----

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| **ANNUAL INFORMATION FORM** |
|-----------------------------|

| **For the year ended      December 31, 2016** |
|-----------------------------------------------|

 

 

 

| **Dated as of February 23, 2017** |
|-----------------------------------|

----

| Table of Contents |
|-------------------|

| **Preliminary Notes.**                                          | **1**  |
|-----------------------------------------------------------------|--------|
|                                                            |   |
| **Corporate Structure.**                                        | **8**  |
|                                                            |   |
| **General Development of the Business.**                        | **9**  |
|                                                            |   |
| **Description of the Business.**                                | **13** |
|                                                            |   |
| **Mineral Properties.**                                         | **17** |
|                                                            |   |
| **Dividends.**                                                  | **56** |
|                                                            |   |
| **Description of Capital Structure.**                           | **56** |
|                                                            |   |
| **Market for Securities.**                                      | **57** |
|                                                            |   |
| **Directors and Officers.**                                     | **58** |
|                                                            |   |
| **Legal Proceedings.**                                          | **62** |
|                                                            |   |
| **Interest of Management and Others in Material Transactions.** | **63** |
|                                                            |   |
| **Transfer Agents and Registrars.**                             | **63** |
|                                                            |   |
| **Material Contracts.**                                         | **63** |
|                                                            |   |
| **Names and Interests of Experts.**                             | **64** |
|                                                            |   |
| **Additional Information.**                                     | **64** |
|                                                            |   |
| **Schedule "A" