|------------------------------------|

| trenching: | The      mechanical or human excavation of ground material to expose material below      surface. |
|------------|---------------------------------------------------------------------------------------------------|

| TSX: | The      Toronto Stock Exchange. |
|------|----------------------------------|

| UTM: | The      Universal Transverse Mercator coordinate system. |
|------|-----------------------------------------------------------|

| vein: | Sheet-like      body of minerals formed by fracture-filling or replacement of the host rock. |
|-------|----------------------------------------------------------------------------------------------|

| VMS: | Volcanic      hosted massive sulphides. |
|------|-----------------------------------------|

| WGS84: | The World      Geodetic System, 1984. |
|--------|---------------------------------------|

| Zn: | Atomic symbol for zinc. |
|-----|-------------------------|

|   | **11**| Nevsun Resources Ltd. |
|--------|-------------------------------|

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**CORPORATE STRUCTURE**

**Name and Incorporation**

Nevsun Resources Ltd. wasincorporated under the laws of the Province of British Columbia under the *CompaniesAct* (British Columbia) on July 19, 1965 under the name of “Hogan MinesLtd.” Since inception, it has undergone four name changes until December 19,1991 when it adopted the name of “Nevsun Resources Ltd.” It is governed by the *BusinessCorporations Act* (British Columbia) and its Articles.  

The head office of Nevsun Resources Ltd. is located at 760- 669 Howe Street, Vancouver, British Columbia, V6C 0B4 and its registered andrecords office is located at 1000 ‐ 840 Howe Street, Vancouver,British Columbia, V6Z 2M1.

**IntercorporateRelationships**

The following diagram explains the intercorporaterelationships among the Company; the name and place of incorporation of each subsidiary;and the percentage of voting securities legally and beneficially owned: 

British Columbia, Canada

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**GENERAL DEVELOPMENT OF THE BUSINESS**

**Three Year History**

Nevsun Resources Ltd. is a British Columbia company listedon the TSX and the NYSE MKT LLC  and is engaged through its wholly and majorityowned direct and indirect subsidiaries in the exploration for, and thedevelopment and production of, mineral resource properties.  The Company’sprincipal property is the Bisha Property and its primary asset is the BishaMine located in Eritrea in North East Africa.  The Company’s major achievementsduring the past three fiscal years include the commencement of commercialproduction of copper at Bisha in December, 2013; the transition to copperproduction and completion of the copper expansion on-time and under budget; theproduction of approximately 784,000 ounces of gold at Bisha from 2011 throughDecember 31, 2013; the commencement of commercial gold production at Bisha in February,2011; maintaining an industry leading safety performance record at Bisha;generating substantial cash flows; declaring and paying semi-annual dividendsto shareholders in 2013, 2012 and 2011; and enhancing its corporate socialresponsibility program initiatives to reflect evolving international standards. 

The most significant activities impacting the Companyduring the three year period ended December 31, 2013 are set out below.  

**2013 Developments**

On January 9, 2014, the Company announced that it had produced92,000 ounces of gold doré plus 20,000 equivalent gold ounces in precious metalconcentrate and 48 million pounds of copper from the Bisha Mine in 2013.  Copperproduction resulted from nearly 100,000 tonnes of copper concentrate produced. Over65,000 tonnes of this concentrate had been shipped in six separate shipments inthe fourth quarter of 2013. The new copper flotation plant continued asuccessful ramp up with a December annualized production rate of 190 millionpounds of copper, copper recovery of 84% and copper concentrate grade of 32%.

On December2, 2013, the Company announced that it reached commercial production of copperwith the successful commissioning of its flotation plant. From initialflotation plant commissioning to commercial production, the operation had producedapproximately 60,000 tonnes of copper concentrate.  In November the plant had achievedover 80% of its targeted metrics of feed grade, recovery rates, and copperproduced in concentrate. It further announced that transportation logisticsfrom site to Massawa port were on track and working well and Bisha made threeocean shipments totalling approximately $60 million in value. Pre-commercialproduction sales proceeds and production costs to-date, including mining,processing and general and administrative costs directly attributable to the copperproject, were capitalized against the build cost.  The build cost of the copperplant and infrastructure at this time was estimated at $110 million, comparedto a budget of $125 million.

On November 18, 2013, the Company announceddiamond drill results from an eight hole 2,713 metre in-fill resourcedefinition drilling program completed in 2013 at the Hambok polymetallicmassive sulphide deposit, located 16 kilometres southwest from the BMSCprocessing plant. A new mineral resource estimate for Hambok was expected to bereleased in early 2014 and would incorporate these results in an updatedmineral reserve and resource statement for BMSC which would also includeupdated mineral reserves and resources for Bisha Main and Harena, and a maidenmineral resource for the NW Zone. 

On November 14, 2013 and May 15, 2013, respectively, theCompany declared semi-annual cash dividends of $0.07 per common share ($0.14per common share annually) which were paid to shareholders on January 15, 2014and July 15, 2013, respectively.

On October 21, 2013, the Companyannounced further diamond drill results from resource definition drilling atthe NW Zone. BMSC completed the resource definition and expansion drillingprogram totaling 216 holes at the NW Zone in May, 2013 and drilled a further 4holes in July and August, 2013.  A total of 18,892 metres of drilling had beencompleted at the NW Zone in 2013. 

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On October 15, 2013, theCompany announced the first shipment of 11,000tonnes of pre-commercial production copper concentrate from the new Bishacopper plant. Commissioning and ramp up in mill throughput continued withcommercial production on track for late 2013 or Q1 2014.

On September 4, 2013, theCompany announced previously unreported assayresults from drilling completed by the previous owner of the Mogoraib RiverExploration License that includes the Hambok mineral deposit.  Bisha had starteda resource definition drilling program at Hambok with expectation that theresults would be included in a mineral resource estimate for Hambok that would bepart of an overall resource and reserve estimate in Q1 2014 for the Bisha areadeposits. 

On July 16, 2013, the Companyannounced the voting results of the Annual and Special Meeting of Shareholderswhich was held on May 14, 2013.  The nominees listed in the management proxycircular for the Annual Meeting of Shareholders were elected as directors ofNevsun – R. Stuart Angus, Clifford T. Davis, Robert J. Gayton, Gary E. German,Gerard E. Munera. A total of 80.47% of outstanding shares were voted. TheAdvance Notice Policy of the Company was adopted by a 99.78% majority of thevotes cast.  The number of directors was set at five, and KPMG LLP wasappointed auditor of the Company.

On June 17, 2013, the Company reportedthatafterclose of trading on June 21, 2013, Nevsun would be removed from NYSEArca Gold Miners Index becauseNevsun’s revenue was switching to majority copper from majority gold during2013. Nevsun has been advised that the Van Eck Gold Miners ETF is required tosell its position in Nevsun since the ETF tracks the index. During March, 2013a similar event occurred when Nevsun was deleted from the Van Eck’s proprietaryMarket Vectors Junior Gold Miners index, at which time the company experiencedvery significant trading volumes and was essentially price neutral.

On June 17, 2013, the Company announcedrevised production guidance of gold production increased to 110,000 ounces  andcopper production revised to 30 to 50 million pounds. The Company alsoannounced the decision to commission the new flotation plant with pyrite sandore to produce a precious metals concentrate and thereby postponing coppersupergene ore flotation.   

On May 23, 2013, the Companyannounced diamond drill results from resource definition drilling at the NWZone. In 2013, 15,890 metres of drilling was completed at the NW Zone.  This wasin addition to 4,325 metres completed in 2011 and 13,520 metres completed in2012.  

On April 18, 2013, the Companyannounced the release of its 2012 corporate social responsibility report whichmay be viewed on the Company website: http://www.nevsun.com/responsibility/reporting/. Thereport was written and released under the Global Reporting Initiative’s G3.1guidelines and self-declaring Application Level C. 

On February21, 2013, the Company announced its planned exploration program for 2013.  

On January23, 2013, the Company announced its 2013 outlook for planned gold and copperproduction from the Bisha Mine of 80,000 to 90,000 ounces of gold produced in doré and 60 to 80 million pounds of copper produced incopper concentrate.

On January 11, 2013, theCompany in a news release commented on its approach to human rights at theBisha Mine and its commitment to responsible operations and practices at theBisha Mine, based on international standards of safety, governance and humanrights. 

On January 9, 2013, the Company announced it hadproduced 313,000 ounces of gold in doré from the Bisha Mine in 2012, and thecopper plant expansion at the Bisha Mine had progressed on schedule and onbudget with concentrate production expected in mid-2013. The Company hadmaintained top quartile safety performance at Bisha operations and advanced itscorporate responsibility initiatives to reflect evolving internationalstandards for the safety and health of its employees, protecting theenvironment, respecting human rights of its employees and residents of thecommunities in which it operates, and contributing to the sustainabledevelopment of those communities. The Company began personnel expansion tosupport management in its operations, to oversee its strategy andimplementation of the Company’s corporate social responsibility programs, andto drive organic growth and Nevsun’s acquisition and expansion strategy.

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**2012 Developments**

On May 15, 2012 and November 15,2012, respectively, the Company declared cash dividends of $0.05 per commonshare ($0.10 per common share annually) which were paid to shareholders on July16, 2012 and January 15, 2013, respectively.

On October 10, 2012, the Company announced that it had acquiredthe Mogoraib River Exploration License and has identified high priority explorationtargets.  The Hambok historic resource is potential additional feed for theBisha plant.

On September 7, 2012, the Company filed the 2012Technical Report.  The probable mineral reserves (effective date May 31, 2012)consisted of 26.5 million tonnes. This included 0.9 million tonnes of oxide oresgrading 5.79 grams per tonne gold for a total of 167,000 troy ounces of gold, 6.4million tonnes of supergene ore grading 4.09% copper for a total of 579 millionpounds of copper, and 19.2 million tonnes of primary ores grading 1.09% copperand 6.33% zinc for a total of 462 million pounds of copper and 2,680 millionpounds of zinc.

On August 8, 2012, the Company announced it hadcompleted its 13,500 metre exploration drill program at the NW Zone which lies3 kilometres from the Bisha deposit.

On July 9, 2012, the Company announced that it wasgranted the Harena Mining License.  The Harena deposit is a satellite VMSdeposit with oxide gold and base metal sulphide ores, similar in configurationto Bisha but smaller and lower in grade.

On June 18, 2012, the Company announced its progress onthe construction of the copper plant and that it had purchased all required equipmentto allow for a containerized transport and handling solution for its copperconcentrate.

On March 19, 2012, the Company announced a sharerepurchase program of its outstanding common shares under a normal courseissuer bid on the TSX.  The Company repurchased a total of 1,732,600 commonshares during the year ended December 31, 2012.

In March, 2012, a class action lawsuit was commencedagainst the Company and certain of its executive officers. The action is stillpending (see the Section, “Legal Proceeding and Regulatory Actions”).

On February 7, 2012, the Company announced its 2012outlook for planned gold production from the Bisha Mine of 190,000 to 210,000ounces of gold and that it was on track with its copper phase of developmentfor the copper phase process plant in advance of commercial production in 2013.

On January 10, 2012, the Company announced that itproduced 379,000 ounces of gold doré in its first year of operations at theBisha Mine.  

**2011 Developments**

November 21, 2011 and May 18, 2011, respectively, theCompany declared its first dividends which were paid to shareholders in January,2012 and July, 2011, respectively. 

On November 17, 2011, the Company reported the votingresults at its special meeting of shareholders held on November 16, 2011 which shareholdersapproved setting the number of directors at six with 99.77% shares voting infavour and approved the Rights Plan with 87.23% of shares voting in favour.

OnAugust 23, 2011, the Company announced that it had finalized its arrangements with the Stateof Eritrea regarding the purchase of 30% of the Bisha mine by the ENAMCO. Theagreed price was $253.5 million, which would be settled from the after tax cashflows generated at Bisha.

On June 8, 2011, the Company announced it had adopted aRights Plan to ensure the fair treatment of shareholders in connection with anytake-over bid for the common shares of Nevsun.

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In June, 2011 the Company began civil works inpreparation for construction of the second phase copper flotation plant.

On May 11, 2011, the Company announced that it completeddevelopment and commissioning of the Bisha Mine on schedule  and under budgetand concluded the first quarter of 2011 with its first five weeks of commercialoperations.

The Company also announced successful completion of anotherphase of significant exploration and development drill programs at the BishaMain pit area and adjacent HW Copper Zone adjacent to Bisha.  

**DESCRIPTION OF THE BUSINESS**

The Company’s principal mineral property is the BishaProperty which hosts the Bisha Mine and satellite VMS deposits at Harena, theNW Zone and Hambok.  The Mining Agreement governs the development of the BishaProperty and covers an area of 39.0 square kilometres and contains the BishaMine and the Bisha Mining License.  In addition, the Company owns the HarenaMining License and the Mogoraib River Exploration License. The Company has alsomade application for additional exploration rights in areas surrounding theBisha Property.

**The Bisha Mine**

The Bisha Mine, owned and operated by BMSC, is a gold,copper and zinc deposit that is projected to have a strong economic return overthe remaining eleven year mine life.  Nevsun is a 60% shareholder in BMSC withthe remaining 40% interest held by ENAMCO.  BMSC is governed under the terms ofa shareholder agreement between Nevsun and ENAMCO.  

The top layer of the deposit at Bisha was gold oxidematerial lying at the surface.  The mine began commercial production of gold inFebruary, 2011 that allowed an early payback of gold phase capital and allowedfor funding of the copper phase expansion. Mining of the gold oxide phase wascompleted for the most part at the end of Q2, 2013. The Bisha Mine transitionedfrom gold production to copper production in late 2013 and commenced commercialproduction of copper in December, 2013.  The development of the zinc flotationcircuit required for future zinc production is expected to be online in late H12016, and is presently underway. The Bisha Mine has the full support of theEritrean Government.

**Gold, Silver and Copper****Sales**

The Company recorded revenues of $156 million based onsales of  96,700 ounces of gold and by-product sales of 507,935 ounces ofsilver in 2013 compared to revenues of $566 million based on sales of 320,500ounces of gold and by-product sales of 962,000 ounces of silver in 2012.  Thesignificant reduction of revenue was anticipated and was impacted as theCompany transitioned from gold production to copper production.  Copperconcentrate sales during 2013 were credited to copper development costs as allsuch sales related to pre-commercial production activity.

There are numerous purchasers of copper, gold and other metalsand the Company is not dependent upon any one purchaser.  Gold production fromBisha was in the form of doré bars (gold and silver) which were flown from theBisha site to the capital city of Asmara, and then flown to refiners in Europeand Canada. With the commencement of copper production in mid-2013, copperproduction from Bisha is in the form of copper concentrates (including smallamounts of gold and silver credits) produced at site and transported in countryby truck and trailer to the port of Massawa and in turn loaded into ocean freightersfor transport to smelters in Europe and Asia.

**Methods of Production**

Bisha has an owner-operated mining fleet and for itsgold production, used standard CIL processing facilities to initially processthe gold oxide cap by traditional cyanide leaching.  Following completion ofprocessing the gold oxide cap in mid-2013, the CIL facility was cleaned and decommissionedbut remained in place for future use. The Company then began processing supergenecopper ores using flotation  to recover copper as a sulphide concentrate andwill use the same process when primary copper and zinc ores are processedstarting in 2016. 

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The current mine life is estimated to be 11 years, projectedto 2024, followed by six months of final processing of remnant oxide ores andgold doré extraction using the original CIL circuit.  The Company also expectsto further expand its mineral resources with subsequent conversion into mineralreserves. Opportunities to expand the Bisha Mine life  may be found by additionaldrilling in and around the Bisha Mine including the NW Zone, on the HarenaMining License and on the Mogoraib River Exploration License.  Numerousuntested geophysical targets remain on these properties and both the Bisha andHarena deposits have not been fully defined by drilling to date.  Several newtargets will continue to be evaluated on the Mogoraib River Exploration Licenseand in addition to efforts to expand the existing resource at Hambok, highpotential targets along the Hambok trend and other new areas will also betested. These properties have the potential to provide additional near term mineralresources for the Bisha operations.  If this potential is achieved, the Companywill evaluate through a cost-benefit analysis if there are sufficient economicresources to transport to and process at the Bisha mill. 

**Skill and Knowledge**

BMSC has built a management team of skilled mining, processing,environmental, financial, and administrative personnel reporting to the generalmanager at the Bisha Mine who is in charge of mine production, process plantfacilities, exploration programs, and future operations of the Bisha Mine.  The specialized knowledge and skills required in all areas of mining include mining,engineering, geology, metallurgy, environmental permitting, drilling, andexploration program planning. The Bisha Mine is the first modern miningoperation in Eritrea. Training and re-training of local staff to attain andmaintain the requisite skills in all aspects of mining operations is and hasbeen a priority. 

**Employees**

BMSC directly employs approximately 1,000 Eritreans and110 expatriates at the Bisha Mine and provides a safe and supportive workingenvironment. Nevsun strives to ensure that its presence has a positive socialand economic impact. With spin-off effects, the Bisha Mine has createdmeaningful employment for thousands of Eritreans. Compensation for Eritreansdirectly employed by BMSC is well above the average for Eritrea. Employees areprovided free food and free accommodations or free local commuting. Theseemployees also receive free training and have opportunities for advancement.Employees also have access to free medical care at the mine’s clinic. The useof conscripted labour at the Bisha site is not allowed, and BMSC has strongpractices and procedures to ensure that all individuals at Bisha are working oftheir own free will and are not conscripts. The procedures include theinspection of national service discharge documentation for all Eritrean workersat Bisha, and Bisha-issued photo identification cards for those employeddirectly or by subcontractors.******

**Corporate SocialResponsibility**

The Company’s objective is to generate sustainableprosperity through its business operations, which means respecting the safetyand health of its employees, protecting the environment, respecting the humanrights of its employees and the residents of the communities in which it operates,and contributing to the sustainable development of those communities.  TheSocial, Environmental, Health and Safety Committee established by the Board overseesthe Company’s efforts in meeting these objectives. 

While not a member of the EITI, the Company supports thegoals of fiscal transparency and governance and has taken the approach ofdisclosing payments made to governments in countries in which it operates,whether or not the host government is a member of EITI. 

From commencement of commercial gold production in early2011, Bisha has contributed more than $670 million in cash remittances to theEritrean government and government-owned entities. In addition, the Bisha Minecontributed tens of millions of dollars to the economy of Eritrea throughsalaries, wages, benefits, local supply-chain purchases, and communityassistance, and the mine did not displace any local communities.  Consideringthat the Bisha Mine is the only modern mine in Eritrea, this direct contributionis a significant benefit to the national economy and the local communities. Theresulting impact through the indirect multiplier effect on the economy ofEritrea is difficult to estimate but is believed to be very significant.

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The Company voluntarily releases a corporate socialresponsibility report annually that adheres to the Global Reporting Initiative(GRI) G4.0 Core requirements. The report addresses a hybrid of general andspecific sectorial information about the Bisha Mine and its relevance toannualized corporate social responsibility objectives.

**Social Responsibility**

The Company recognizes that its activities have thepotential to impact the human rights of individuals affected by its businessoperations.  As such, the Company seeks to integrate human rights bestpractices into its business processes and conducts itsbusiness within a framework that promotes worker and community health andsafety, environmental protection, community involvement, community benefits andquality of life for employees and their families.  The Company is committed to****responsible****operations and practices at its BishaMine, based on national and international standards of safety, governance andhuman rights and strives to ensure that the Company’s presence has a positivesocial and economic impact to the national economy and the local communities. Some of the Company’s social responsibility commitments andpractices include:

-     actively promoting understanding by all    employees of the culture, language and history of the communities, regions and    countries in which it operates;
-  working to protect cultural heritage resources    potentially affected by the Company’s activities;
-  conducting activities in a manner that respects    traditional-use rights, cultures, customs and social values; 
-  promoting job equity and equal access to    employment opportunities for women; 
-  maintaining formal human resources practices and    procedures to ensure that conscripted labour is prohibited at Bisha, including inspection    of national service discharge documentation for all Eritrean workers at Bisha;
-  building capacity by sharing environmental and    social experiences and solutions with local communities and regional and    national governments; 
-  actively consulting with local communities to    identify and resolve environmental and social issues;
-  procuring materials, goods and services in a    manner that enhances local benefits and protects against unethical practices    such as child labour and forced labour;
-  establishing social responsibility performance    criteria; and
-  monitoring and reporting performance to senior    management through periodic audits.

**Health and Safety**

The Company recognizes that the safetyand security of its employees and the communities in which it operates is anintegral part of its business.  The Company has maintained top quartilesafety performance at Bisha operations now exceeding 15 million hours without alost time injury. As to safety, the long-term goal is foremployees of the Company to operate injury-free, regardless of what role theyperform. The Company likewise has advanced its corporate responsibilityinitiatives to reflect evolving international standards.

To achieve its health and safetyobjectives, the Company is training employees to work in a safe and responsiblemanner, carrying out risk assessments for all construction and operationalactivities, conducting thorough investigations when incidents do occur tounderstand the underlying causes, ensuring that health and safety performances complywith relevant legislation and regulation, adhering to local laws as well asinternational standards on law enforcement in securing its operations,particularly those that relate to the use of force, carrying out riskassessments in relation to security issues at each of its project sites, ensuringthat security is managed in a way that respects and protects human rights,avoids creating conflict, and addresses security threats in as peaceful a wayas possible and assisting the local community in health awareness activities.

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**Environment**

The Company is committed to achieving high standards ofenvironmental responsibility in its operations and compliance with allapplicable regulations and laws.  

The Company is committed to devoting its resources tothe goal of:

-     complying with all host country environmental    laws and regulations together with industry best practice standards, or    whichever is the more stringent of the two; 
-  ensuring the necessary resources are provided to    support and implement the Company’s environmental policy;
-  continual improvement in environmental    performance by developing environmental indicators, monitoring and auditing    performance, and by implementing corrective actions where needed;
-  reporting externally on environmental    performance and encouraging dialogue with employees, local communities and    other stakeholders to promote environmental awareness; 
-  applying the principles of best available    technology to environment management; 
-  reducing, re-using and recycling resources and    implementing proper waste management practices; 
-  training, motivating and ensuring that all    employees adhere to environmental protection and pollution prevention policies;
-  incorporating an emergency preparedness and    response system into standard operating practices; and 
-  monitoring and reporting on performance to senior    management through periodic audits.

**MINERAL PROPERTIES**

The Company’s principal mineral property is the Bisha Propertyin Eritrea, North-East Africa and its primary operating asset is the Bisha Minelocated on the Bisha Property with gold, silver, copper and zinc mineralresources and mineral reserves.  Unless otherwise stated, the technical andscientific information included in this AIF concerning Bisha are derived fromthe****2013 Technical Report prepared by Paul Gribble, C.  Eng., FIMMM,Chief Resource Geologist, BMSC; Jay Melnyk, P.Eng. AGP; and Peter Munro,BAppSc., Mineralurgy Pty.  Ltd.  The authors of the 2013 Technical Report are QPswithin the meaning of NI 43-101.  The information included herein is also basedon the assumptions, qualifications and procedures which are set out in the 2013Technical Report.  For more detailed information and a complete description ofassumptions, qualifications and procedures associated with the followinginformation, reference should be made to the full text of the 2013 TechnicalReport which has been filed and is available for review on SEDAR (www.sedar.com) and EDGAR (http://www.sec.gov/edgar.shtml).

Commercial production of copper concentrates from the supergeneores at Bisha was achieved in December, 2013 after transition from the oxidephase to the supergene phase of development of the Bisha Property.  Commercialproduction of gold doré from the oxide ores at Bisha was achieved in February,2011 with approximately 784,000 ounces of gold being produced from 2011 through2013.

**Project Description and Location**

In October, 2007, the Government of Eritrea evidencedits strong support for the Bisha Mine and for the development of a new andstrong mining sector in Eritrea through its purchase of a 30% paidparticipating interest through ENAMCO. The purchase price and settlement for the30% interest was determined in 2011. In December, 2007, BMSC concluded the MiningAgreement with the State of Eritrea. Royalties payable to the State of Eritreainclude royalties of 5.0% on precious metal sales and 3.5% on base metal sales.

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The Bisha Mine is located 150 kilometres west ofAsmara, 43 kilometres southwest of the regional town of Akurdat, and50 kilometres north of Barentu, the regional or zone Administration Centreof the Gash-Barka District, in Eritrea, East Africa.  Access to the Bisha Mineis by paved road from Asmara to Akurdat, a distance by road of 181 kilometresand then 52 kilometres from Akurdat via an all-weather unpaved road, which iscurrently being upgraded with over 13 kilometres now paved. The drive fromAsmara to the Bisha camp (also referred to as Bisha Village) takesapproximately four hours by a passenger vehicle, over five hours by a passengerbus. Current onsite  infrastructure includes:  two open pits (Bisha andHarena), process plant (crushers and grinding mills, leach, flotation,thickener and other tanks, filter presses) wet tailings facility and waste rockstorage facilities, offices, maintenance and laboratory facilities, fuelstorage areas, an on-site power plant, and an airstrip. The Bisha Mine islocated at approximate latitude 15°28'N and longitude 37°27'E.  The UTMcoordinates (WGS84) of the centre of the Bisha Property are 1,711,000 N and334,500 E (UTM zone 37). The following Figure 1 shows the location of the BishaProperty.

| **Figure 1 – Bisha SiteLocation** |
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The BMSC properties host the Bisha Main deposit, whichis a large precious metal (Au) and base metal rich (Cu, Zn) VMS deposit whichis currently in production, as well as the satellite VMS deposit at Harena of whichthe oxide gold cap was mostly mined in 2013 and it now sits dormant untilfuture mining around 2021. The BMSC properties also include the potentialsatellite VMS deposits called Northwest and Hambok deposits. The Bisha MiningLicense and the Harena Mining License are also held by BMSC and all conditionsof the Harena Mining License have been met by BMSC and submitted to theMinistry of Mines with approval expected in due course.

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Under the terms of the various mining licenses held byBMSC, BMSC has the exclusive right of land use in the areas comprising these mininglicenses. This right is subject to the acquisition and settlement of anythird-party land-use rights by payment of compensation and/or relocation at theexpense of BMSC. The Company also owns the Mogoraib River Exploration License. The Mogoraib River Exploration License covers the Hambok VMS deposit and during2013, BMSC was required to reduce the license area by 25% (now 73.1 square kilometres). This license is valid until July 2, 2014 pending further extensions whichconsist of part of an annual application process.  The annual explorationlicense fee is approximately $32 per square kilometre and $96 per square kilometrefor a mining license.

In 2013 the Company made applications for additionalexploration rights in the area surrounding the BMSC properties.  Theseapplications are currently the subject of discussions with the Ministry ofMines and ENAMCO. The following Figure 2 shows the areas which comprise theMining Agreement and BMSC’s mining licenses.

| **Figure 2 – BMSC ResourceAreas and License Map** |
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**Accessibility, Climate,Local Resources, Infrastructure & Physiography**

Eritrea is located above the Horn of Africa on thecontinent’s east coast, between Sudan to the north and west, and Ethiopia andDjibouti to the south.  Eritrea has an area of 124,320 square kilometres and a 1,151 kilometre long coastline on the Red Sea, which separatesthe country from Saudi Arabia and Yemen.

Access to the Bisha Property is by paved road fromAsmara to Akurdat, and then from Akurdat via an all-weather unpaved road, whichis currently being upgraded.  The principal port for importation of heavyequipment and shipment of concentrate is Massawa on the Red Sea coast, which isabout 350 kilometres from the Property.  The port has sufficient draught and theCompany has a rotainer handling system which is flexible and able to beexpanded through a modular design to accommodate the handling and loading ofboth copper and future zinc concentrates.  Asmara is the capital city ofEritrea and is serviced currently by regular international flights out ofCairo, and Sanaa.

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The climate is semi-arid, with elevated temperaturesyear-round.   During the hot season in April and May, the average temperatureis +42°C, although temperatures may rise to +50°C for short periods.  The mainrainy season is between June and September, and periodic flooding of the Mogoraiband Barka Rivers can result in flash floods.  Total rainfall is sparse, withbetween 250 millimetres and 300 millimetres.  All mining activities are plannedon a year-round basis.

The Bisha Property is located on a flat to rolling,desert-like plain along the western foot of the central highlands.  The plainis at 560 masl and contains scattered vegetation and few trees.  Steep hillsand ridges rise above the plain with the Bisha, Wade, and Neve peaks reachingelevations of up to 1,226 masl above the alluvial plain at the southernboundary of the Property.

Abundant seasonal streams cross the area, flow northwardfrom the Property into the Barka River which flow northward into Sudan.  TheProperty is crosscut by the Mogoraib River, a tributary of the Barka River thatflows northwards along the western side of the Property.  A smaller seasonaltributary, the Ferektatet River, flows north-northwest into the MogoraibRiver.  The Ferektatet River crosses the Bisha Property and passes immediatelywest of a zone called the Bisha gossan zone.  

The village of Mogoraib (6 kilometres from the BishaMine) is the local administration centre for the Dighe Sub-zone within theGash-Barka District.  The village has a small refugee resettlement site, andsubsidiary military and commercial interests.  The village contains awell-equipped, eight-person health centre with a nursing staff capable oftaking care of small medical problems in preparation for referring patients tolarger, better-equipped hospitals in Akurdat and Keren.  Camp Mogoraib is amilitary training site located just outside the village boundaries.  With thepresence of the mine development and exploration project at Bisha, this camphas been re-activated as a security post from its previous care/maintenance basis.

Few basic goods are commercially available in theimmediate region near the Bisha Mine, either in Mogoraib or in Akurdat.  Themain centre for support of exploration and  development is the capitalcity, Asmara.

Electric power for the mine and processing plant site issupplied from a diesel-fuelled power station located adjacent to the processfacilities.    

Process water is sourced from maximizing the recyclingof water within the plant, and additional needs are supplemented from localgroundwater sources.  Although evaporation rates in this region are very high,a tailings-management facility, supernatant water reclaim pumping-system isinstalled to reclaim seasonal decant water from this source.  In addition,water from the pit is pumped to the process plant, which further reducesdependence on raw water.

Freshwater is supplied to the property fromgroundwater.  Two well farms have been established by BMSC, the firstapproximately 1 kilometre south of the open pit on the western bank of the non-perennialFerektatet River (which also serves to dewater the Bisha pit), and the second 5kilometres to the west, adjacent to the Mogoraib River.  Potable water sourcedfrom the well fields is pumped to a potable water plant utilizing chlorinationfiltration and ultraviolet radiation treatment.  

Current site communication is via radio, cellularservice, and a satellite communications system.

Under the terms of the Mining Agreement, BMSC has theexclusive right of land use in the area comprising the Bisha Mining License  that isgranted under the Mining Agreement and in the area comprising the Harena MiningLicense.  This right is subject to the acquisition and settlement of anythird-party land-use rights by payment of compensation and/or relocation at theexpense of BMSC, in accordance with Eritrean Government Proclamation No.68/1995, “Proclamation to Promote the Development of Mineral Resources and theMining Agreement”.

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BMSC holds all the necessary permits to support a miningoperation.  For the mining operations, grant of the mining lease providespermission to construct and operate the Bisha Mine.  A permit had been grantedfor use of water from the Mogoraib River (currently being used with permission)and for the construction of a water diversion dyke which has been completed.  

**MineralProperty History**

Nevsun has no record of anyprevious exploration or mining activities on the property or surrounding areasprior to 1998.  In June, 1998, Nevsun signed a prospecting license agreement with the State of Eritrea.  In 1999, this agreementwas converted to an exploration licensethat covered an area of 49 square kilometres.  This license was expanded to an area of 224 square kilometres in2003.

**Geological Setting**

Eritrea is divided into severalnorth or northeast trending Proterozoic terranes, which are separated by majorcrustal sutures.  The Nacfa Terrane comprises low-grade metamorphosedcalc-alkaline volcanics and sediments, and hosts base metal mineralization inthe region surrounding the city of Asmara, and in the Gash-Barka district,including the Bisha polymetallic mineralization.

TheVMS deposits at Bisha are hosted by a folded and locally intensely foliatedbimodal sequence of volcanic rocks.  Felsic volcanics directly host and both underlieand overlie the mineralization at Bisha, Harena and the NW Zone.  These felsicvolcanics are flow dominated indicating proximity to volcanic vents.   Maficvolcanic rocks occur deeper in the footwall to the east of the knownmineralized zones.  Alteration of the felsic volcanics is often very intensewith the primary mineralogy being converted to sericite and chlorite.  TheHambok deposit in contrast to the Bisha deposits is entirely hosted in mafic volcanicrocks.  These rocks are strongly foliated and highly chloritized.

**Exploration**

**1998 - 1999**

Exploration activities consisted of reconnaissance-scalegeological mapping, multi-element stream sediment sampling, ground geophysicalsurveys and limited “orientation” soil sampling, which showed the Bisha gossanzone to be highly anomalous in lead with significant values of copper, zinc andsilver. Grab samples of the gossan returned anomalous gold values ranging up to30.4 g/t Au.  

**1999 - 2002**

Work was suspended between 1999 until late 2002 due tothe border war with Ethiopia.

**2002**

In November, 2002, Nevsun completed a diamond-drillingprogram of six holes totalling 811 metres at Bisha to test the geophysicaland geochemical anomalies at the gossan outcrop area.  The drilling wassufficient to confirm the presence of a VMS deposit overlain by a supergenecopper-enriched zone and a gold-enriched gossan cap.

**2003**

Two phases of diamond drilling were completed in 2003for a total of 18,619 metres in 141 holes. Additional work conducted duringthis program included mapping, geochemical sampling, trenching, geophysics(airborne and ground), metallurgical test work, petrographic work and bulkdensity measurements.

**2004**

Further diamond drilling (163 holes totalling 28,879metres), RC drilling (33 holes totalling 1,814 metres) and core/RCcombination holes (9 holes totalling 592 metres) were completed betweenJanuary and June.  Additional work included geophysical surveys, mapping,geochemical sampling, petrographic work, bulk density measurements,geotechnical work, environmental baseline work, and metallurgical test work.

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**2005**

Nevsun completed the diamond drilling of 135 holes for18,053 metres in three zones (86 holes in Bisha Main zone, 22 holesin the NW Zone, 27 holes in the Harena zone).  The Bisha Main zonedrilling included 20 geotechnical and 8 metallurgical drill holes, drilled toprovide further information on the deposit for use in the Bisha FeasibilityStudy.  The mineral resource and mineral reserve contained in this study wasupdated in a technical report at that time.

**2006**

Eight diamond drill holes (1,680 metres) werecompleted.  This included one deep drill hole at the Bisha Main zone, threedrill holes in the HW Copper Zone and 4 drill holes at the NW Zone.  

**2007**

Additional ground geophysical (gravity) surveys wereperformed on new target areas at Bisha.

**2008**

Mechanical trenching/pitting and geological mapping werecompleted on targets defined by geophysical ground surveys in 2007.

**2009**

Twenty nine diamond drill holes (3,578 metres) werecompleted in the Bisha Main zone and at Harena.  The Bisha Main zone drillingconsisted of 9 geotechnical holes to provide additional information for the pitdesign and 3 metallurgical holes drilled to collect additional samples for the designof the copper phase of the mill.  Harena drilling consisted of 17 infill holesdrilled at 50 metre spacings to better define the mineralization. An additionalground gravity survey was also performed on the  southwest of the Harena zone.

**2010**

A total of 34 diamond drill holes (2,448 metres) were drilledto better define the oxide and supergene zone at the Harena deposit.  Thirteen diamonddrill holes (1,918 metres) were also drilled to test gravity targets in theHarena area.  No significant mineralization was intersected.  Atthe Bisha Main zone, an additional 6 metallurgical holes were drilled tocollect additional samples for designing the copper phase of the mill.  

**2011**

In 2011, 167 diamond drill holes (33,788 metres) weredrilled to infill areas of known mineralization for resource upgrading as wellas for metallurgical and geotechnical studies and exploration.  

At the Bisha Main zone, 41 holes (15,950 metres) weredrilled to infill and upgrade the primary zone portion of the deposit frominferred resource to indicated resource. As well, 3 exploration holes (1,572 metres)were drilled to further define the depth extent of the primary zone in thesouthern portion of the deposit. For the HW Copper Zone that lies immediatelywest of the Bisha Main zone, 82 holes (9,421 metres) were drilled to outline andexpand this resource.  These hanging wall copper exploration drill holes weredrilled in 2 phases.  The first was to define the mineralized area and thesecond was to infill with sufficiently tight spacing to allow resource estimation. In addition, 6 holes (695 metres) were drilled for further geotechnical studiesand 2 holes (180 metres) for supplementary supergene metallurgical test work.  

At Harena, 5 regional exploration holes (859 metres)were drilled to test coincident gravity/EM/soil geochemical anomalies 300 metresalong strike to the southwest of the Harena deposit.  No significantmineralization was encountered.  Four holes (603 metres) were drilled forgeotechnical studies, 2 holes (182 metres) were drilled for metallurgicalstudies.

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In 2011 drilling began to define and provide sufficientdrill density for the NW Zone to bring it to a maiden resource estimate.  Atotal of 22 holes (4,325 metres) were drilled as part of this program which continuedinto 2012.

**2012**

Diamond drilling programs were undertaken at the BishaMain, HW Copper Zone, NW Zone and Harena, for a total of 112 holes and 19,432 metres. This was a combination of exploration, extension and infill drilling as well asgeotechnical and metallurgical investigative drilling required for mineralresource and mineral reserve estimations.

At Bisha Main, 12 geotechnical holes (3,049 metres) weredrilled to provide data for a pit design optimization that included the HWCopper Zone extension to the Bisha Main deposit. Metallurgical drilling for atotal of 12 holes (821 metres) was completed across the supergene zone and HWCopper Zone extension to provide supplemental data for the Bisha Main mineralresource estimate update of May 31, 2012.  A further 7 diamond cored holes for410 metres were completed to test for the gold potential above the HW CopperZone within the phase 5 cutback of the Bisha Main open pit.  

The majority of drilling was focussed on the developmentof the NW Zone.  From March to July, 49 diamond cored holes (9,215 metres)completed the initial NW Zone drill program that had commenced in 2011. Thisdrilling was done to a sufficient density in the central portion of the zone toallow for an indicated resource to be calculated to a depth of 200 metres.  Thisdrilling also showed potential for additional along strike, near surface anddown dip extensions to the deposit.  During November and December, 16 additionaldiamond drill holes (2,776 metres) were completed to test these furtherextensions with success.  A separate gold and base metal enriched horizon tothe east of the main body of mineralization was also discovered.  Eightgeotechnical holes (1,568 metres) and two metallurgical holes (471 metres) werealso completed and the geotechnical holes north of the then outlined zoneencountered additional mineralization.  

At Harena, exploration diamond drilling included a totalof 6 holes (1,123 metres) with one of the holes intersecting mineralizationperipheral to the Harena open pit.

**2013**

Diamond drilling consisted of 27,828 metres ofexploration and resource development drilling at Bisha Main, the NW Zone andHambok.  Ten geotechnical and metallurgical holes for 1,007 metres were alsodrilled at Bisha largely for new material for test work on the primary zincdeposit.  Six RC holes (1,148 metres) for hydrology and condemnation programswere completed at Bisha and five holes (833 metres) were completed forhydrology at the NW Zone.

At Bisha, 23 holes for 6,223 metres were completed inthe immediate Bisha area testing geophysical targets.  In addition, 8 holestested below the northern portion of the Bisha Main deposit.

Drilling concluded at the NW Zone with 18,892 metres ofdrilling being completed in 93 holes.  The NW Zone was sufficiently drilled toallow for a maiden resource estimate to be completed.

At Hambok, eight holes for 2,713 metres were completedto infill areas of the deposit that had large gaps in the geological model. This work allowed for a new open pit constrained mineral resource estimate tobe completed.

**Mineralization**

Mineralization found to date, within the Bisha Property,is typical of precious and base metal-rich VMS deposits.  

Eritrea is divided into several north or northeasttrending Proterozoic terranes, which are separated by major crustal sutures. The Nacfa Terrane comprises low-grade metamorphosed calc-alkaline volcanics andsediments, and hosts base metal mineralization in the region surrounding thecity of Asmara, and in the Gash-Barka district, including the Bishapolymetallic mineralization.

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The VMS deposits at Bisha are hosted by a folded andlocally intensely foliated bimodal sequence of volcanic rocks.  Felsic volcanicsdirectly host and underlie and overlie the mineralization at Bisha, Harena and NW. These felsic volcanics are flow dominated indicating proximity to volcanicvents.   Mafic volcanic rocks occur deeper in the footwall to the east of theknown mineralized zones.  Alteration of the felsic volcanics is often veryintense with the primary mineralogy being converted to sericite and chlorite.  TheHambok deposit in contrast to the Bisha deposits is entirely hosted in maficvolcanic rocks.  These rocks are strongly foliated and highly chloritized. 

The mineralized components of the BishaMain deposit are divided into three major zones, namely the oxide, supergene,and primary zones. The large majority of the oxide component is mined out whilea small zone remains in the northeast of the deposit. The massive sulphidebodies of the supergene and primary zones are divided into a southern zone calledthe main zone and a northern zone, whose dip extent is limited. The southernzone strikes at some 345° and dips steeply to the west, with strike and diplengths of some 650 metres and 600 metres, respectively. The northern zonestrikes at around 0° and dips steeply to the west, with strike and dip lengthsof some 500 metres and 100 metres, respectively. In addition, there are massivesulphide pods in the HW Copper Zone of the main massive sulphide units anddevelopment of supergene-mineralized material, also in the HW Copper Zone.These last tend to be of lower-grade material. There are also additional zonesof low-grade disseminated copper mineralization in the footwall and hangingwall of the massive sulphide bodies. Work since 2012 has shown that themineralization is fault bounded and controlled and this model has replaced theoriginal folding model. 

Deep weathering has affected these primary massivesulphides producing high-grade stratified gossanous zone near surface that areenriched in gold and beneath these, supergene blankets enriched in copper.  Thegossan zone can vary in composition from highly siliceous and somewhatferruginous to a massive goethite-hematite-jarosite gossan.  The depth of this oxidationzone is on the order of 35 metres.  The oxidation of the massive sulphidesgenerated strong acid solutions that have progressively destroyed the sulphidesand host rock.  Gold remains in the oxide zone and is concentrated, and as theacid solutions percolate downward, they deposit their dissolved copper at theprimary sulphide interface to produce a copper-rich supergene zone. A horizonof extremely acid-leached material or “soap” has developed between the oxideand supergene/primary domains and the host rocks.

The Harena deposit has been traced over a strike lengthof 400 metres and is interpreted to be a northwest-dipping, tabular massivesulphide body.  The host rocks to the Harena deposit are intensely chloritizedand sericitized hydrothermally-altered felsic volcanic rocks.  Surficialweathering processes have produced a surficial oxide/gossan zone with good goldgrades underlain by a primary massive sulphide deposit.  Supergenemineralization is not well developed.  The massive sulphide zone ranges in thicknessof between 5 metres and 15 metres and is open at depth.

Mineralization at the NW Zone occurs in a series ofmassive sulphide lenses hosted within altered felsic volcanic rocks containingabundant copper and zinc-rich stringer sulphide mineralization. Some of themassive sulphides have been exposed to weathering at surface creating oxide zonethat are locally enriched in gold. Beneath these areas, some supergene coppermineralization may also be present. Core recovery is often poor in the oxide zoneas unconsolidated material is easily washed away and not recovered during thediamond drilling process. Further testing of these areas by reverse circulationdrilling will be completed in due course.

Hambok consists of a single massive sulphide lens thatis steeply east dipping and lenticular in shape. The lens extends for over1,000 metres along strike and at least 350 metres down dip. Base metal valuesare generally higher nearer to surface along the top and outer edges in thecentral area of the body. The massive sulphide lens is open to the north andsouth and there is limited drilling at depth. The deposit is hosted by variablychloritized mafic volcanic rocks and is dominantly composed of massive pyritewith zones of finely banded chalcopyrite and sphalerite. Intervals of nearmassive magnetite are often found associated with the massive sulphides. As ofyet, no footwall stringer zone or associated felsic volcanic rocks have beenfound associated with the deposit although highly altered felsic volcanics areassociated with the Aderat occurrence four kilometres immediately along trendto the north. Future work will focus on exploring this favourable trend to theimmediate north and south of Hambok. 

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**Drilling**

Drilling on Bisha Main, Harena, NWand Hambok has been undertaken by contractors in a number of DDH programs from2002 to 2013 and by in-house drill rigs for RC in more recent 2013 drillcampaigns.  Three of the deposits, Bisha Main, NW, and Harena, lie close toeach other, with Hambok lying some 18 kilometres to the southwest in theMogoraib River Exploration License.  

Drill programs have been completed primarily by contractdrill crews, largely supervised by BMSC geological staff for Bisha, Harena, andNW, and by Sanu Resources historically, and BMSC staff more recently in the case ofHambok. Diamond drilling was mostly completed by Boart Longyear Eritrea Limitedusing LF90 track-mounted drill rigs while modern RC grade control drilling wascarried out in-house, with BMSC employing two Schramm T450 Rigs.

At the Bisha Main deposit, 618 DDH holes were drilledbetween 2002 to 2013, including 9 RC pre-collared diamond holes, 14geology-related blast holes, 33 geotechnical drill holes, and 40 metallurgicaltest work drill holes.  The RC pre-collared diamond holes, some of themetallurgical holes, and the geotechnical holes were not included in themineral resource estimate described in the 2013 Technical Report. As well, 514RC holes, including 474 grade control holes, were drilled in 2013 in gradecontrol drilling campaigns.  A total of 498 DDH and 474 RC grade control holeswere used in the mineral resource estimate described in the 2013 TechnicalReport.  Much of the massive sulphide mineralization in the Bisha Main deposithas been well defined, with drilling spaced at 25 metres x 25 metres or closerin some areas.  Drilling density decreases with depth, with the depositremaining open at depth in the south. With the oxide zone now mined out, thesample recovery problems experienced in this zone have only minor influence onthe Mineral Resource and Mineral Reserves.

At the Harena deposit, a total of 105 drill holes havebeen completed, comprising 98 DDH and 7 RC holes drilled between 2005 and 2012.

At the NW deposit, a total of 287 drill holes have beendrilled  in a series of campaigns since 2003, comprising 240DDH and 47 shallow RC grade control exploration-related holes.  The DDH holesinclude 8 geotechnical and 2 metallurgical test holes. Much of the massivesulphide mineralization in the NW deposit has been well defined, with drillingspaced at 25 metres x 25 metres or closer in some areas.  Drilling densitydecreases with depth, with the deposit remaining open at depth and alongstrike. Core recovery problems in the oxide zone and supergene zone werecountered by classification of this material as Inferred Resources.  

At the Hambok deposit, a total of 145 holes have beendrilled in a series of campaigns, comprising 102 DDH and 42 RC holes. Diamonddrilling was completed by Boart in 2006 for Sanu Resources, and in 2013 for BMSC, withthe remaining diamond cored holes completed by General Exploration Drilling PtyLtd., an Australian-based company which typically employed an RC pre-collar ofup to 100 metres. Much of the massive sulphide mineralization in the Hambokdeposit has been well defined, with drilling spaced at 50 metres x 50 metres orcloser in some areas.  Drilling density decreases with depth, with the depositremaining open at depth and along strike.

**Sampling and Analysis**

Sampling programs at the BishaProperty included drill core samples, RC samples and various geochemicalsamples, which included: surface rock chip, trench, auger, pit, soil, andstream sediment sampling. Nevsun established detailed logging, samplecollection, and sample preparation protocols for core and RC sampling, andimplemented procedures for the collection of geotechnical data.

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All trench, rock chip andgeochemical samples, including soil and auger, stream sediment, pit and termitemound samples collected during the 2003 Phase I Program were shipped to theHorn of Africa Preparation Laboratory, in Asmara, which provided preparationservices for Genalysis Laboratory Services Pty of Maddington, Australia, nowknown as Intertek Genalysis (“Genalysis”).  The preparation laboratory producedpulp samples that were subsequently shipped to Genalysis in Australia foranalysis.  Following the 2003 Phase I Program, geochemical and rock chipsamples were shipped to ALS Chemex Ltd., in Vancouver, Canada, nowknown as ALS Minerals (“ALS”).

The primary laboratory used byNevsun for analytical work on the drilling programs was ALS.  Nevsun used thelaboratory for both sample preparation and analyses from the initiation of thefirst drill program in 2002.  During the 2002 and 2003 Phase I Program, sampleswere shipped as half-core from the Bisha camp to Asmara and forwarded to ALS inVancouver.  After establishing a sample preparation facility, designed andinstalled by ALS at camp in September, 2003, Nevsun sent coarse crushed andsplit material (2 millimetres) for core, RC, and rock samples to ALS forsubsequent pulverization and analyses.  All assay data contained in thedatabase for mineral resource estimation was assayed by ALS. 

Both ALS and Genalysis areregistered with the ISO and are internationally recognized facilities.  ALS isregistered to ISO 9001:2000 for the “provision of assay and geochemicalanalytical services” by BSI Quality Registrars.  The National Association ofTesting Authorities Australia has accredited Genalysis, following demonstrationof its technical competence, to operate in accordance with ISO/IEC 17025(1999), which includes the management requirements of ISO 9002:1994.  Thefacility is accredited in the field of chemical testing for the tests,calibrations and measurements that are shown in the Scope of Accreditationissued by the National Association of Testing Authorities, Australia. 

In 2009 the Company switchedfrom ALS Chemex in Vancouver to ALS Chemex in Romania in order to save onshipping costs and to speed up turn-around times for obtaining analyticalresults. This proved to be of no benefit so the Company switched back to ALSChemex in Vancouver in 2010. For metallurgical testing the Company has used Mintekand Maelgwyn in South Africa,  G&T Metallurgical Services  (now ALSMetallurgy Kamloops), ALS Metallurgy Burnie and SGS Laboratories in Canada.

Sample programs includedinsertion of blank, duplicate and SRM samples.  The QA/QC program results donot indicate any significant problems with the analytical programs that wouldpreclude use of the data.

The initial process of dataverification for Bisha was performed by Nevsun, and by external consultanciescontracted by Nevsun staff.  During the Feasibility Study, and as part of thechecks on data for this, and previous technical reports, AMEC reviewed drillingand other exploration and project data.  AMEC also submitted independentsamples for verification of mineralization tenor at Bisha. AGP also reviewed thedrilling and submitted independent samples for verification of mineralizationtenor during their 2012 resource model update.

A ROM laboratory was establishedby SGS Mineral Services in 2010 and is managed and operated by them.

In 2013, trench sampling wasused in the estimate of Inferred Mineral Resources for the NW deposit. Thetrenches were excavated to a depth of 0.5 metres to 2.0 metres depending on thedifficulty of excavation or breaking the rock.  The trenches were mapped andthen sampled, with samples taken at 2 metre intervals breaking at lithologicalcontacts; 480 samples were taken in total. Trench samples were analysed by ALSGlobal and preparation, despatch and analysis are as described below for drillcore.

In 2013, for holes drilled inall the NW campaigns and Bisha and Hambok, holes were sampled for their fulllength at a target length of 1.0 metre per sample. Sample intervals vary basedupon mineralogical and lithological contacts. The sample regime is set out by thelogging geologist. Standard diamond cutting blades flushed with fresh water areused to halve the core.  Highly broken core pieces are cut along the axis ifpossible or the core is split using a trowel down the middle of the tray rowand handpicked or scooped to ensure representative samples are obtained. Cutting lines may be drawn on the core. The remaining half core is returned tothe box and boxes stacked in numerical order by hole. 

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The technicians or samplersunder the supervision of technicians place half of the core in individual trayslaid out in numerical order. Samples are then placed in a drying oven for 12 to18 hours at between 80°C and 100°C. The samples then pass through a jaw crusherto greater than 75% of sample passing 10 mesh (2 millimetre) screen. The sampleis then split using a Jones-type riffle splitter to achieve a sub-sample weightof approximately 200 grams to 300 grams. The sample reject is then bagged,labelled with the original sample ID and put into storage at Bisha site. Thesub-samples are packed and then placed in large plastic shipping barrels. Whensamples are ready to be shipped the samples lists are combined with a samplesubmission form and enclosed with the samples in plastic drums. Samples aredespatched to Asmara in BMSC vehicles with BMSC staff and are held at the BMSChead office before onward despatch.

Analysis for NW samples wascarried out by ALS in Vancouver. In this example, the sample information withrequired analytical procedures is emailed to ALS so that the sample shipmentcan be tracked and the laboratory is made aware of the pending arrival ofsamples. The sample barrels are submitted to the Eritrean Ministry of Mines forinspection and submission to customs. A seal is placed on the barrels and thesample barrels are shipped via air transport directly to ALS in Vancouver. AtALS the samples are pulverised to better than 85% passing 75 microns.

Analysis for Hambok samples wascarried out by Genalysis for consistency of analysis with the Sanu Resources campaigns.In this example the plastic barrels are taken by road to their Horn of Africapreparation facility near Asmara. Here, samples are pulverised and the pulpsdespatched by courier to the Genalysis laboratory in Perth, West Australia, foranalysis. Pulverisation is to better than 85% passing 75 microns.

For holes drilled at Bisha andHarena that are used in the current Mineral Resource, sampling methods andpreparation were the same as those described above, excepting that for the mostpart holes were sampled only through the mineralized zone.

RC grade control samples fromdrilling in the Bisha pit are sampled at 1 metre intervals. Following rifflesplitting the sample is sent to the SGS on-site laboratory. The samples areplaced in a drying oven for 12 to 18 hours at between 80°C and 100°C. Thesamples then pass through a jaw crusher to greater than 75% of sample passing10 mesh (2 millimetre) screen. The sample is then split using a Jones-typeriffle splitter to achieve a sub-sample weight of approximately 200 grams to300 grams. The samples are then pulverised to better than 85% passing 75microns. A subsample is also retained for additional analytical work.

To determine bulk density, BMSCtook and used two types of sample, namely drill core and rock samples. Thelatter are taken from within the open pit (pit floor and mining faces) and theROM stockpiles. The sample locations are recorded by the survey department. Atotal of 315 samples were taken in the latest programme to determine bulkdensities for the supergene mineralized zone. 

Bulk density for all samples isdetermined using Archimedes principle. Rock samples are dried and then wrappedin foil prior to weighing in air and water. BMSC recognise that the samplecollection method has potential bias but all efforts are made to avoid this.The work completed to date has successfully addressed reconciliation of ROMtonnages, and densities determined by this method have been used in theresource estimation process. 

**Security of Samples**

The chain-of-custody for core samples collected andbeing shipped from site is as follows:

-  Core is transported to the Bisha camp by Bisha personnel    and placed in the core logging area.
-  The logging and sample preparation area and the    Bisha camp is within a fenced and guarded compound.
-  Core samples are crushed and sub-sampled. 
-  Prepared samples are placed in sealed barrels.
-  Each barrel has a list of samples written on the    outside of the container.

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-  A sample submission form accompanies each    barrel.
-  Barrels are transported to Asmara in company-owned    vehicles arranged by BMSC.

The sample barrels are submitted to the EritreanMinistry of Energy and Mines for inspection and submission to customs, acustoms seal is placed on the barrels and they are shipped via air transport directlyto the analytical laboratories.

**Mineral ResourceEstimate**

Commencing 2005, an initial mineralresource model for Bisha Main was constructed by AMEC that was subsequentlyperiodically updated with new information.

In 2012, the resource model was reviewedby AGP, an independent mining and geological consulting firm that had notpreviously reported on the property.  AGP estimated new mineral resources atBisha.  AGP’s estimate was in turn reviewed by another independent third partyengineering company.  AMEC estimated a new mineral resource at Harena.  InAugust, 2012, AGP prepared the new combined Bisha and Harena mineral reservesestimate (May 31, 2012 effective date) and the 2012 Technical Report was filedon SEDAR and EDGAR.

In late 2013, new revised updatedmineral resources were estimated for both the Bisha Main and Harena depositsconsidering mine depletion, additional historic drill data, additional metallurgicaltest data, new structural mapping and interpretation and a more refined andslightly differing approach to mineral resource modeling.  Likewise, an updatedmineral resource estimate was generated for the Hambok deposit succeeding thepast historic mineral resource generated by the previous owner Sanu Resources,which importantly employs a constraining pit shell.  In addition, a maidenmineral resource estimate was completed for the NW deposit.  All four mineralresource estimates have an effective date December 31, 2013. The mineralresource estimates were completed or supervised by Paul Gribble, C.Eng., FIMMM,Chief Resource Geologist for BMSC, and the QP for the Mineral Resourceestimates. Assumptions, details and methodology of the mineral resource estimatecan be viewed more fully in the 2013 Technical Report.

Since the May, 2012 mineral resourceestimate, the sample database for the Bisha Main and Harena deposits hasundergone a thorough QA/QC process, and any historical data consideredunreliable was excluded.  The current interpretation and estimation for BishaMain and Harena was completed using DDH cored holes and recent RC grade controlholes.  The mineral resource estimate for the largest of the four deposits,Bisha Main, includes some 500 DDH and 475 RC holes, for approximately 30,700and 5,840 samples, respectively. The majority of the RC holes were drilled in2012 and 2013 while all the DDH holes were drilled prior to May, 2012. All datafrom Sanu Resources was validated by BMSC prior to use.

A major reinterpretation of thegeological model for Bisha has been undertaken since the last mineral resourceestimate effective date May 31, 2012. This work included review of drill core,logging data, grade control mapping, new RC data, and detailed pit wallmapping. The data was all combined in plan and sectional interpretations, withresulting three-dimensional (“3D”) models. This work resulted inreinterpretation of the supergene and primary zones for this estimate. 

Bulk density values for the Bisha Maindeposit were predominantly assigned on the basis of rock type and oxidationstate, as defined by the interpreted geological wireframes. The values arebased on a combination of:

-  bulk densities from the previous resource    estimate;
-  some generic values for typical weathering    profiles in felsic sediments at upper greenschist facies; and
-  bulk density values from in-situ measurements in    use at the mine, derived over the last year.

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This approach was taken based onexamination of historical bulk density values in use at Bisha. Problems withthe veracity of the density information previously used in the resource work,especially in oxide material and the very top of the supergene zone, were noted. Melnyk et al. (2012) identified a probable sample biasissue, with the material being sampled from competent drill core relating todenser pieces of rock, and probably not representative of the oxidation domain.Recent determinations from in-situ measurements have reduced this problem, butsome potential in friable material still remains. The oxidized domains are nowmostly mined out.

For all deposits, the estimationprocess involved the creation of 3D geological and mineralization shapes in crosssection, flagging of database, compositing of samples, exploratory dataanalysis including variography, and Kriging neighbourhood analysis.

Estimation was by Ordinary Kriging ofall elements in all mineralized domains. Each domain was separately estimatedusing the unique set of composite samples associated with that domain. 

Validation was by visual and statisticalmethods of the arsenic, copper, zinc, gold, and silver grade estimates. Allcomparisons were satisfactory and the estimates are judged to be robust. Somesmoothing of grade was apparent, but this was expected and desirable from theuse of Ordinary Kriging as the interpolation method.

The mineral resource for all depositsis a global estimate representing a reliable estimate of the total containedmetal, but the current block estimates are likely to vary as compared with theactual grade/tonnage distribution that will be achieved during selective miningand over short production periods. 

The mineralization at each deposit hasbeen sufficiently drilled and sampled to allow classification as an Indicatedand Inferred Mineral Resource in accordance with the current CIM DefinitionStandards for Mineral Resources and Mineral Reserves. The classificationemployed reflects a practical combination of both geological knowledge andestimation quality parameters that may be more numerical in nature. Thisapproach to classification aims to avoid creating a complex classificationsystem.

Reasonable prospects for economicextraction were made by applying a net smelter return NSR-based cutoff toblocks within a constraining optimized pit shell using LG optimization.

The assumed long-term metal prices usedfor the optimization work as applied to Mineral Resources are shown in thefootnotes of the mineral resource tables below. These metal prices areapproximately 15% higher than those used in the estimation of Mineral Reserves.

The NSR calculation and pitoptimization process considers many of the parameters used in the mineralreserve estimation, as these parameters are well established within the workingmine. These parameters include commodity price, budget costs for production andprocessing, process recoveries, concentrate grade, selling costs, and otherore-based costs. The optimization process also uses the current geotechnicalmodel for the pit design. 

For the Bisha deposit,mineralization below the pit shell described above was studied for potentialfor underground mining. The high-level study concluded that an appropriateunderground mining cost per tonne would be $60/t. The mineralization was thenanalyzed for contiguous blocks with NSR values exceeding $100/t. A shape ofsufficient tonnage and value was identified, and this tonnage is included inthe Inferred Resource category given in the Mineral Resource statement.

The following tables are based on the2013 Technical Report, as certified by the identified QPs as of the effective datesindicated. Mineral resources that are not mineral reserves do not havedemonstrated economic viability. Mineral Resources reported here for Bisha Mainand Harena are inclusive of Mineral Reserves.

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|   |             ANNUAL  INFORMATION FORM - 2013 |
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**Table 1.1 Combined Bisha, Harena, Northwestand Hambok Mineral Resource Estimate**

**Paul Gribble, C. Eng., Effective Date:December 31, 2013**

| **Indicated**       |           |        |          |          |     |       | **  Contained Metal** |
|---------------------|----------------|-------------|---------------|---------------|----------|------------|----------------------------|
|                | **NSR Cutoff** | **Tonnes**  | **Copper**    | **Zinc**      | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**            | **($/t)**      | **('000s)** | **%**         | **%**         | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | Variable       | 480         | -   |  -       | 6.6      | 20         | -                          | - | 100 | 300 |
| **Supergene Phase** | Variable       | 8,480       | 3.41          |  -       | 0.6      | 25         | 638,650                    | - | 160 | 6,920 |
| **Primary Phase**   | Variable       | 32,260      | 1.05          | 4.59          | 0.6      | 36         | 743,920                    | 3,223,350 | 570 | 36,430 |
| **Total Indicated** |           | **41,220**  |          |          |     |       | **1,382,570**              | **3,223,350** | **830** | **43,650** |
|                |           |        |          |          |     |       |                       |   |   |   |
| **Inferred**        |           |        |          |          |     |       | ** Contained Metal**  |
|                |           | **Tonnes**  | **Copper**    | **Zinc**      | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**            |           | **('000s)** | **%**         | **%**         | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | Variable       | 570         | -   | -   | 3.9      | 19         | -                          | - | 61 | 350 |
| **Supergene Phase** | Variable       | 110         | 1.37          | -   | 3.4      | 18         | 4,200                      | - | 10 | 70 |
| **Primary Phase**   | Variable       | 1,752       | 0.80          | 4.19          | 0.7      | 33         | 31,230                     | 163,210 | 40 | 1,910 |
| **Total Inferred**  |           | **2,432**   |          |          |     |       | **35,430**                 | **163,210** | **111** | **2,330** |

**Table 1.2Bisha Mineral Resource Estimate**

******Paul Gribble, C. Eng., Effective Date:December 31, 2013**

| **Indicated**       |            |        |          |          |     |       | ** Contained Metal**  |
|---------------------|-----------------|-------------|---------------|---------------|----------|------------|----------------------------|
|                | **NSR  Cutoff** | **Tonnes**  | **Copper**    | **Zinc**      | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**            | **($/t)**       | **('000s)** | **%**         | **%**         | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 40.55           | 410         | -   |  -       | 6.8      | 21         | -                          | - | 90 | 270 |
| **Supergene Phase** | 39.55           | 7,460       | 3.68          |  -       | 0.6      | 27         | 605,500                    | - | 150 | 6,590 |
| **Primary Phase**   | 39.55           | 21,070      | 1.05          | 5.87          | 0.7      | 47         | 487,770                    | 2,726,870 | 480 | 31,770 |
| **Total Indicated** | **-**           | **28,940**  |          |          |     |       | **1,093,270**              | **2,726,870** | **720** | **38,630** |
|                |            |        |          |          |     |       |                       |   |   |   |
| **Inferred**        |            |        |          |          |     |       | **  Contained Metal** |
|                |            | **Tonnes**  | **Copper**    | **Zinc**      | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**            |            | **('000s)** | **%**         | **%**         | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 40.55           | 30          | -             | -   | 7.3      | 39         | -                          | - | 10 | 30 |
| **Supergene Phase** | 39.55           | 10          | 7.23          | -   | 0.1      | 10         | 2,200                      | - | 0 | 0 |
| **Primary Phase**   | 39.55           | 1,300       | 0.80          | 4.50          | 0.5      | 36         | 23,100                     | 129,600 | 20 | 1,500 |
| **Total Inferred**  | **-**           | **1,340**   |          |          |     |       | **25,300**                 | **129,600** | **30** | **1,530** |

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|   |             ANNUAL  INFORMATION FORM - 2013 |
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**Table 1.3Harena Mineral Resource Estimate**

******Paul Gribble, C. Eng., Effective Date:December 31, 2013**

| **Indicated**       |             |        |       |          |     |       | ** Contained Metal** |
|---------------------|------------------|-------------|------------|---------------|----------|------------|---------------------------|
|                | **NSR   Cutoff** | **Tonnes**  | **Copper** | **Zinc**      | **Gold** | **Silver** | **Cu**                    | **Zn** | **Au** | **Ag** |
| **Zone**            | **($/t)**        | **('000s)** | **%**      | **%**         | **g/t**  | **g/t**    | **('000 lbs)**            | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 42.41            | 70          |  -    |  -       | 5.5      | 14         |  -                   |  - | 10 | 30 |
| **Primary Phase**   | 41.41            | 1,800       | 0.65       | 3.91          | 0.6      | 23         | 25,760                    | 154,990 | 30 | 1,350 |
| **Total Indicated** | **-**            | **1,870**   |       |          |     |       | **25,760**                | **154,990** | **40** | **1,380** |
|                |             |        |       |          |     |       |                      |   |   |   |
| **Inferred**        |             |        |       |          |     |       | ** Contained Metal** |
|                |             | **Tonnes**  | **Copper** | **Zinc**      | **Gold** | **Silver** | **Cu**                    | **Zn** | **Au** | **Ag** |
| **Zone**            |             | **('000s)** | **%**      | **%**         | **g/t**  | **g/t**    | **('000 lbs)**            | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 40.55            | 20          | -          | -   | 5.9      | 8          | -                    | - | 0 | 10 |
| **Primary Phase**   | 39.55            | 350         | 0.75       | 4.10          | 0.8      | 32         | 5,700                     | 31,200 | 10 | 350 |
| **Total Indicated** | **-**            | **370**     |       |          |     |       | **5,700**                 | **31,200** | **10** | **360** |

**Table 1.4 Northwest Mineral ResourceEstimate**

******Paul Gribble, C. Eng., Effective Date: December 31,2013**

| **Indicated**       |             |        |       |     |     |       | **  Contained Metal** |
|---------------------|------------------|-------------|------------|----------|----------|------------|----------------------------|
|                | **NSR   Cutoff** | **Tonnes**  | **Copper** | **Zinc** | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**            | **($/t)**        | **('000s)** | **%**      | **%**    | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 40.70            | -           |  -    |  -  | -        | -          |  -                    |  - | - | - |
| **Supergene Phase** | 39.70            | 1,020       | 1.47       |  -  | 0.2      | 10         | 33,150                     | - | 10 | 330 |
| **Primary Phase**   | 39.70            | 2,530       | 1.04       | 1.08     | 0.3      | 13         | 58,020                     | 60,250 | 20 | 1,050 |
| **Total Indicated** | **-**            | **3,550**   |       |     |     |       | **91,170**                 | **60,250** | **30** | **1,380** |
|                |             |        |       |     |     |       |                       |   |   |   |
| **Inferred**        |             |        |       |     |     |       | ** Contained Metal**  |
|                |             | **Tonnes**  | **Copper** | **Zinc** | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**            |             | **('000s)** | **%**      | **%**    | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 40.70            | 500         | -          | -        | 3.7      | 18         | -                          | - | 50 | 300 |
| **Supergene Phase** | 39.70            | 100         | 0.80       | -        | 3.7      | 19         | 2,000                      | - | 10 | 70 |
| **Primary Phase**   | 39.70            | 100         | 0.90       | 0.90     | 2.9      | 15         | 2,400                      | 2,400 | 10 | 60 |
| **Total Inferred**  | **-**            | **700**     |       |     |     |       | **4,400**                  | **2,400** | **70** | **430** |

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|   |             ANNUAL  INFORMATION FORM - 2013 |
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**Table 1.5  Hambok Mineral Resource Estimate**

******Paul Gribble, C. Eng., Effective Date:  December 31, 2013**

| **Indicated ** |             |        |       |     |     | **   Contained Metal** |
|---------------------|------------------|-------------|------------|----------|----------|---------------------------------------|
|                | **NSR   Cutoff** | **Tonnes**  | **Copper** | **Zinc** | **Gold** | **Silver**                       | **Cu** | **Zn** | **Au** | **Ag** |
| **Zone**            | **($/t)**        | **('000s)** | **%**      | **%**    | **g/t**  | **g/t**                          | **('000 lbs)** | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 44.45            | -           |  -    |  -  | -        | -                                |  - |  - | - | - |
| **Primary Phase**   | 43.45            | 6,860       | 1.14       | 1.86     | 0.2      | 10                               | 172,370 | 281,240 | 40 | 2,260 |
| **Total Indicated** | **-**            | **6,860**   |       |     |     |                                  | **172,370** | **281,240** | **40** | **2,260** |
|                |             |        |       |     |     |                                  |   |   |   |   |
| **Inferred**        |             |        |       |     |     | **  Contained Metal**            |
|                |             | **Tonnes**  | **Copper** | **Zinc** | **Gold** |  **Silver**                      | **Cu** | **Zn** | **Au** | **Ag** |
| **Zone**            |             | **('000s)** | **%**      | **%**    | **g/t**  |  **g/t**                         | **('000 lbs)** | **('000 lbs)** | **('000   Oz)** | **('000 Oz)** |
| **Oxide Phase**     | 44.45            | 20          | -          | -        | 1.5      |  17                              | - | - | 1 | 10 |
| **Primary Phase**   | 43.45            | 2           | 0.90       | 0.20     | 0.2      |  8                               | 30 | 10 | 0 | 0 |
| **Total Indicated** | **-**            | **22**      |       |     |     |                                  | **30** | **10** | **1** | **10** |

Notes to be readin conjunction with the Resource tables above:

| (1) | NSR Cutoff ($/t): variable as per tables above.  MineralResources are defined within an optimal  LG pit shell, generated usingmetal prices for copper, zinc, gold, and silver of $3.35/lb, $1.05/lb,$1,350/oz, and $23/oz, respectively, using blocks of all resourcecategories.  The mining cost and total ore-based cost (process, G&A,and stockpile rehandle) applied was the 2014 budget mining cost withappropriate ore haulage costs for each satellite deposit.  Overall pitslopes varied from 34.5° to 44° for Bisha, 29° to 35.5° for Harena, from 39° to45° for Northwest, and 40° overall for Hambok (preliminary assessment). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | NSR values were calculated for eachblock using both Indicated and Inferred categories, metal prices, recoveries,appropriate smelter terms, and downstream costs.  Metallurgicalrecoveries, supported by metallurgical testwork, were applied as follows: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | Bisha Oxide Zone: recoveries of 88% and22% were applied for gold and silver, respectively. |
|--------|----|--------------------------------------------------------------------------------------------|

|   | b) | Harena Oxide Zone: a recovery of 75% wasapplied for gold. |
|--------|----|-----------------------------------------------------------|

|   | c) | Bisha Supergene Zone: recoveries of 88%,46%, and 50% were applied for copper, gold, and silver, respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------|

|   | d) | Bisha HW Zone: recoveries of 85%, 46%,and 50% were applied for copper, gold, and silver, respectively. |
|--------|----|--------------------------------------------------------------------------------------------------------|

|   | e) | Bisha Transition Zone (mixed zinc andsecondary copper zone below the supergene): recoveries as per supergene zonewere applied. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------|

|   | f) | Bisha Primary Zone: recoveries to copperconcentrate of 85%, 36%, and 29% were applied for copper, gold, and silver,respectively.  Recoveries to zinc concentrate of 83.5%, 9%, and 20% wereapplied for zinc, gold, and silver, respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g) | Harena Primary Zone: recoveries tocopper concentrate of 85%, 36%, and 29% were applied for copper, gold, andsilver, respectively.  A zinc recovery to zinc concentrate of 72% wasapplied. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | h) | Northwest Oxide Zone: recoveries of 88%and 22% were applied to gold and silver, respectively. |
|--------|----|-----------------------------------------------------------------------------------------------|

|   | i) | Northwest Supergene Zone: recoveries of87%, 46%, and 50% were applied for copper, gold, and silver,respectively.  Zinc was not assigned a recovery, as the values areisolated on the fringes of the deposit. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | j) | Northwest Primary Zone: recoveries tocopper concentrate of 87%, 36%, and 29% were applied for copper, gold, andsilver, respectively.  Recoveries to zinc concentrate of 81%, 9%, and 20%were applied for zinc, gold, and silver, respectively. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | k) | Hambok Oxide Zone: recoveries of 88% and22% were applied to gold and silver, respectively. |
|--------|----|--------------------------------------------------------------------------------------------|

|   | l) | Hambok: recoveries to copper concentrateof 88%, 87%, 36%, and 29% were applied for copper, zinc, gold, and silver,respectively.  Preliminary metallurgical characterization studies, but notfull testing, have been completed for Hambok. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mineral Resources are reported withinthe pit shell generated using the specified commodity prices, using NSR blockgrade cutoffs derived as above.  Tonnages were rounded to the nearest10,000 tonnes, and grades were rounded to two decimal places for copper andzinc, one decimal place for gold, and no decimal places for silver. Tonnages and grades for the Inferred category are further rounded, reflectingthe uncertainty that attaches to this category. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Rounding as required by reportingguidelines may result in apparent summation differences between tonnes, grades,and contained metal contents. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

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| (5) | Tonnage and grade measurements are inmetric units.  Contained gold and silver ounces are reported as troyounces, contained copper and zinc pounds as imperial pounds. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Stockpile tonnages are included asIndicated Resources in the totals given in the tables for Bisha and Harena. |
|-----|---------------------------------------------------------------------------------------------------------------|

| (7) | The Bisha Primary Inferred Resourceincludes an underground resource.  This was derived by defining a shapearound contiguous blocks where an NSR of $100 was achieved.  The value ofNSR $100 represents the processing cost plus approximately $60/t mining cost. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Mineral Resources that are not MineralReserves do not have demonstrated economic viability. |
|-----|---------------------------------------------------------------------------------------------|

**Mi****neral Reserves**

The Proven and Probable Mineral Reserves at theoperation have been classified in accordance with the 2010 CIM DefinitionStandards for Mineral Resources and Mineral Reserves.  Mineral Reserves aredefined within a mine plan, with open pit phase designs guided by LG optimizedpit shells, generated using metal prices for copper, zinc, gold and silver of$2.90/pound, $0.92/pound, $1,175/ounce, and $20/ounce respectively. The NSRCut-Offs/t are: oxide zone $40.55 for Bisha and $42.41 for Harena; supergene zone$39.55 for Bisha; and primary zone $39.55 for Bisha, and $42.41 for Harena.

Pit slope design criteria reflect no change from the previousreserves estimate with overall pit slopes varied from 34.5° to 44° for Bisha,and from 29° to 35.5° for Harena.  Revenue will be generated from the sale ofcopper concentrates (which contain payable co-products of gold and silver)during the supergene ore phase, and both copper and zinc concentrates duringthe primary ore phase of the operation. Small quantities of oxides remainingwithin the pits and stockpiles will be processed at the end of the mine lifethrough the currently inactive CIL circuit, producing doré with payable goldand silver. To capture the multi-rock ore types, variable recoveries by rocktype, and multi-element complexity, NSR values were calculated for blockvaluation.

The NSR grade determination considers the recoveries,concentrate grades, and penalties (where applicable) for each rock type, andapplies the metal prices as noted above and various cost parameters, resultingin a net value/t of ore, inclusive of all costs outside the mine gate.  OnlyMeasured and Indicated Mineral Resources were considered for processing. Inferred Mineral Resources were treated as waste. As of February 26, 2014, thecopper and gold prices used are well below both three-year trailing prices($3.60/lb and $1,540/oz, respectively) and recent spot prices ($3.23/lb and$1,290/oz, respectively).  The silver price used is well below the three-yeartrailing average of $29/oz, and just below recent spot prices of $21/oz.  Thezinc price used is equal to the three-year trailing price of $0.92/lb, which isalso the current spot price.

The waste and ore-based costs applied for pitoptimization and mine planning were based on 2014 budget costs developed byBMSC.  The mining cost (inclusive of ore control, geology, lab services, and amining equipment-sustaining capital allowance) was $2.89/t, plus an appropriateincremental haulage cost per bench.  The total ore-based costs (process,G&A, stockpile re-handle, and a TMF-sustaining capital allowance) included$39.55/t for supergene and primary ores. 

Because the mineralization-waste delineation wasperformed using an NSR block value, net of downstream costs, the totalore-based cost represents the marginal break-even cut-off grade for pitoptimization and mine planning purposes.

The Mineral Resource estimates for Bisha and Harena areconsidered to be undiluted.  A 2 metre dilution skin was added at the time ofore and waste delineation for mine planning purposes (i.e., Mineral Reserves). No mining loss adjustments were made.

Factors that may affect the Mineral Reserve estimatesinclude dilution; metal prices; smelter, refining, and shipping terms;metallurgical recoveries and geotechnical characteristics of the rock mass;capital and operating cost estimates; and effectiveness of surface andgroundwater management.  

The QPs are of the opinion that these potentialmodifying factors have been adequately accounted for using the assumptions inthis report, and therefore the Mineral Resources within the mine plan may beconverted to Mineral Reserves. Factors that may affect the assumptions in this reportare:

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-  Commodity price and exchange rate assumptions.
-  Ensuring marketability of concentrates in particular the copper    concentrate during the supergene phase will require careful ore control and    blending to minimize smelter penalties.
-  Mill throughput of the identified ore types may prove to be    higher or lower than modelled.  If certain rock types or delivered blends of    rock types have lower throughputs than currently modelled, this would increase    the processing cost, which would in turn increase the mill cut-off grade.  If    all other things held constant, this would tend to reduce the tonnage of the    Mineral Reserve and the amount of contained metal.  If throughput reductions    are significant, this could reduce the size of the economic pit limits, further    reducing the Mineral Reserve.  Furthermore, a reduction in throughput would    delay cash flow, resulting in a negative impact on  economics.
-  Effective surface and groundwater management are important to the    safety and productivity of the mining operation.  If the currently planned    water management methods prove to be ineffective, additional dewatering wells    and/or sumps and pump systems may be required, which would add to the capital    and operating costs, resulting in a negative impact on  economics and a    potential reduction in the Mineral Reserves.

The summary of the Mineral Reserves are shown in thefollowing tables.  No re-estimates have been done by Nevsun.

**Table 2.1 Combined Bishaand Harena) Mineral Reserve Estimate**

**Jay Melnyk, B.Eng., EffectiveDate December 31, 2013**

| **Probable**         |         |       |     |     |       | **  Contained  Metal** |
|----------------------|--------------|------------|----------|----------|------------|-----------------------------|
|                 | **Tonnes**   | **Copper** | **Zinc** | **Gold** | **Silver** | **Cu**                      | **Zn** | **Au** | **Ag** |
| **Zone**             | **(1000's)** | **%**      | **%**    | **g/t**  | **g/t**    | **('000 lbs)**              | **('000 lbs)** | **('000 Oz)** | **('000 Oz)** |
| **Oxide Phase**      | 510          | -          | -        | 6.25     | 19         | -                           | - | 103 | 280 |
| **Supergene  Phase** | 7,400        | 3.57       | -        | 0.61     | 27         | 582,420                     | - | 145 | 6,420 |
| **Primary Phase**    | 19,550       | 1.00       | 5.54     | 0.67     | 45         | 429,910                     | 2,386,030 | 421 | 28,020 |
| **Total Probable**   | **27,460**   |       |     |     |       | **1,012,330**               | **2,386,030** | **669** | **34,720** |

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|   |             ANNUAL  INFORMATION FORM - 2013 |
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**Table 2.2 Bisha Mineral Reserve Estimate**

**JayMelnyk, B.Eng., Effective Date December 31, 2013**

| **Probable******      |         |       |     |     |       | ** Contained Metal** |
|-----------------------|--------------|------------|----------|----------|------------|---------------------------|
|                  | **Tonnes**   | **Copper** | **Zinc** | **Gold** | **Silver** | **Cu**                    | **Zn** | **Au** | **Ag** |
| **Zone**              | **(1000's)** | **%**      | **%**    | **g/t**  | **g/t**    | **('000 lbs)**            | **('000 lbs)** | **('000 Oz)** | **('000 Oz)** |
| **Oxide Phase**       | 430          | -          | -        | 6.50     | 20         | -                         | - | 90 | 280 |
| **Supergene Phase**   | 7,400        | 3.57       | -        | 0.61     | 27         | 582,420                   | - | 145 | 6,420 |
| **Primary Phase**     | 18,390       | 1.02       | 5.66     | 0.68     | 46         | 413,540                   | 2,294,730 | 402 | 27,200 |
| **Subtotal Probable** | **26,220**   |       |     |     |       | **995,960**               | **2,294,730** | **637** | **33,900** |

**Table 2.3 Harena Mineral Reserve Estimate**

**JayMelnyk, B.Eng., Effective Date December 31, 2013**

| **Probable**          |         |          |          |     |       | **  Contained Metal** |
|-----------------------|--------------|---------------|---------------|----------|------------|----------------------------|
|                  | **Tonnes**   | **Copper**    | **Zinc**      | **Gold** | **Silver** | **Cu**                     | **Zn** | **Au** | **Ag** |
| **Zone**              | **(1000's)** | **%**         | **%**         | **g/t**  | **g/t**    | **('000 lbs)**             | **('000 lbs)** | **('000 Oz)** | **('000 Oz)** |
| **Oxide Phase**       | 80           | -   | -   | 4.93     | 16         | -                          | - | 13 | - |
| **Primary Phase**     | 1, 160       | 0.64          | 3.57          | 0.52     | 22         | 16,370                     | 91,300 | 19 | 820 |
| **Subtotal Probable** | **1,240**    |          |          |     |       | **16,370**                 | **91,300** | **32** | **820** |

Notes to be read inconjunction with the Reserve tables above:

| (1) | NSR Cutoff ($/t): Oxide Phase $40.55for Bisha and $42.41 for Harena: Supergene Phase $39.55 for Bisha and PrimaryPhase $39.55 for Bisha and $42.41 for Harena.  Mineral Reserves aredefined within a mine plan, with phase designs guided by LG pit shells,generated using metal prices for copper, zinc, gold and silver of $2.90/lb,$0.92/lb, $1,175/oz, and $20/oz respectively.  The mining cost applied wasthe 2014 budget mining cost with appropriate haulage cost adjustments. The total ore based costs (process, G&A, and stockpile re-handle) are$40.55/t for oxide, and $39.55/t for supergene and primary ores.  Harenaore-based costs include an additional $2.63/t overland ore haulage cost. Overall pit slopes varied from 34.5° to 44° for Bisha and from 29° to 35.5° forHarena. |
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| (2) | NSR values were calculated usingdiluted Indicated grades, metal prices, recoveries and appropriate smelterterms, and downstream costs.  Metallurgical recoveries, supported bymetallurgical testwork, were applied as follows: |
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|   | a) | Bisha Oxide Zone: recoveries of 88% and22% were applied for gold and silver, respectively. |
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|   | b) | Harena Oxide Zone: a recovery of 75% wasapplied for gold; 80 kt of oxide remain in the Harena pit. |
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|   | c) | Bisha Supergene Zone: recoveries of 88%,46%, and 50% were applied for copper, gold, and silver respectively. |
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|   | d) | Bisha Hanging Wall Zone: recoveries of85%, 46% and 50% were applied for copper, gold and silver, respectively. |
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|   | e) | Bisha Transition Zone (mixed zinc andsecondary copper zone below the supergene): the same metallurgical parametersas for the Bisha supergene zone were applied. |
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|   | f) | Bisha Primary Zone: recoveries to copperconcentrate of 85%, 36%, and 29% were applied for copper, gold, and silver,respectively.  A recovery to zinc concentrate of 83.5% was applied forzinc.  Gold and silver reporting to the zinc concentrate are not expectedto be payable. |
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|   | g) | Harena Primary Zone: recoveries tocopper concentrate of 85%, 36% and 29% were applied for copper, gold and silverrespectively.  A zinc recovery to zinc concentrate of 72% wasapplied.  Gold and Silver reporting to zinc concentrate are not expectedto be payable. |
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| (3) | Mineral Reserves are reported withinBisha and Harena ultimate pit designs, using NSR block grade, where themarginal cutoff is the total ore-based cost stated above.  Tonnages arerounded to the nearest 10kt and grades are rounded to two decimal places withthe exception of silver, which was rounded to zero decimal places. |
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| (4) | Rounding as required by reportingguidelines may result in apparent summation differences between tonnes, grade,and contained metal content. |
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| (5) | Tonnage and grade measurements are inmetric units.  Contained gold and silver ounces are reported as troyounces, contained copper and zinc pounds as imperial pounds. |
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| (6) | The life-of-mine (LOM) stripping ratiosin tonnes for Bisha and Harena are 5.6: 1 and 5:7: 1, respectively. |
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| (7) | The Bisha Probable Oxide MineralReserve includes the pyrite sand and uncrushed DSO stockpiled material, being320 kt at 7.8 g/t Au in the stockpile as of 31 December 2013. |
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| (8) | The Bisha Probable Supergene MineralReserves includes 105 kt at 5.25% Cu in the stockpile as of 31 December2013. |
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| (9) | ForBisha and Harena, conversions from Mineral Resources to Mineral Reservesincluded a mining dilution of 2 m applied around contiguous blocks thatexceeded the appropriate NSR cutoff value. |
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**Mining Operations**

The table below highlights the 3year key mine and process metrics at Bisha.

**Table3.1 Key Production Highlights – 3 Year History**

|                                             | **2013**  | **2012**  | **2011**   |
|--------------------------------------------------|-----------|-----------|------------|
| Oxide ore  mined, tonnes                         | 1,187,000 | 1,591,000 | 1,898,000  |
| Supergene ore  mined, tonnes                     | 805,000   | -         | -          |
| Waste mined,  tonnes                             | 9,038,000 | 8,677,000 | 11,114,000 |
| Strip  ratio, (using tonnes)                     | 4.5       | 5.5       | 5.9        |
| Copper  phase prestrip, tonnes                   | -         | 1,220,000 | -          |
|                                             |      |      |       |
| Processing – copper:                       |      |      |       |
| Tonnes milled                                    | 767,000   | -         | -          |
| Copper feed grade, %                             | 3.9       | -         | -          |
| Recovery, % of copper                            | 73.5      | -         | -          |
| Copper in concentrate produced,  millions pounds | 48.0      | -         | -          |
|                                             |      |      |       |
| Processing – gold:                         |      |      |       |
| Tonnes milled                                    | 887,000   | 1,807,000 | 1,806,000  |
| Gold grade (g/t)                                 | 3.4       | 6.2       | 7.6        |
| Recovery, % of gold                              | 79        | 86        | 88         |
| Gold in doré, ounces produced               | 92,000    | 313,000   | 379,000    |

The Bisha Main pit is planned to be approximately 1.5 kilometreslong and 1.0 kilometres wide.  The slope heights will range from 160 metres to290 metres. 

Open pit slope design recommendations have been providedfor each design sector in each geotechnical domain.  Design sectors are definedby the average azimuth of the anticipated wall orientations, based ongeological structural controls on slope stability.  Geotechnical domains resultfrom the combination of structural domains and geotechnical units, resulting innine distinct geotechnical domains with the recommended inter-ramp angles varyingfrom 31° to 46°, depending on the design sector and geotechnical domain. All ofthe slope designs assume that controlled blasting will be undertaken for thefinal walls of the pit.

Depressurization of the open pit slopes is required toachieve the open pit slope designs as the pre-development water table isapproximately 15 metres below ground surface.  Therefore a combination ofvertical wells and in-pit sumps in use with horizontal drains to be installedto dewater the open pit and depressurize the slopes.

The Bisha and Harena deposits are being mined byconventional open pit mining methods.  The Bisha pit consists of nineindividual pit phases, where the first three phases targeted oxide production,the second three target supergene production, and the final three phases willtarget primary production.  The oxide pit phases have now been exhausted, andPhases 4, 5, and 6 are currently providing supergene ore.  Stripping for theprimary mineralization has started in Phase 8. 

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The Harena pit features two pit phases, one targetingoxide production (which was mainly completed in 2013 with some remnant materialremaining), and the final phase targeting primary production to be active in 2021for waste stripping with ore extraction scheduled for 2023.  The Harena pit iscurrently inactive.

Although the initial oxide production phase of theoperation is complete, small quantities of oxide mineralization remain withinsome of the pit phases and in stockpiles.  These materials will be processed atthe end of the primary phase of the operation.  

The open pit designs for Bisha Main include double laneramp design widths of 26 metres, based on three times the width of the Cat 775truck, ramp gradient of 10 percent, a nominal minimum mining width of 25 metres;and smoothing of walls in areas where convex “noses” could cause geotechnicalissues. 

The mine plan for the current mineral reserves wasdeveloped using a throughput of 2.4 million tonnes per annum for all materials.Descent rates were limited to 50 vertical metres per year.  Drilling andblasting will be performed on 5 metre benches.  The mine is scheduled to work360 days a year, with five days allowed for delays due to weather disruptions. The plant is scheduled to operate 365 days a year.

The mine delivers ore to the ROM pad, where it is dumpedinto several different short-term stockpiles.  This ore is then reclaimed by afront-end loader to the dump pocket, following a blending plan that is provideddaily and modified as required based on plant performance.  Longer-termstockpiling of non-oxide material has been minimized to limit oxidization.

Bisha has three different types of mineralization –oxide, supergene, and primary – each requiring a specific process flow sheet. The plan in the Bisha Feasibility Study to mine and process each zone insuccession starting with the top oxide zone (now ceased), is still beingfollowed.  The oxide plant facilities included a primary jaw crusher, a singleSAG followed by single ball grinding mills, cyanide leach/CIL circuit, cyanidedestruction circuit, refinery to produce doré bullion, tailings thickener,tailings discharge system, and the necessary reagent, water, and air systems.Additional process equipment as part of the new copper flotation plant to treatthe supergene mineralization was commissioned by mid-2013 and installeddownstream of the crushing and grinding “front end” part of the carbon-in-leach(CIL) plant which treated the oxide ore.  This equipment consists of flotationcells for copper roughing and cleaning duties, regrind mills for size reductionof rougher concentrate, copper concentrate thickener and pressure filters, acopper concentrate load-out building, copper flotation reagent systems,flotation air blowers, and pressure filter air compressors.

Before the supergene mineralization is exhausted, theadditional equipment required to process the primary mineralization will beinstalled and commissioned.  Due to the sub-horizontal and undulating contactbetween the supergene and primary mineralized materials, there will be amulti-year period where both supergene and primary materials are mined.  Duringthis overlap period, both supergene and primary ores will be treated incampaigns of appropriate durations.

For the treatment of primary mineralization, additionalequipment will include zinc roughing and cleaning flotation circuits, a zincconcentrate regrind mill, zinc concentrate thickener and pressure filters, azinc concentrate load-out building, zinc flotation reagent systems, anadditional zinc flotation air blower, and a zinc pressure filter aircompressor.

Some stockpiling of supergene and primary mineralizationtypes will occur.  The effect of any possible sulphide mineral oxidation onflotation performance should be minimized by management practices currentlyused in the base metal sulphide sector, such as reduced wetting of broken ore.

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The current LOM plan starts from the December 2013end-of-month surveyed surface.  Over the remaining LOM, it is expected that 150million tonnes of waste rock will be produced from the Bisha Main pit andplaced in two waste rock facilities to the east and southeast of the open pit,as well as in a backfill dump located in the north end of the ultimate pit. The east waste rock facility nominally covers 80 hectares, and the southeast wasterock facility nominally covers 90 hectares.  An operational scheduling plan hasbeen prepared for placement of the rock within the dumps that allows potential acidrock drainage issues to be appropriately managed during operations and closure.

**Metallurgical Test Work and ProcessPlant Design**

The Bisha Property mineral resource contains three oretypes: a gold and silver bearing oxide cap (treatment ceased in Q2, 2013),underlain by a more complex secondary copper mineralized supergene ore, whichis in turn underlain by primary copper-zinc ore where chalcopyrite (copper) andsphalerite (zinc) are the main economic minerals.

The metallurgical performances of the three ore typescorresponding with the December, 2013 mineral reserves are summarized in Table 3.2. 

| **Table 3.2:   Expected Metallurgical Performance of the Three Ore   Types** |
|------------------------------------------------------------------------------|
|                                                                         | **%AuRecovery** | **%AgRecovery** | **%CuGrade** | **%CuRecovery** | **%ZnGrade** | **%ZnRecovery** |
| Bullion  from Bisha Oxide Ore                                                | 88 | 22 | - | - | - | - |
| Bullion  from Harena Oxide Ore                                               | 75 | n/a | - | - | - | - |
| Cu  Concentrate from Bisha Supergene Ore                                     | 46 | 50 | 30 | 88 | - | - |
| Cu  Concentrate from Bisha Primary Ore                                       | 36 | 29 | 25.5 | 85 | - | - |
| Zn Concentrate from Bisha  Primary Ore                                       | - | - | - | - | 55 | 83.5 |
| Cu Concentrate from Harena Primary  Ore                                      | 36 | 29 | 25.5 | 85 | - | - |
| Zn Concentrate from Harena  Primary Ore                                      | - | - | - | - | 52 | 72 |

The oxide, supergene andprimary ores require different processing techniques andequipment.      The current plan, since treatment ofthe oxide ore ceased in Q2, 2013 and processing of supergene ore commenced, isto mine the remaining two zones (supergene zone at Bisha Main and the primary zonesat Bisha Main and Harena) in succession with some minor overlap of supergeneand primary ore. This is pending further reviews to economically optimize themine production schedule. When the supergene ore availability diminishes, whichis anticipated by H1 2016, the current flotation plant treating supergene orewill have been suitably modified to accept its first primary copper-zinc ore.The additional equipment to be installed will include zinc roughing and cleanerflotation sections, zinc rougher concentrate regrinding, zinc concentratethickener and pressure filters, a zinc concentrate load-out building, zincflotation reagents system, additional flotation air blowers and a zinc pressurefilter air compressor. This will allow a manageable transition from processingthe supergene ore to primary copper-zinc ore. There will be sometransition period where campaign treatment of both ore types may be required.However, no interruption to production is anticipated as campaign processing ofdifferent ore types is an established practice in the treatment of base metalssulphide ores. 

Approximately 860 tonnes ofcopper concentrate per day averaging 30% copper is estimated to be producedduring the first year of commercial production (over 300,000 tonnes ofconcentrate on an annualized basis), withsignificant quantities for 2014-2015, and smaller quantities in 2016-2024 averaging about 100,000 tonnes of copperconcentrate per year due to lower coppergrades.  Zinc concentrate production occurs in mid-2016 through to 2024 averaging approximately 200,000 tonnes of zincconcentrate per year.  Concentrate is loaded from the dewatered stockpile, sealed in special half-height shipping containers and transported tothe existing container port of Massawa onthe Red Sea by truck. The concentrate is exported using a proven system withindustry leading environmental controls.The sealed containers are stockpiled inMassawa at the container port facilities while waiting for ship arrival. The rotainer crane system then discharges the containers into bulk vessels andthe empty containers are returned to the Bisha mine for re-loading. The bulkvessels deliver the concentrate to coppersmelters worldwide.

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**MineWaste and Water Management**

Wasterock from the Bisha open pit is being placed in two separate waste rock dumps, NAGand PAG. The decision on where to place future waste rock excavated during pitstripping is based upon waste rock characterization laboratory work recentlyupdated. Waste rock characterization at Harena has indicated there is no PAGfor the oxide zone and consequently no requirement for drainage and sumpsystems. Waste rock dump locations are determined taking into account the levelof environmental impact, optimizing mining operations, and permit expansion ofmining areas based on further exploration programs. The Bisha PAG waste rockdump has been designed with compacted low permeable soil base layer, drainageand seepage collection system, and sumps to facilitate re-use of any seepage inthe process plant. Design criteria at both pits allows for gravity drainage tothe open pits on closure.

Tailings generated from the processes are pumped to the TMFsituated to the north of the process plant. Site selection of the TMF was basedon storage characteristics of the basin and natural topography, extent ofenvironmental impact and embankment construction requirements.  The TMF islined with an impermeable HDPE liner to reduce any potential impact togroundwater aquifer and/or downstream users.  An aggressive return watermethodology of operation ensures maximum re-use of this valuable resource.  Avigorous cyanide monitoring program is in place to ensure compliance withInternational Cyanide Management Code requirements. The first 3 metre lift ofthe existing TMF started during 2013 and is planned to be complete by end of May2014. 

Surface water flow in the project area is non-existentfor much of the year; however, river and stream flow can be significant duringprecipitation events.  Three separate diversions in the Freketetet River ensurethat storm water is directed away from operations to both the east (ShateraRiver) and the west (Mogoraib). These diversions have enabled downstreamcommunities to develop river-fed agricultural opportunities. Groundwater is themain water source for the process plant, the volume of which is reduced by azero discharge policy, judicious re-use of poor quality pit sump water andmaximum use of dewatering well waters.  

**Socioeconomicand Environmental Assessment and Approval**

The environmental assessment phase of Bisha Minecommenced with baseline studies in 2004. The Terms of Reference for the SEIAproject was approved by the Eritrean Ministry of Energy and Mines in March,2006 and the SEIA was completed in December, 2006.  During 2009 the Companycompleted an update report which augmented the 2006 SEIA and addressed therevisions to the configuration of the project that had occurred since the BishaFeasibility Study.  The project social and environmental management plans wereextended to capture the additional details of the project resulting from theadvancement of engineering and development and to ensure full compliance withthe Eritrean National Standards, and the IFC Performance Standards as appliedto the Equator Principles. The Company continues to consult and work closelywith government ministries on matters pertaining to social and environmentalaspects and will continue to do so through the LOM.  There have been nomaterial adverse social or environmental impacts identified.

The Company adopted the IFC Performance Standards anddeveloped its management plans accordingly.  The plans have been subject toreview by the host country, as well as part of an extensive due diligence byinternational bankers who at one time were considered for funding.  The socialand environmental plans have been implemented and have subsequently beenaudited by an independent third party. Staff training and engagement with localauthorities, as well as significant employment from both local and otherin-country sources are key elements of the Company’s social and environmentalmanagement.  Department heads for both human resources and environment areexperienced professionals with a solid understanding of local requirements aswell as IFC Performance Standards.  The Company continues to place significantemphasis on all social and environmental impacts of its operations.

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SEMPs are in place and serve to assist the Company inachieving compliance of the operation to both Eritrean legislation and wherethis is not available, to international best practice or standards. An in-housereview and update of the SEMPs was conducted during 2012 based on commentsreceived by the IRC. An independent review and update of the SEMP was completedin Q2 2013 and has addressed the updated roles and responsibilities in theSEMP. Internally, policies and statements of intent have been developed withrespect to environmental policy, water conservation, energy conservation,cyanide management and materials management. These policies are expected to beaugmented with training, awareness and toolbox talks, with the goal ofimplementing these policies throughout the workforce. An extensiveenvironmental monitoring program which includes air quality (ambient andoperational dust and emissions), noise (ambient and operational), waterqualities and quantities, natural resources (soils, wildlife, livestock,erosion, ecology, and botanical) measure the effectiveness of the proposedmitigation actions in the environmental management plans. The conceptualclosure plan of 2009 has been updated to include the new operations at theHarena deposit.

The Company continues to consult and work closely withgovernment ministries through the submission of annual and quarterly reportsand quarterly inspections by the IRC and will continue to do so throughout the LOM. There were no adverse social or environmental incidents for 2013. 

**OtherExpansion Plans**

BMSC will advance its zinc expansion project through2014, with a target start-up in H1 2016.  The engineering, procurement andconstruction management contractor has been appointed and review of alternateoptimised options continues, initial commitments for long-lead items will bemade in Q2 2014 and civil works have commenced along with detailed designs.Capital cost for the zinc project will be more closely estimated during H12014.

**Exploration and Development**

Exploration on the BMSC properties while significant todate is planned for continued ramp up in terms of approach and work level. There are plans to implement lithogeochemistry and further improve the level ofexploration sophistication to better understand the stratigraphy and specificcontrols that hosts the deposits. Lithogeochemistry will aid in determining andfinger printing favourable host stratigraphy and quantifying zones ofalteration. In addition there will become a higher degree of a geophysicalcomponent rather than gravity method focusing on electromagnetic methods inorder to focus drilling to the best possible targets. New license areas willrequire regional airborne surveys to help focus the exploration effort andselect areas of existing licenses will also be covered to provide directcorrelation with known mineralization.

The main areas of focus will remain the Bisha Mine andnear mine in best understanding the controls on mineralization at Bisha andexploring along these features to find new ore bodies or extensions of Bisha.This would include shallow open-pitable resources with the potential for oxideand supergene mineralization as well as potentially deeper underground primaryresources. Other areas will include the Harena deposit to find possibleextensions along Harena or new ore bodies close by. Work will continue at the NWdeposit to understand the controls on mineralization at NW and to explore alongthese features to find higher grade material including further exploration ofthe eastern lode. Focus will also be placed on defining the relationshipbetween the stratigraphy that hosts NW and Bisha (oxide, supergene and primarymineralization – open pit). As well, there will be further exploration on MogoraibRiver Exploration License at Hambok and the Hambok to Ankerite (Aderat)Corridor, Tekewuda and Asheli focussing on the Asheli Ridge. There will be focuson the Bisha to Harena Corridor as primary target area followed by covering theentire block with new surveys.  Finally work will be initiated on the new MogoraibRiver Exploration License with focus on the Shabayet West target initially,followed by covering the entire block with new surveys.

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The major development work will be the completion of theprimary metallurgical test work to assist with confirmation of design of theprimary flotation circuit and continued progress with the engineering design,procurement and construction of the plant due for completion in H1 2016.

**RiskFactors**

The business and operations of the Company are highlyspeculative due to the high-risk nature of its business in the mining industry,including but not limited to the acquisition, financing, exploration,development, operation and production of metals at its mining properties. Therisks below, some of which are summarized elsewhere in this Report, are not theonly ones facing the Company. Additional risks not currently known to theCompany, or that the Company currently deems immaterial, may also impair theCompany’s operations. If any of the following risks actually occur, theCompany’s business, financial condition and operating results could beadversely affected.

***Commodity price risk.***  Revenue andprofitability of the Company’s operations will be dependent upon the marketprice of mineral and materials commodities.  The Company’s revenues aresubstantially attributable to the sale of copper concentrate and other metals. Prices of copper, gold and other metals are key performance drivers for theCompany and fluctuations in the prices of these commodities can have asignificant impact on the Company’s operations and financial performance.  TheCompany does not enter into any commodity hedging and accordingly is fullyexposed to price risk.  The price of copper, gold, and other metals can and hasexperienced volatile and significant price movements over short periods oftime, and is affected by numerous factors beyond the control of the Company,including international economic and political trends, expectations ofinflation or deflation, currency exchange fluctuations (specifically, the USdollar relative to other currencies), interest rates, global or regionalconsumption patterns, speculative activities and increased production due toimproved mining and production methods.  The supply of and demand for copper,gold and other metals are affected by various factors, including politicalevents, economic conditions, competition, production costs, and governmentalpolicies.  If the market price of copper, gold or other metals fallssignificantly from its current level, the production and ongoing minedevelopment at Bisha or any other project of the Company may be rendereduneconomic and the production or development at Bisha or any other project maybe suspended or delayed.  In addition, if the market price of copper or goldwere to drop and the prices realized by the Company on copper concentrate andother metals gold sales were to decrease significantly and remain at this levelfor a significant period of time, profitability of the Company and cash flowwould be negatively affected. 

Mineral reserve calculations andlife-of-mine plans using significantly lower metal prices could result inmaterial write-downs of the Company’s investment in mining properties andincreased amortization, reclamation and closure charges.  In addition toadversely affecting the Company’s mineral reserve estimates and its financialcondition, declining commodity prices can impact operations by requiring areassessment of the feasibility of a particular project. Such a reassessmentmay be the result of a management decision or may be required under financingarrangements related to a particular project. Even if the project is ultimatelydetermined to be economically viable, the need to conduct such a reassessmentmay cause substantial delays or may interrupt operations until the reassessmentcan be completed.

The BishaMine’s power generation plant and mobile equipment fleet are diesel fuelled. As fuel costs are a significant component of the Company’s operating costs,changes in the price of diesel could have a significant effect on its operatingcosts and adversely affect profitability. Energy prices can be affected bynumerous factors beyond the Company’s control, including global and regionalsupply and demand, political and economic conditions and applicablegovernmental policies.

***Exploration,development and operating risks.*** Mining operations generally involve a high degree of risk.  The Company’soperating mine in Eritrea is subject to all the hazards and risks normallyassociated with mineral production, including damage to or destruction of plantand equipment, unexpected geologic formations, pit collapse, injury or lifeendangerment, environmental damage, fire, equipment failure or structuralfailures, such as retaining walls or tailings dams, potentially resulting inenvironmental pollution and consequent liability.  The Company may also beunable to effectively manage the sulphide rich reactive ground as it affectsblasting and continuous ore supply and experience unplanned detonationsresulting from reactive[1] ground or experience a failure of drilling,processing and mining equipment or unanticipated costs and downtimes due tooptimizing the copper floatation plant and its operating facilities.   Thesecosts, downturns and other risks can have a material, adverse effect on theCompany’s operating costs and results, its operations and financial position. 

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The exploration for and development of mineral depositsinvolves significant risks, which even a combination of careful evaluation,experience and knowledge may not eliminate. While the discovery of an ore bodymay result in substantial rewards, few properties that are explored areultimately developed into producing mines. There is no certainty thatexpenditures made by the Company towards the search and evaluation of mineraldeposits will result in discoveries or future development.  Whether a mineraldeposit will be commercially viable depends on a number of factors, whichinclude, among other things, the interpretation of geological data obtainedfrom drill holes and other sampling techniques, feasibility studies (whichinclude estimates of cash operating costs based upon anticipated tonnage andgrades of ore to be mined and processed), the particular attributes of thedeposit such as size, grade and metallurgy, expected recovery rates of metalsfrom the ore, proximity to infrastructure and labour, the cost of water andpower, anticipated climatic conditions, cyclical metal prices, fluctuations ininflation and currency exchange rates, higher input commodity and labour costs,and government regulations, including regulations relating to prices, taxes,royalties, land tenure, land use, importing and exporting of minerals, andenvironmental protection.

Major expenses may be required to locate and establishadditional mineral reserves.  It is impossible to ensure that the explorationor development programs planned by Nevsun will result in additional profitablecommercial mining operations. The exact effect of these factors cannot beaccurately predicted, but the combination of these factors may result in Nevsunnot receiving an adequate return on invested capital.  The Companysignificantly relies on the analyses performed by its Qualified Persons toestimate resources and reserves, and such estimates may be subject to materialrisks and uncertainties.

The marketability of naturalresources that may be acquired or discovered by the Company will be affected bynumerous factors beyond its control.  These factors include marketfluctuations, the proximity and capacity of natural resource markets andprocessing equipment, and government regulations, including regulationsrelating to prices, taxes, royalties, land tenure, land use, importing andexporting of minerals and environmental protection.  The exact effect of thesefactors cannot be accurately predicted, but the combination of these factorsmay result in the Company not receiving an adequate return on invested capital.

***Foreignoperation and political risks.***  The Company conducts operationsin Eritrea through its foreign subsidiaries with financial assets in Barbadosand Eritrea, and substantially all of its assets are held in such entities. While the Company believes that the political climate of these countries andstrong government support in Eritrea provide a stable environment for itsoperations, there is no guarantee against any future political, or economicinstability in these countries or neighboring countries which might adverselyaffect the Company.  

Political unrest in Egypt, Libya,Syria, Yemen, Saudi Arabia, Somalia, South Sudan, Sudan and other countries inthe region has had an impact on investor confidence with companies operating innorthern Africa, including Eritrea, even though no direct effect is evident oranticipated in the operations at Bisha or communications with the Eritreangovernment.  New government regulations in Canada, the United States or othercountries in which the Company operates could adversely affect the Company’sfuture business and operations.  In addition, intervention by the internationalcommunity through organizations such as the United Nations could affect thepolitical risk of operating in Eritrea. In December, 2009 the United NationsSecurity Council (UNSC) imposed sanctions on Eritrea related to an armsembargo, which in itself has had no direct impact to the Bisha Mine, except tocause some uncertainty as to how UN member states may continue to deal with thecountry. In December, 2011 the UNSC provided additional sanctions guidance tomember states.  Effects of the sanctions could impact the Company’s ability tooperate efficiently.  There are also unresolved tensions between Ethiopia andEritrea and the possibility of future armed conflicts between Ethiopia andEritrea by rebel groups or otherwise which could affect or interfere withcontinued operations at Bisha.

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1  Reactive ground is a term to describe ground in which  an exothermic chemical reaction between sulphides (in this case pyrite, which  is an iron sulphide) contained in rock at Bisha and the ammonium nitrate  contained in explosives may take place.

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Other risks the Company may facein operating in foreign jurisdictions include unforeseen government actions,terrorism, hostage taking, military repression, extreme fluctuations incurrency exchange rates, high rates of inflation, labour unrest, the risks ofwar or civil unrest, expropriation and nationalization, renegotiation ornullification of existing concessions, licenses, permits and contracts, illegalmining, changes in taxation policies, restrictions on foreign exchange andrepatriation, and changing political conditions, currency controls, exportcontrols, and governmental regulations that favour or require the awarding ofcontracts to local contractors or require foreign contractors to employ citizensof, or purchase supplies from, a particular jurisdiction or other events.

All or any of these factors, limitations, or theperception thereof could impede the Company’s activities, result in theimpairment or loss of part or all of the Company’s interest in the properties,or otherwise have an adverse impact on the Company’s valuation and stock price.

***Infrastructure risk.***  Mining, processingand development activities depend, to some degree, on adequate infrastructure.Reliable roads, bridges, power sources and water supply are importantdeterminants that affect capital and operating costs.  Disruption orcurtailment of access to or maintenance of such infrastructure or supplies, beit due to inclement weather, wear and tear, or other reasons, could have anadverse material impact on ability to service and operate due to higher costsor business interruption. Unusual or infrequent weather phenomena, sabotage,government or other interference in the maintenance or provision of suchinfrastructure could adversely affect the Company’s operations, financialcondition and results of operations.

***Transportation risk.***  Delivery to the mineoperation of required operating consumables and fuel as well as delivery to thevarious smelters of mine produced concentrates is most often subject to thirdparty contractors, be it land transport in country or sea freight to and fromthe ocean port.  To a large extent there are many factors outside the controlof the Company which can adversely affect the delivery of these key consumablesor the export of these metal concentrates ranging from elevated transport coststo significant delays or temporary stoppage in product movement. The Companymay be unable to achieve transport logistical efficiencies in thetransportation of copper concentrate from the mine site to port.  Of particularconcern is the performance of the transport contractor responsible for landdelivery of copper concentrates from mine gate to the port of Massawa. Thereremains a risk that the contractor will not be able to transport the requiredvolume of concentrate due to various factors such as an inadequate number oftrucks, poor maintenance of those trucks, or an inadequate number of traineddrivers to operate the trucks.  In addition, there may be difficulties inchartering marine bulk carriers into Massawa in a timely manner to transportconcentrate from the port of Massawa to overseas customers.  There is also arisk of piracy with respect to marine transport in and around the Gulf of Adenand the risk that the port of Massawa could become inaccessible in the event ofpiracy, military conflict or political unrest.  Any interruption in thedelivery chain from mine site to customers could both halt mine process plantproduction due to limited storage capacity for concentrates (as well as risksassociated with build-up of concentrate stocks exposed to the elements) leadingto business interruption losses, and could also breach terms and conditions ofofftake agreements some of which may specify required quantities of concentrateover set time periods. These factors could have a material impact on results ofthe operation and associated revenues and costs.

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***Key executive risk.***  The Company is to alarge degree dependent on the services of key executives and senior personnel. The loss of these persons or the Company’s inability to attract and retainexecutives and personnel with the qualifications necessary to operate thebusiness successfully may adversely affect its business and future operations. The Company competes with numerous other companies for the recruitment andretention of qualified executives and employees.

***Expatriate and third-party nationals skills risk.*** The Company’s Eritrean operations are the first modern commercial miningoperation in that jurisdiction.  As a result, the Company is reliant onattracting and retaining expatriate and third-party nationals with miningexperience to staff key operations and administration management positions. The Company’s inability to attract and retain personnel with the skills andexperience to manage the operation and train and develop staff, due to theintense international competition for such individuals, may adversely affectits business and future operations.

***Labour risk.***  The Company is dependent onits workforce to extract and process minerals, and is therefore sensitive to alabour disruption of the Company's mining activities or changes to laws. TheCompany endeavours to maintain good relations with its workforce in order tominimize the possibility of strikes, lock-outs and other stoppages at its worksites.  Relations between the Company and its employees may be impacted bychanges in labour relations which may be introduced by, among other things,employee groups, unions, and the relevant governmental authorities in whosejurisdictions the Company carries on business.

***Mineral reserve and mineral resource estimaterisk.***  The tabulated data for mineral reserves and mineral resourcespresented in figures in this document and contained in the Company’s continuousdisclosure documents filed on SEDAR (www.sedar.com)and EDGAR (http://www.sec.gov/edgar.shtml)are estimates generated by Qualified Persons, and no assurance can be given thatthe anticipated tonnages and grades will be achieved or, in the case ofreserves, that the indicated level of metallurgical recovery will be realized. Actual reserves may not conform to geological, metallurgical or otherexpectations, and the volume and grade of ore recovered may be below theestimated levels.  Market fluctuations in the price of mineral commodities orincreases in the costs to recover minerals may render the mining of orereserves uneconomical and require the Company to take a write-down of the assetor to discontinue development or production.  Moreover, short-term operatingfactors relating to the reserves, such as the need for orderly development ofthe ore body or the processing of new or different ore grades, may cause amining operation to be unprofitable in any particular accounting period.

There are numerous uncertaintiesinherent in estimating quantities of mineral resources and reserves, includingmany factors that are beyond the Company’s control.  The estimates are based onvarious assumptions relating to metal prices and exchange rates during theexpected life of production, mineralization of the area to be mined, theprojected cost of mining including costs of fuel and other critical operatingconsumables, and the results of additional planned development work.  Actualfuture production rates and amounts, revenues, taxes, operating expenses,environmental and regulatory compliance expenditures, development expendituresand recovery rates may vary substantially from those assumed in the estimates. Any significant change in these assumptions, including changes that result fromvariances between projected and actual results or any assumptions in thehistorical resource estimates turn out to be incorrect, incomplete or flawed inany respect or the methodologies and models used to prepare the resource andreserve estimates either underestimate or overestimate the resources orreserves due to hidden or unknown conditions,  could result in materialdownward or upward revision of current estimates.

***Production risk.***  Asis typically the case with the mining industry, no assurances can be given thatfuture mineral production estimates will be achieved. Estimates of futureproduction for the Company’s mining operations are derived from the Company’smining plans.   These estimates and plans are subject to change, includingchanges based on actual mining results at various phases of the miningoperations.  The Company cannot give any assurance that it will achieve itsproduction estimates.  The Company may not be able to effectively managepotential deleterious elements contained within the ore to ensure continued 

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saleability of concentrates produced at projected costs.  The Company may notbe able to effectively manage the combination of oxidation of ore stockscoupled with in pit water inflow which may adversely affect flotation andquality of concentrates produced. There is a further risk that the potentialreactive nature of the ore and waste with high pyrite (sulphides) content and itsreactivity with ammonium nitrate contained in explosives will have a negativeimpact on ore and waste blasting efficiencies and result in increased costs. Any process plant adjustments or modifications to further optimize and improveoperating efficiencies could result in significant capital expenditures andhave an impact on process plant productivity or result in a temporary shutdownto rectify the issues.  The Company’s failure to effectively manage these andother matters and to achieve its production estimates could have a material andadverse effect on the Company’s future cash flows, results of operations,production cost, financial condition and prospects.  The plans are developedbased on, among other things, mining experience, reserve estimates, assumptionsregarding ground conditions, hydrologic conditions and physical characteristicsof ores (such as hardness and presence or absence of certain metallurgical ormineralogical characteristics) and estimated rates and costs of production, andinclude assumptions derived by geological block models developed by theQualified Person in consultation with Company personnel.  Actual production mayvary from such estimates for a variety of reasons, including risks and hazardsof the types discussed above, and as set out below, including:

-  greater    mining dilution than expected affecting geological grades and material    movement;
-  accidents;
-  mobile    and fixed plant equipment failures;
-  natural    phenomena such as inclement weather conditions, floods, droughts, rock slides    and earthquakes;
-  unforeseen    geotechnical structures and faults leading to pit wall failures and production    delays;
-  adverse    chemical nature and potential acidity and amount of in-pit water;
-  unexpected    or higher than anticipated occurrence of deleterious elements in the ore such    as arsenic, selenium and tellurium impacting subsequent concentrate quality;
-  higher    than expected oxidation of in-pit ore stocks adversely impacting flotation    characteristics and subsequent concentrate quality;
-  encountering    unusual or unexpected mineralogy conditions including reactive sulphide rock    with ammonia nitrate based explosives adversely affecting blasting procedures    and productivity;
-  changes    in power costs and potential power shortages;
-  shortages    of principal supplies (fixed components, parts and consumables) needed for    operations;
-  strikes    and other actions by labour; 
-  unanticipated    costs, delays or downtime due to maintenance or further required optimisation    of the process plant and operation facilities; and
-  regulatory    restrictions imposed by government agencies.

Such occurrences could, inaddition to stopping or delaying mineral production or impacting quality andsaleability of metal concentrates, result in damage to mineral properties,injury or death to persons, damage to the Company’s property or the property ofothers, monetary losses and legal liabilities.  These factors may also cause amineral deposit that has been mined profitably in the past to becomeunprofitable.  Estimates of production from properties not yet in production orfrom operations that are to be expanded are based on similar factors(including, in some instances, feasibility studies prepared by the Company’spersonnel and outside consultants) but it is possible that actual operatingcosts and economic returns will differ significantly from those currentlyestimated.

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***Need for additional reserves risk.***  Given that mines have limited lives based on provenand probable mineral reserves, the Company must continually replace and expandits reserves at its mines.  The life-of-mine estimates included in theCompany’s continuous disclosure documents filed on SEDAR and EDGAR are subjectto adjustment.  The Company’s ability to maintain or increase its annualproduction of gold, copper and other commodities will be dependent insignificant part on its ability to bring new mines into production and toexpand reserves at existing mines.  The Bisha Mine has an estimated 11 yearmine life remaining. 

***Permitting risk.*** TheCompany’s operations and future development are subject to receiving andmaintaining permits from appropriate governmental authorities and the grantingof new exploration and other licenses and permits.  There is no assurance thatdelays will not occur in connection with obtaining all necessary renewals ofexisting permits for current operations or exploration tenements, or foradditional permits for any possible future changes to operations orapplications for new exploration tenements, or additional permits associatedwith new legislation. Prior to any development on any of its properties, theCompany must receive permits from appropriate governmental authorities. Therecan be no assurance that the Company will obtain or continue to hold allpermits necessary to develop or continue operating at any particular property. Any failure to obtain or maintain requisite permits could have a materialadverse effect on the Company and its future production.

***Putative classaction and litigation risk.***  The Company and certain of itsdirectors and officers is party to legal proceedings, which, if decidedadversely to the Company or any of its directors or officers, may have amaterial effect on the financial or business position or prospects of theCompany.  Investors are urged to read the description of the pending legalproceedings set out under the heading, Contingencies.  Any litigation couldresult in substantial costs and damages and divert management’s attention andresources.    

***Risks related to the construction, plantexpansion, transition to zinc phase at Bisha, optimisation of current processplant, and start-up of new mining operations or mining phases.***  Thesuccess of construction projects, plant expansions and their optimisation, thetransition to primary production at Bisha or the start-up of new mines by theCompany is subject to a number of factors including the availability andperformance of engineering and construction contractors, mining contractors,suppliers and consultants, the receipt of required governmental approvals andpermits in connection with the construction of mining facilities and theconduct of mining operations, including environmental permits, price escalationon all components of construction, plant expansion, transition to primaryproduction or start-up of new mines, the underlying characteristics, qualityand unpredictability of the exact nature of mineralogy and metallurgy of adeposit and the consequent accurate understanding of doré or concentrateproduction, the successful completion and operation of conveyors to move oreand other operational elements. Any delay in the performance of any one or moreof the contractors, suppliers, consultants or other persons on which theCompany is dependent in connection with its construction, expansion ortransition activities or start-up of new mines, a delay in or failure toreceive the required governmental approvals and permits in a timely manner oron reasonable terms, or a delay in or failure in connection with the completionand successful operation of the construction or operational elements coulddelay or prevent the construction projects, plant expansions, the transition tosupergene or primary production at Bisha as planned, or the start-up of newmines. There can be no assurance that current or future construction projects, plantexpansions, the transition to supergene production at Bisha as planned or thestart-up of new mines by the Company will be successful.

***Environmentalrisk.*** Production at the Company’s mine involves the use of toxic materials. Shouldtoxic materials leak or otherwise be discharged from the containment systemthen the Company may become subject to liability for cleanup work that may notbe insured. While the Company intends to prevent discharges of pollutants intothe ground water and the environment, it may be unsuccessful and may becomesubject to liability for hazards that it may not be insured against. Lossesfrom these events may cause the Company to incur significant costs that couldhave a material adverse effect upon its financial performance and results ofoperations.

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The Company’s operations aresubject to environmental regulations promulgated by the government of Eritrea. Environmentallegislation provides for restrictions and prohibitions on spills, releases oremissions of various substances produced in association with certain miningindustry operations, such as seepage from tailings disposal areas that couldresult in environmental pollution.  A breach of such legislation may result inthe imposition of fines and penalties.  Environmental legislation is evolvingin general in a manner that means standards and enforcement, fines andpenalties for non-compliance are becoming more stringent. Environmentalassessments for projects carry a heightened degree of responsibility forcompanies, directors, officers and employees.  The cost of compliance withchanges in government regulations has the potential to reduce the profitabilityof operations.  The Company plans to devote significant time and resources tomeeting the goal of complete compliance with all environmental regulations inthe countries in which the Company has operations and comply with prudentinternational standards.

Environmental hazards may also exist on the propertieson which the Company holds interests that are unknown to the Company at presentand that have been caused previous to the Company receiving title to theproperties.

Failure to comply with applicablelaws, regulations and permitting requirements may result in enforcementactions, including orders issued by regulatory or judicial authorities causingoperations to cease or be curtailed, and may include corrective measuresrequiring capital expenditures, installation of additional equipment, orremedial actions. Parties engaged in mining operations, including the Company,may be required to compensate those suffering loss or damage by reason of themining activities and may have civil or criminal fines or penalties imposed forviolations of applicable laws or regulations.

Amendments to current laws, regulations and permits governingoperations and activities of mining companies, or more stringent implementationthereof, could have a material adverse impact on the Company and causeincreases in exploration expenses, capital expenditures or production costs,reduction in levels of production at producing properties, or abandonment ordelays in development of new mining properties.

***Currency risks.***  At present all of theCompany’s activities are carried on outside of Canada and are subject to risksassociated with fluctuations of the rate of exchange of foreign currencies. The United States dollar (USD) is the Company’s functional currency, exposingthe Company to risk on any fluctuations of the USD with other currencies towhich the Company is exposed, which are primarily the Canadian dollar (CAD),South African rand (ZAR), and the Eritrea Nakfa (ERN).  While only a smallportion of the Bisha Mine’s operating expenses are denominated in ERN, are-valuation or de-pegging of this currency to the USD could expose the Companyto additional currency risk.

***Funding risks.***  The exploration,development, operations, acquisitions or other activities may requiresubstantial additional financing.  Failure to obtain sufficient financing mayresult in delaying or indefinite postponement of exploration, development,operations, acquisitions or other activities of the Company including a loss ofproperty interest.  Historically, the Company has financed its activitiesthrough the sale of equity capital and through cash-flow from operations.  Thesale of metals from Bisha currently provides and is expected to continue toprovide revenue from operations, which the Company expects will be sufficientto fund its future needs. Factors which may impact cash flows include changesin metal prices, taxes, operating costs, marketability of copper concentrate,gold and other metals from operations, capital expenditures or other unexpectedoccurrences such as unanticipated costs, delays, downtimes, slowdown orstoppage of operations.  Failure to obtain sufficient financing to continueoperations if such needs arise may adversely affect the Company’s business andfinancial position. Should the Company require additional funding forexploration, development, operations, acquisitions or other activities, there isno assurance that sources of financing will be available on acceptable terms orat all.  

***Counterpartyrisks.***  The Company is exposed tovarious counterparty risks including, but not limited to: (i) financialinstitutions that hold the Company’s cash and cash equivalents; (ii) companiesthat have payables to the Company, including copper concentrate and dorécustomers and non-controlling interest; and (iii) insurance providers.  As aresult, the Company may become exposed to credit-related losses in the event ofnon-performance by such counterparties.

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***Insurance risks.***  Although the Companymaintains insurance to protect against certain risks in such amounts as itconsiders to be reasonable, its insurance will not cover all the potentialrisks associated with a mining company’s operations. Nevsun may also be unableto maintain insurance to cover these risks at economically feasible premiums.Insurance coverage may not continue to be available or may not be adequate tocover any resulting liability.

***Land title risk.***  The acquisition of titleto mineral properties is a very detailed and time-consuming process. Title to,and the area of, mineral concessions may be disputed.  Although the Company believesit has taken reasonable measures to ensure proper title to its properties,there is no guarantee that title to any of its properties will not bechallenged or impaired.  Third parties may have valid claims underlyingportions of the Company’s interests, including prior unregistered liens,agreements, transfers or claims, including indigenous land claims, and titlemay be affected by, among other things, undetected defects.  In addition, theCompany may be unable to operate its properties as permitted or to enforce itsrights with respect to its properties.

***Competition risks.***  The mining industry isintensely competitive in all of its phases and the Company competes with manycompanies possessing greater financial and technical resources than itself. There is intense competition in the mining industry for mineral rich propertiesthat can be developed and produced economically, the technical expertise tofind, develop, and operate such properties, the labour to operate theproperties, and the capital for the purpose of funding such properties.  Manycompetitors not only explore for minerals, but conduct refining and marketingoperations on a global basis.  Such current and future competition may resultin the Company being unable to acquire desired properties.    The Company isalso subject to risks associated with a hostile takeover of the common sharesof the Company or other unsolicited attempts to acquire control of the Company.

***Write-downs and impairments risk.***  Miningand mineral interests are the most significant assets of the Company andrepresent capitalized expenditures related to the development of miningproperties and related plant and equipment and the value assigned toexploration potential on acquisition.  The costs associated with miningproperties are separately allocated to exploration potential, reserves andresources and include acquired interests in production, development andexploration-stage properties representing the fair value at the time they wereacquired.  The values of such mineral properties are primarily driven by thenature and amount of ore believed to be contained or potentially contained, inproperties to which they relate.

The Company reviews and evaluatesits mining interests for impairment at least annually or when events or changesin circumstances indicate that the related carrying amounts may not berecoverable, which becomes more of a risk in the global economic conditionsthat exist currently.  An impairment is considered to exist if the totalestimated future undiscounted cash flows are less than the carrying amount ofthe assets.  An impairment loss is measured and recorded based on discountedestimated future cash flows.  Future cash flows are estimated based on expectedfuture production, commodity prices, operating costs and capital costs.  Thereare numerous uncertainties inherent in estimating mineral reserves and mineralresources.  Differences between management’s assumptions and market conditionscould have a material effect in the future on the Company’s financial positionand results of operation.

In addition, with a weaker global economy, there is alarger risk surrounding inventory levels.  The assumptions used in thevaluation of work-in process inventories by the Company include estimates of copper,gold and other metals contained in the ore stock piles, crushed ore piles,processing plant circuits, and an assumption of the copper and gold price andother metal prices expected to be realized when the copper, gold and othermetals are recovered.  If these estimates or assumptions prove to beinaccurate, the Company could be required to write-down the recorded value ofits work-in-process inventories, which would reduce the Company’s earnings andworking capital.

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***Derivatives risk.***  In the future theCompany may use certain derivatives products to manage the risks associatedwith changes in gold prices, silver prices, interest rates, foreign currencyexchange rates and fuel prices.  The use of derivative instruments involvescertain inherent risks including, among other things: (i) credit risk – therisk of default on amounts owing to the Company by the counterparties withwhich Company has entered into such transaction; (ii) market liquidity risk –the risk that the Company has entered into a derivative position that cannot beclosed out quickly, by either liquidating such derivative instrument or byestablishing an offsetting position; and (iii) unrealized mark-to-market risk –the risk that, in respect of certain derivative products, an adverse change inmarket prices for commodities, currencies or interest rates will result in theCompany incurring an unrealized mark-to-market loss in respect of suchderivative products.

***Acquisitions andintegration risk.***  The Company continues to examineopportunities to acquire additional mining assets and businesses.  Anyacquisition that the Company may choose to complete may be of a significantsize, may change the scale of the Company’s business and operations, and mayexpose the Company to new geographic, political, operating, financial andgeological risks.  The Company’s success in its acquisition activities dependson its ability to identify suitable acquisition candidates, negotiateacceptable terms for any such acquisition, and integrate the acquiredoperations successfully with those of the Company. 

Any acquisition would beaccompanied by risks.  For example, a material ore body may prove to be belowexpectations; the Company may have difficulty integrating and assimilating theoperations and personnel of any acquired companies, integrating internalcontrols over financial reporting of such acquired companies, identifying andmitigating any potential domestic or foreign liabilities, including potentialliabilities due to foreign anti-corruption laws, realizing anticipatedsynergies and maximizing the financial and strategic position of the combinedenterprise, and maintaining uniform standards, policies and practices acrossthe organization; the integration of the acquired business or assets maydisrupt the Company’s ongoing business and its relationships with employees,customers, suppliers and contractors; and the acquired business or assets mayhave unknown liabilities which may be significant. 

In the event that the Company chooses to raise debtcapital to finance any such acquisition, the Company’s leverage will beincreased. If the Company chooses to use equity as consideration for suchacquisition, existing shareholders may suffer dilution.  Alternatively, theCompany may choose to finance any such acquisition with its existingresources.  There can be no assurance that the Company would be successful inovercoming these risks or any other problems encountered in connection withsuch acquisitions.

***Governmental regulatory risks.***  TheCompany’s mineral exploration, development and production activities aresubject to various laws governing prospecting, development, production, taxes,labour standards and occupational health, mine safety, toxic substances,environmental protection and preservation, and other matters.  No assurance canbe provided that the Company will be successful in its efforts to comply withall existing rules and regulations, that new rules and regulations will not beenacted, or that existing rules and regulations will not be modified in amanner that could limit or curtail production or development of the Company’sproperties.  All such rules and regulations governing the operations andactivities of the Company could have a material adverse effect on the Company’sbusiness, financial condition and results of operations.

***Share price risk.***  The market price of apublicly traded stock is affected by many variables not directly related to thesuccess of the Company, including the market for all resource sector shares,the breadth of the public market for the stock, and the attractiveness ofalternative investments.  The effect of these and other factors on the marketprice of the common shares of the Company on the exchanges on which the commonshares are listed suggests that the share price will be volatile.  In theprevious eight quarters, between January 1, 2012 and December 31, 2013 theCompany’s shares traded in a range between CAD $2.71 and CAD $6.82.

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***Dividend policyrisks.*** The Company has established a dividend policy that has considered the long-termsustainability of cash flows and will be reviewed on a periodic basis andassessed in relation to the growth of the operating cash flows of the Company.

Between January 1, 2012 and December 31, 2013, theCompany paid semi-annual dividends.  Payment of any future dividends will be atthe discretion of the Board after taking into account many factors, includingthe Company’s operating results, financial condition, comparability of thedividend yield to peer gold companies and current and anticipated cash needs. There can be no assurance that the Company will continue to pay dividends atthe current rate or at all.

***Conflicts of interest.* **Certain of the directors and officers of the Company also serve asdirectors and/or officers of other companies involved in natural resourceexploration and development and consequently there exists the possibility forsuch directors and officers to be in a position of conflict. Any decision madeby any of such directors and officers involving the Company will be made inaccordance with their duties and obligations to deal fairly and in good faithwith a view to the best interests of the Company and its shareholders. Inaddition, each of the directors is required to declare and refrain from votingon any matter in which such directors may have a conflict of interest inaccordance with the procedures set forth in the Business Corporations Act(British Columbia) and other applicable laws.

**DIVIDENDS**

The Company declared its first cash dividend of $0.03per share in May, 2011, which was paid to shareholders of record at the closeof business on June 30, 2011.  The second dividend was declared in November,2011 for $0.05 per share to shareholders of record at December 31, 2011, givingshareholders an accumulated annual dividend of $0.08 for a total payment of$15,947,885.

In 2012 the Company declared two cash dividends of $0.05per common share ($0.10 per common share annually) on May 15, 2012 and November15, 2012 which were paid to shareholders on July 16, 2012 and January 15, 2013,respectively, for a total payment of $19,926,031.50.

In 2013 the Company declared two cash dividends of $0.07per common share ($0.14 per common share annually) on May 15, 2013 and November14, 2013 which were paid to shareholders on July 15, 2013 and January 15, 2014,respectively, for a total payment of $27,882,093.19.

Commencing the first quarter of 2014, the Companyintends to pay cash dividends quarterly, instead of semi-annually, as cash flowpermits, with the amount to be decided by the Board.

**DESCRIPTION OF CAPITAL STRUCTURE**

Nevsun Resources Ltd. has authorized capital of anunlimited number of common shares without par value of which 199,347,802 areissued and outstanding at the date of this AIF.  All shares in the capital of Nevsunare of the same class.  The holders of common shares are entitled to dividends,if, as and when declared by the Board, to one vote per common share at meetingsof the shareholders and, upon liquidation, to share equally in such assets of Nevsunas are distributable to the holders of common shares.

Nevsunalso has stock options outstanding in accordance with its former stock optionplan that expired on April 27, 2012 (the “Former Plan”) and its new stock optionplan which was approved by shareholder on September 5, 2012 (the “New Plan”).  Theability to grant options under the Former Plan expired on April 27, 2012, butoptions granted under the Former Plan remain outstanding and exercisable inaccordance with their terms and are governed by that plan. Nevsun’s ability to grant  options under the Former Plan expired on April 27, 2012.

The New Plan provides for amaximum number of securities equaling 6.75% of the outstanding shares which maybe granted as options and including in this calculation the number of optionscurrently outstanding in the Former Plan.  The New Plan allows for a maximum numberof common shares issuable to not exceed 6.75% of the issued and outstandingcommon shares of Nevsun.  As options are exercised or common shares of Nevsun areotherwise issued, the number of options issuable under the New Plan up untilthe date of expiry could be increased up to the 6.75% maximum upon applicationto the TSX.  Options which expire without being exercised are automaticallyadded back into option balance available  under the New Plan. 

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The Board approved an amendment to the New Plan onDecember 13, 2013 to provide for the immediate vesting of unvested options on achange of control.  This revision to the New Plan was approved by the TSX onJanuary 15, 2014.

At the date of this AIF, the total number of stockoptions outstanding is 11,218,500 representing 5.62% of the outstanding sharesof Nevsun of which 6,737,500 options are outstanding under the Former Plan (ofwhich all are vested), representing 3.1% of its outstanding shares and 4,481,000stock options are outstanding under the New Plan (of which 1,152,500 arevested), representing 1.92% of its outstanding shares.  Options under bothplans will remain in existence until they have been exercised, cancelled orhave otherwise expired.  Each vested option is exercisable for one common shareof Nevsun. 

As at the date of this AIF, 2,600,528 stock options were available for grant, but not yet granted underthe New Plan.

No share purchase warrants to purchase common shares ofNevsun are outstanding.

Nevsun has not asked for, and is not aware of anystability or provisional ratings on the Company’s securities set by anyapproved rating organization.

**MARKET FORSECURITIES**

Nevsun Resources Ltd.’s common shares have traded on theTSX since March 8, 1996 and on the NYSE MKT since January 12, 2005. During the 2013 financial year, the closing price of Nevsun’s common shares onthe TSX ranged from CAD $2.77 to CAD $4.63, with monthly trading volume on theTSX ranging from 5.1 million shares in January to 28.9 million shares in March,with an average monthly volume of 10.7 million shares on TSX plus 18 millionshares on NYSE MKT, for a total average monthly volume of 28.7 million shares. There are no seasonal trends to fluctuations in volume or trading price.  Themonthly high/low trading prices and closing prices on the TSX and monthlyvolume for 2013 are as follows:

| **Common Shares** |
|-------------------|
| **CAD $**         | **High ($)** | **Low ($)** | **Close ($)** | **Volume** |
| January           | 4.63 | 3.95 | 4.20 | 5,126,093 |
| February          | 4.26 | 3.32 | 3.70 | 5,458,901 |
| March             | 4.10 | 3.49 | 3.92 | 28,943,416 |
| April             | 3.95 | 3.27 | 3.77 | 10,943,607 |
| May               | 3.96 | 3.38 | 3.75 | 12,991,852 |
| June              | 3.96 | 2.77 | 3.11 | 13,765,718 |
| July              | 3.59 | 2.95 | 3.46 | 8,602,184 |
| August            | 3.58 | 3.41 | 3.34 | 22,545,534 |
| September         | 3.75 | 3.19 | 3.28 | 8,939,447 |
| October           | 4.02 | 3.14 | 3.80 | 8,861,441 |
| November          | 3.93 | 3.18 | 3.57 | 5,261,216 |
| December          | 3.67 | 3.24 | 3.53 | 12,827,488 |

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**DIRECTORS AND OFFICERS**

**Name, Occupation and Security Holding**

The following table sets forth, for each director andofficer of Nevsun Resources Ltd. as of the date of this AIF, the name,municipality of residence, office, periods of service and the principaloccupations in which each director and executive officer of Nevsun has beenengaged during the immediately preceding five years.  Each director of Nevsun holdsoffice until the next annual general meeting of the shareholders of Nevsun oruntil his successor is duly elected or appointed, unless his office is earliervacated in accordance with the articles of Nevsun or he becomes disqualified toact as a director.  Each executive officer is appointed by the Board.

| **Name, Municipality ****of****Residence   and PositionHeld**                                               | **Principal Occupation for the Past Five Years**                                                                                                                                                                                                                                                 | **Director    Since** | **Number &   Percentage ofShares Held** |
|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|---------------------------------------------|
| R. Stuart Angus(1)(3)(5)(6)  Sechelt, British  Columbia, Canada  Chairman and Director                           | Business advisor to  the mining industry 2006-present.                                                                                                                                                                                                                                           | January, 2003         | 402,392 (<1%)                            |
| Ian R. Ashby(4)  Campbell, California,  USA  Director                                                            | Non-Executive Director  and Corporate Advisor 2012-present; President–Iron Ore, BHP Billiton Ltd.  2006-2012.                                                                                                                                                                              | January, 2014         | 0                                           |
| Robert J.   Gayton(1)(2)(5)(6)  West Vancouver, British Columbia,  Canada  Director                              | Financial Consultant  since 1994.                                                                                                                                                                                                                                                                | November, 2003        | 62,470 (<1%)                             |
| Gary E.   German(1)(2)(3)(4)(5)  Toronto, Ontario, Canada  Director                                              | Independent Director  and Advisor for international resource companies 2005-present; President,  Old Saw Mill Investments Inc. 2009-present.                                                                                                                                                | April, 1996           | 416,094 (<1%)                            |
| Gerard E.   Munera(1)(2)(3)(5)  Greenwich, Connecticut,  USA  Director                                           | Managing Director,  Synergex Group, investment holding company; Executive Chairman, Arcadia Inc.,  manufacturer of building parts, since 1995.                                                                                                                                                   | April, 1996           | 732,618 (<1%)                            |
| Clifford T.  Davis   Vancouver, British   Columbia, Canada  President, Chief Executive   Officer,  Director | President and Chief  Executive Officer of Nevsun Resources  Ltd. since August, 2008.                                                                                                                                                                                                             | December, 1997        | 1,553,219 (<1%)                          |
| Thomas S. Whelan        Vancouver, British        Columbia, Canada  Chief Financial Officer                      | CFO of Nevsun  Resources Ltd. since January 2014; Global  Mining & Metals Assurance Sector Leader, Ernst & Young LLP 2011-2013;  Vancouver Leader of Assurance Practice,  Ernst & Young LLP 2009-2013; Canadian Mining & Metals Sector Leader,  Ernst & Young LLP 2007-2012. | N/A                   | 0                                           |
| Frazer W. Bourchier  North Vancouver,   British Columbia,  Canada  Chief Operating Officer(4)                    | COO of Nevsun Resources Ltd. since 2012; VP Business Development & Technical Services, Silver  Wheaton Corp. 2010-2012; Consultant, Aurizon Mines Oct-Dec 2009; VP  Operations & Business Development, Intrepid Mines Ltd. 2008-2009.                                                    | N/A                   | 0                                           |

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| **Name, Municipality ****of****Residence          and Position          Held**                                                                       | **Principal Occupation for the Past Five Years**                                                                                                                                                                                                                                                                                                 | **Director         Since** | **Number &        Percentage of        Shares Held** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|----------------------------------------------------------|
| Joseph  P. Giuffre            North Vancouver,      British       Columbia, Canada            Chief Legal Officer and            Corporate Secretary | CLO and Secretary of Nevsun      Resources Ltd. since January 2013; partner of Axium Law Corporation,      2005-2012.                                                                                                                                                                                                                            | N/A                        | 32,500 (<1%)                                          |
| Peter J. Hardie      Maple Ridge, British Columbia, Canada      VP Finance                                                                                | VP Finance of Nevsun Resources Ltd. since January 2013; CFO of the Company August 2008-December 2012.                                                                                                                                                                                                                                            | N/A                        | 2,000 (<1%)                                           |
| Peter M. Manojlovic            Delta, British Columbia,       Canada      VP      Exploration                                                             | VP Exploration of Nevsun      Resources Ltd. since 2012; VP      Exploration, Sabina Gold & Silver Corp., 2010-2012; Chief Geologist,      Sabina Gold & Silver Corp., 2009-2010; Consultant, Paragon Minerals      Corporation, February 2009; Senior Project Leader – New Ventures, Teck      Resources April 2007-January 2009. | N/A                        | 0                                                        |
| Todd E. Romaine            West Vancouver,      British Columbia, Canada      VP Corporate Social       Responsibility(4)                                 | VP Corporate Social      Responsibility of Nevsun Resources Ltd. since November, 2012; Senior Manager, Land Services (Operations),      Enbridge Inc. 2008-2012.                                                                                                                                                                                 | N/A                        | 0                                                        |
| Scott A. Trebilcock      Vancouver,      British Columbia,      Canada      VP Business      Development       & Investor Relations                   | VP Business      Development & Investor Relations of Nevsun Resources Ltd. since 2010; VP      Business Development, Nautilus Minerals 2007-2010.                                                                                                                                                                                            | N/A                        | 0                                                        |

| (1) | Member of the Governance Committee |
|-----|------------------------------------|

| (2) | Member of the Audit Committee |
|-----|-------------------------------|

| (3) | Member of the Human Resources Committee |
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| (4) | Member of the Social Environment, Health & Safety Committee |
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| (5) | Member of Special Committee |
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| (6) | Member of the Litigation Committee |
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As of March 24, 2014, the directors and executive officersof Nevsun, as a group, beneficially owned directly or indirectly, or exercisedcontrol or direction over 3,201,293 common shares or approximately 1.6% of theissued and outstanding common shares of Nevsun.  The same directors andexecutive officers, as a group, have been granted and currently hold options topurchase up to 9,600,000 shares of Nevsun, 1,655,000 of which were granted in2013.

**Cease Trade Orders,Bankruptcies, Penalties or Sanctions**

Certain directors or executive officersof Nevsun are, at the date of this AIF, or have been within the 10 years before the date of this AIF, a director, chiefexecutive officer or chief financial officer of a company that: 

(a)               was subject to a cease trade or similar order, or an order that deniedthe relevant company access to any exemption under securities legislation, thatwas in effect for a period of more than 30 consecutive days (an “Order”) thatwas issued while the director or executive officer was acting in the capacityas director, chief executive officer or chief financial officer, or

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(b)              was subject to an Order that was issued after the director or executiveofficer ceased to be a director, chief executive officer or chief financialofficer and which resulted from an event that occurred while that person wasacting in the capacity as director, chief executive officer or chief financialofficer, 

details of which are described as follows:

|   | R. Stuart Angus is a director of Wildcat SilverCorporation (“Wildcat”), which requested and received notice from the BritishColumbia Securities Commission of the issuance of a management cease tradeorder (the “MCTO”) on October 30, 2007 in connection with the late filing of itsannual audited consolidated financial statements for the fiscal year endingJune 30, 2007. Wildcat’s failure to make the filing within the required timeframe was due to the need to clarify potential foreign tax obligations relatingto an acquisition it made. The required filing was made on January 7, 2008 andthe MCTO was revoked on January 8, 2008. |
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One director of Nevsun has been, within the 10 yearsbefore the date of the AIF, a director or executive officer of a company that,while that person was acting in that capacity, or within a year of that personceasing to act in that capacity, became bankrupt, made a proposal under anylegislation relating to bankruptcy or insolvency or was subject to orinstituted any proceedings, arrangement or compromise with creditors or had areceiver, receiver manager or trustee appointed to hold its assets, details ofwhich are as follows:

|   | Gerard E. Munera resigned from the board of SiVaultSystems Inc. on October 10, 2006; in July, 2007, SiVault Systems Inc. startedbankruptcy proceedings. |
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No director or executive officer of Nevsun, orshareholder holding a sufficient number of securities of Nevsun to affectmaterially the control of Nevsun has, within the 10 years before the date ofthis AIF, become bankrupt, made a proposal under any legislation relating tobankruptcy or insolvency, or was subject to or instituted any proceedings,arrangement or compromise with creditors, or had a receiver, receiver manageror trustee appointed to hold the assets of the director, executive officer orshareholder.

No director or officer of Nevsun, or to Nevsun’s knowledge, a shareholderholding a sufficient number of securities of Nevsun toaffect materially the control of Nevsun, has: 

(a)               been subject to any penalties or sanctions imposedby a court relating to securities legislation or by a securities regulatoryauthority or has entered into a settlement agreement with a securitiesregulatory authority; or

(b)              been subject to any other penalties or sanctionsimposed by a court or regulatory body that would likely be considered importantto a reasonable investor in making an investment decision.  

**Conflicts ofInterest**

To the best of Nevsun’s knowledge, there are no existing or potential material conflictsof interest between Nevsun or a subsidiary of Nevsunand a director or officer of Nevsun ora subsidiary of Nevsun.   

**Audit Committee**

Nevsun has a separately-designatedstanding audit committee in accordance with CSA National Instrument 52-110Audit Committees and with Section 3(a)(58)(A) of the United States SecuritiesExchange Act of 1934, as amended.

**Audit Committee Charter**

The Board has adopted a charter for theAudit Committee which sets out the committee’s mandate, composition,responsibilities and duties.  A copy of the Audit Committee Charter is attachedto this AIF as Schedule “A”.

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**Independent Advice & Funding**

The Audit Committee shall havethe authority to determine the appropriate funding for the ordinaryadministrative expenses of the Audit Committee.  In addition, the AuditCommittee may, in its sole discretion, retain, at the expense of the Company,and determine the compensation to be received by, such legal, financial orother advisors or consultants as it may deem necessary or advisable in order toproperly and fully perform its duties and responsibilities hereunder.    

**Composition of the Audit Committee**

The Audit Committee has three members,all of whom are independent and financially literate.              An outlineof each member’s relevant education and experience follows:

|   | ***Robert J. Gayton, Chair.***Mr. Gayton isa Chartered Accountant with a Ph.D. Business from the University of California(1973). He is a director and audit committee chairman of a number ofcompanies, including Western Copper and Gold Corp., Eastern Platinum Limited, AmerigoResources Ltd. and B2Gold. Mr. Gayton is a current member of the Institute ofChartered Accountants of B.C. From 1976-1987 he was a partner with theaccounting firm Peat Marwick Mitchell in Mississauga, Coquitlam and Vancouver.Mr. Gayton has shown that he has a clear understanding of the relevantaccounting principles, internal controls and procedures for financialreporting, and the relevant experience preparing, auditing, analyzing andevaluating financial statements and their associated complex issues. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Audit Committee has determined that Mr. Gayton isan audit committee financial expert within the meaning of the rules promulgatedby the SEC and that Mr. Gayton is independent within the meaning of the NYSE MKTCompany Guide. |
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|   | ***Gary E. German.***Mr. German has over thirty five yearsof senior management and executive positions in global resource projects andcompanies, including the provision of strategic and corporate finance directionand international commodity brokerage operations. Previously he was ManagingDirector,Corporate Finance Group (resources), Kingsdale Capital Corp. (2002-03),and prior to this Chairman of the Finance Committee and Senior Advisor to thePresident-CEO of Ma'aden, the Kingdom of Saudi Arabia's mineral resourcedevelopment corporation. Mr. German is a graduate of the University of Toronto(Bachelor of Applied Science, Industrial Engineering) and the University ofWestern Ontario (Diploma, International Management).**** |
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|   | ***Gerard E. Munera.***Mr. Munera, a UScitizen, is Managing Director of Synergex Group LLC, an investment holdingcompany, and Executive Chairman of Arcadia Inc., a manufacturer of buildingproducts. He has served on the Audit Committees of three public company boardsand has a diverse background which includes engineering, economics, sales,finance, operations, mining and metals. His tenures have included ChiefFinancial Officer or Chief Executive Officer of several mining and metalscompanies, including 20 years with Pechiney, first as CFO and then as CEO oftheir Argentine subsidiary, then as CEO of their US subsidiary Howmet Aluminumand then as Senior Vice President of their Ferro Alloys, Uranium and Carbonbusinesses in several international locations, all of which included detailedfinancial involvement with the company. Mr. Munera was also CEO of UnionMiniere for fiveyears and CEO of Minorco USA for three years. |
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**Pre-Approval Policies and Procedures**

The Audit Committee has adoptedpolicies and procedures for the engagement of non-audit services, described asfollows:

Nevsun and its subsidiaries will not engage its externalauditor KPMG LLP (“KPMG”) to carry out any non-audit services that are deemedinconsistent with an auditor’s independence (“Prohibited Service”).  

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The AuditCommittee will consider the pre-approval of permitted services to be performedby the external auditor in each of the following broad categories: 

|   | Audit Services, Audit Related Services, Tax Services,as well as Compliance Services, Tax Planning Services, Commodity Tax Services,Executive Tax Services. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Other Services: Valuation Services, InformationTechnology Advisory and Risk Management Services, Actuarial Services, Forensicand Related Services, Corporate Recovery Services, Transaction Services, CorporateFinance Services, Project Risk Management Services, Operational Advisory andRisk Management Services, Regulatory and Compliance Services |
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For permitted services the following pre-approvalpolicies will apply:

A.     Audit Services

The Audit Committee will pre-approve all Audit Servicesprovided by KPMG through the Audit Committee’s recommendation to shareholdersat Nevsun’s annual meeting, of KPMG as Nevsun’s external auditor and throughthe Audit Committee’s review of KPMG’s annual Audit Plan.  

B.     Pre-Approval of Audit Related, Tax and Other Non-Audit Services

Periodically (e.g. annually), the Audit Committee willupdate a list of pre-approved services that are recurring or otherwisereasonably expected to be provided.  

The Audit Committee will besubsequently informed at least annually**of the services on the attachedlist for which the auditor has been actually engaged.

Any additional requests forpre-approval will be addressed on a case-by-case specific engagement basis asdescribed in (C) below.  

C.     Approval of Additional Services

The Company employee making the request will submit therequest for service to the CFO.  The request for service should include adescription of the service, the estimated fee, a statement that the service isnot a “Prohibited Service” and the reason KPMG is being engaged.

***Serviceswhere the aggregate fees are estimated to be less than or equal to $25,000***

Recommendations, in respect of each engagement, will besubmitted by the CFO to the Chairman of the Audit Committee for considerationand approval.  The full Audit Committee will subsequently be informed of theservice at its next meeting.  The engagement may commence upon approval of theChairman of the Audit Committee.

***Services where theaggregate fees are estimated to be greater than $25,000***

Recommendations, in respect of each engagement, will besubmitted by the CFO to the full Audit Committee for consideration andapproval, generally at its next meeting or at a special meeting called for thepurpose of approving such services.  The engagement may commence upon approvalof the full Committee.

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**External AuditorFees**

All dollar amounts in this section areexpressed in Canadian currency.

The following table sets forth the aggregate fees incurredby the Company for the years ended December 31, 2013 and 2012 by KPMG:  

|                                 | **Year ended****December 31,  2013** |   | **Year ended****December 31,  2012** |   |
|--------------------------------------|--------------------------------------|--------|--------------------------------------|--------|
| Audit  fees(1)Audit-related  fees(2) | $ 487,500  -0-             |   |  $ 508,800-0-                   |   |
| Tax fees(3)                          | 22,715                               |   | 50,334                               |   |
| All  other fees(4)                   | 132,900                              |   | -0-                                  |   |
| Total                                | $643,115                             |   | $ 559,134                            |   |

| (1) | Audit fees include fees related to the audit of the year-end financialstatements, audit of the internal control over financial reporting, review of theinterim financial statements, and services that are normally provided by theAuditors in connection with statutory and regulatory filings or engagements forsuch year. |
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| (2) | Audit related fees consist of fees for assurance and related services bythe Auditors that are reasonably related to the performance of the audit orreview of the financial statements and are not reported above as Audit Fees.  Noaudit-related fees were billed by the Auditors in 2013. |
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| (3) | Tax feesfor 2013 and 2012 are primarily for tax compliance and other minor tax advisorymatters, all in accordance with the pre-approval policies of the AuditCommittee. |
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| (4) | Other feeswere billed by the Auditors in 2013 for other services, general advisoryservices relating to due diligence. |
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**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**

Two putative class actions were filed in the UnitedStates District Court for the Southern District of New York, on March 13, 2012, and March 28,2012, respectively, naming the Company and certain officers of the Company asdefendants (hereafter the U.S. Actions).  The plaintiffs assert claims under Sections 10(b) and20(a) of the Securities Exchange Act of 1934, based on allegedmisrepresentations and omissions relating to the amount of gold reserves at theBisha Mine.  The plaintiffs purport to bring suit on behalf of allpurchasers of the Company's publicly traded securities between March 31, 2011and February 6, 2012.  Plaintiffs seek unspecified damages, interest, costsand attorneys' fees on behalf of the putative class.  By order ofcourt, the two cases have been consolidated, and a consolidated amendedcomplaint was filed on August 21, 2012. The consolidated amended complaintexpanded the purported class period to run from March 28, 2011, until February6, 2012, and asserted alleged misrepresentations and omissions relating theBisha Mine’s “strip ratio” throughout 2011, the omission of “material negativetrends”, allegedly in violation of a disclosure duty under U.S. Regulation S-K,and the departure of certain seniorexecutives at the Bisha Mine.  OnSeptember 20, 2012, the Company filed a motion to dismiss all claims againstthe Company and its officers. OnSeptember 27, 2013, the Court granted in part and denied in part the motion todismiss. The parties thereafter agreed to suspend the litigation pending asettlement mediation of the case, in which the parties will seek to voluntarilyresolve the case without further litigation. On October 22, 2013, the districtcourt ordered that further legal proceedings would be suspended until February28, 2014. A mediation was held on December 9, 2013, and the parties were unableto settle the case at that time. Thereafter, plaintiffs moved the court to liftthe stay, and on February 4, 2014, the court granted the motion.  Defendantsfiled their answer to the Complaint on February 28, 2014. A pre-trialconference is scheduled on April 10, 2014. The parties are continuing todiscuss settlement of the U.S. case, as part of a global settlement of both theU.S. case and the Canadian case described below.

A putative class action also was filedin the Ontario Superior Court of Justice on July 12, 2012, naming theCompany and certain officers of the Company as defendants (hereafter theCanadian Actions). Theplaintiff’s Statement of Claim asserts claims for (i) violation of certainprovisions of the Ontario

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 Securities Act, as well as the equivalent statutes ofother provinces; (ii) negligent misrepresentation; and (iii) vicariousliability of the Company, based on alleged misrepresentations and omissionsrelating to the amount of gold reserves, and the grade of the mineable goldreserves, at the Bisha Mine.  The plaintiffs purport to bring suit on behalf ofall purchasers of the Company’s publicly traded securities between March 31,2011, to andincluding February 6, 2012, including purchasers of the Company’s stock on theToronto and American Stock Exchanges.  The plaintiffs amended their claim onFebruary 13, 2013, to add furtherdetail to their factual allegations.  The Canadian Actions are based onessentially the same set of facts and the same alleged misrepresentations asthe U.S. Actions. The plaintiff seeks damages in the sum of $100 million plusinterest and costs, on behalf of the putative class.  The CanadianActions areexpected to proceed more slowly than the U.S. Actions, due to differencesbetween U.S. and Canadian procedural rules.  

On October 2, 2013, the plaintiffs filed their motionfor class certification and for leave to proceed with a claim under PartXXIII.1 of the Ontario Securities Act. The hearing of these motions has not yetbeen scheduled.

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

**INTEREST OF MANAGEMENT AND OTHERS IN****MATERIAL TRANSACTIONS**

No director, officer or other insider of the Company,nor any associate or affiliate of any director, officer or other insider hasparticipated in, directly or indirectly, nor had any material interest in, anymaterial transaction of the Company in the most recently completed financialyear or any of the three preceding financial years.

**TRANSFER AGENTS AND REGISTRARS**

The Company’s registrar and transfer agent isComputershare Investor Services Inc., located in Vancouver, British Columbia.

**MATERIAL CONTRACTS**

There were no material contracts other than in theordinary course of business entered into during 2013.

**NAMESAND INTERESTS OF EXPERTS**

The 2013 Technical Report which isreferenced in this AIF was prepared by the following Qualified Persons.

Jay Melnyk, P.Eng., AGP Mining Consultants, Inc.

Paul Gribble C.Eng., FIMM., Chief Resource Geologist ofBMSC

Peter Munro, BAppSc.,Mineralurgy Pty. Ltd.

To the best of the knowledge of the Company, APG MiningConsultants Inc., Mineralurgy Pty. Ltd and the “designated professionals” (assuch term is defined in Form 51-102F2) thereof hold less than a 1% interest inthe outstanding securities of the Company.

KPMG is the auditor for theCompany and has audited the annual financial statements of the Company for theyear ended December 31, 2013.  KPMG have confirmed that they are independentwith respect to the Company within the meaning of the relevant rules and relatedinterpretations prescribed by the relevant professional bodies in Canada, andunder all relevant US professional and regulatory standards, including PCAOBRule 3520.

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**ADDITIONAL INFORMATION**

Additional information relating to the Company, may befound by using SEDAR on the internet at www.sedar.com,EDGAR filing system at http://www.sec.gov/edgar.shtml, or the Company’s website: www.nevsun.com. 

Additional information includingdirectors' and officers' remuneration and indebtedness, principal holders ofthe Company's securities and options to purchase securities is contained in theCompany's information circular for its most recent annual meeting ofshareholders that involves the election of directors. 

Additional financial information isalso provided in the Company's audited consolidated financial statements andMD&A for its most recently completed financial year, copies of which may befound on SEDAR or EDGAR, or be obtained by contacting the Company at:

NevsunResources Ltd.Suite 760 – 669 Howe StreetVancouver, BC V6C 0B4Tel: 604-623-4700 or Toll-free 1-888-600-2200Email: contact@nevsun.com

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**SCHEDULE“A”**

****NEVSUN RESOURCES LTD. (the “Company”)****

****AUDIT COMMITTEE CHARTER****

TheAudit Committee is appointed by the Board of Directors to:

|   | i. | ensure the Company has in place an effective     system of internal controls over financial reporting which     meets high standards of quality and integrity and complies with legal and     regulatory requirements, and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii. | monitor the performance, independence and     qualification of the Company’s independent auditor. |
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**Composition**

The Audit Committee shallconsist of at least three members of the Board of Directors.  Each member ofthe Audit Committee shall be “independent” of the Company within the meaning ofall applicable legal and regulatory requirements, and eachsuch member must not have participated in the preparation of the Company’sfinancial statements, or that of the Company’s subsidiaries, at any time duringthe three years prior to becoming a member of the Audit Committee (exceptin the circumstances, and only to the extent, permitted by all applicable legaland regulatory requirements).  Each member of the Audit Committee shall also be“financially literate”, which means that he or she must have the ability toread and understand a set of financial statements that present a breadth andlevel of complexity of accounting issues that are generally comparable to thebreadth and complexity of the issues that can reasonably be expected to beraised by the Company’s financial statements.  In addition, at least one memberof the Audit Committee shall be a “financial expert” within the meaning of therules and forms adopted by the US Securities and Exchange Commission and shall be financial sophisticated, in that he or she haspast employment experience in finance or accounting, requisite professionalcertification in accounting or any other comparable experience or backgroundwhich results in the individual’s financial sophistication, including but notlimited to being or having been a chief executive officer, chief financialofficer, or other senior officer with financial oversight responsibilities (exceptin the circumstances, and only to the extent, permitted by all applicable legaland regulatory requirements).

**Responsibilities**

Theoverall responsibilities of the Audit Committee are to:

| 1. | assist the Board of Directors and Managementwith meeting their responsibilities with respect to financial reporting; |
|----|----------------------------------------------------------------------------------------------------------------------|

| 2. | be directly responsible for (i)the selection of an external auditor to be proposed for election as theexternal auditor of the Company, (ii) the oversight of the work of the of theCompany’s external auditor, (iii) the retention of the Company’s externalauditor, and (iv) fixing thecompensation of the external auditor of the Company, subject to the grantby the shareholders of the authority to do so, if required; |
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| 3. | ensure that at all times there aredirect communication channels between the Audit Committee and the Company’sexternal auditor; |
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| 4. | ensure the independence of theCompany’s external auditor, including ensuring receipt from the externalauditor of a formal written statement delineating all relationships between theexternal auditor and the Company and actively engaging in dialogue with theexternal auditor with respect to any disclosed relationships or services thatmay impact the objectivity and independence of the external auditor; |
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| 5. | periodically review and report tothe Board of Directors whether Management has designed and implemented aneffective system of internal controls over financial reporting for reviewingand reporting on the Company’s financial statements; |
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| 6. | review and report to the Board ofDirectors on all financial statements (including interim financial statements)prepared by the Company and enhance the credibility and objectivity of allfinancial reports; and |
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| 7. | otherwise review the Company’scompliance with regulatory and statutory requirements as they relate tofinancial statements, taxation matters and disclosure of related materialfacts. |
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**Duties**

For the purposes of fulfillingits responsibilities, the Audit Committee will:

| 1. | schedule meetings to take place on a regular basis; |
|----|-----------------------------------------------------|

| 2. | afford an opportunity periodically to the externalauditor and to senior Management to meet separately with the Audit Committee,and when required,   meet independently of the external auditor and Management; |
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| 3. | keep minutes of all meetings of the Audit Committee; |
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| 4. | periodically report the results of the reviewsundertaken and any associated recommendations to the Board of Directors; |
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| 5. | select an external auditor to be proposed byManagement to the shareholders for election by the shareholders as the externalauditor for the Company, review and approve the terms of the external auditor'sengagement and determine the appropriateness and reasonableness of the proposedaudit fees and any unpaid fees; |
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| 6. | review and evaluate the qualifications, performanceand independence of the lead partner of the external auditor, discuss withManagement the timing and process for implementing the rotation of the leadaudit partner and the reviewing partners of the external auditor, and otherissues related to a change of the external auditor and the planned steps for anorderly transition; |
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| 7. | obtain confirmation from the external auditor that itwill report directly to the Audit Committee; |
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| 8. | obtain confirmation from the external auditor that itwill report in a timely matter to the Audit Committee all critical accountingpolicies and practices to be used, all alternative accounting policies andpractices, the ramifications of each of such accounting policy and practice andthe accounting policy and practice preferred by the external auditor, for thefinancial information of the Company within applicable generally acceptedaccounting principles (GAAP), which have been discussed with Management; |
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| 9. | obtain confirmation from the external auditor that itwill provide a copy of all material written communications between the externalauditor and Management including, without limitation, any Management letter orschedule of unadjusted differences; |
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| 10. | obtain confirmation from the external auditor that itwill ensure that all reports filed under the United States Securities ExchangeAct of 1934, as amended, which contain financial statements required to beprepared in accordance with GAAP and reflect all material correctingadjustments identified by the external auditor of the Company; |
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| 11. | review and approve the Company’s hiring policiesregarding partners, employees and former partners and employees of the presentand any former external auditor of the Company; |
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| 12. | review all reportable events, including disagreements,unresolved issues and consultations, as defined in National Instrument 51-102of the Canadian Securities Administrators, on a routine basis; |
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|   |             ANNUAL  INFORMATION FORM - 2013 |
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| 13. | review and pre-approve any and all engagements fornon-audit services to be provided to the Company or to any of its subsidiariesby the Company’s external auditor or any affiliates of the external auditor,together with estimated fees, and review and approve the audit plan with theexternal auditor and with Management; |
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| 14. | review with Management and with the external auditorany  proposed changes in major accounting policies, the presentation and impactof significant financial risks and uncertainties and key estimates andjudgments of Management that may be material to financial reporting and thesteps Management has taken to minimize such risks to the Company; |
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| 15. | assist in the preparation of any internal controlreport by Management, which provides that Management is responsible forestablishing and maintaining an adequate control structure and procedures forfinancial reporting by the Company, assessing the effectiveness of such controlstructure and procedures and ensuring that the external auditor of the Company,if required by governing legislation or regulation, attest to and report on theassessment of such control structure and procedures by Management; |
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| 16. | assist the Chief Executive Officer and the ChiefFinancial Officer of the Company in their assessment of the effectiveness ofthe Company’s internal control over financial reporting and in determiningwhether there has been any material change in the Company’s internal controlover financial reporting which has materially affected or could materiallyaffect such internal control subsequent to the date of the evaluation; |
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| 17. | assist the Chief Executive Officer and the ChiefFinancial Officer of the Company in identifying and addressing any significantdeficiencies or material weaknesses in the design or operation of the Company’sinternal control over financial information and any fraud, whether or notmaterial, that involves Management or other employees who have a significantrole in the Company’s internal control over financial reporting; |
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| 18. | question Management and the external auditor regardingsignificant financial reporting issues discussed during the fiscal period andthe method of resolution; |
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| 19. | review any problems experienced by the externalauditor in performing the audit, including any restrictions imposed byManagement or significant  accounting issues to which there was a disagreementwith Management; |
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| 20. | review audited annual financial statements, in conjunctionwith the report of the external auditor, and obtain an explanation fromManagement of all significant variances between comparative reporting periods; |
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| 21. | review the post-audit or Management letter, containingthe recommendations of the external auditor and Management’s response andsubsequent follow up to any identified weaknesses; |
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| 22. | review all interim unaudited financial statementsbefore release to the public; |
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| 23. | review all public disclosure documents containingaudited or unaudited financial information before release, including anyprospectus, the annual report, the AIF and Management’s discussion andanalysis; |
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| 24. | ensure that the Company discloses in the periodicreports of the Company, as appropriate, whether at least one member of theAudit Committee is a “financial expert” within the meaning of the rules andforms adopted by the US Securities and Exchange Commission; |
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| 25. | ensure that all non-audit services provided by theexternal auditor are approved by or on behalf of the Audit Committee and aredisclosed in the periodic reports of the Company; |
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| 26. | ensure that each annual report and, to the extentrequired by any applicable legal or regulatory requirement, any quarterlyreport of the Company includes disclosure with respect to all materialoff-balance sheet transactions, arrangements, obligations (including contingentobligations) and other relationships of the Company with unconsolidatedentities which may have a current or future effect on the Company in accordancewith all applicable legal and regulatory requirements; |
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|   | **64**| Nevsun Resources Ltd. |
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|   |             ANNUAL  INFORMATION FORM - 2013 |
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| 27. | ensure that all financial statements and otherfinancial information, including pro forma financial information, included inany report filed by the Company with any regulatory authority or contained inany public disclosure or press release of the Company is presented in a mannerwhich does not contain a material misstatement or omission and reconciles thepro forma information contained therein to GAAP, and which otherwise complieswith all applicable legal and regulatory requirements; |
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| 28. | review the evaluation of internal control by theexternal auditor, together with Management’s responses; |
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| 29. | to assist Management with its annual risk assessmentand reporting strategy to manage the process of the identification, evaluationand mitigation of the Company’s principal enterprise risks; |
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| 30. | review the appointments of the chief financial officerand any key financial executives involved in the financial reporting process; |
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| 31. | establish procedures for (i) the receipt, retentionand treatment of complaints regarding accounting, internal accounting controls,or auditing matters, and (ii) the confidential, anonymous submission byemployees of concerns regarding questionable accounting or auditing matters; |
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| 32. | annually assess the adequacy of the Audit CommitteeCharter; and |
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| 33. | annually evaluate the Audit Committee’s performance. |
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**Independent Advice & Funding**

The Audit Committee shall havethe authority to determine the appropriate funding for the ordinaryadministrative expenses of the Audit Committee.  In addition, the Audit Committeemay, in its sole discretion, retain, at the expense of the Company, anddetermine the compensation to be received by, such legal, financial or otheradvisors or consultants as it may deem necessary or advisable in order toproperly and fully perform its duties and responsibilities hereunder.  

**Amended and approved by the Audit Committee on March 18, 2010, June 26, 2012, and March 19, 2013.**

|   | **65**| Nevsun Resources Ltd. |
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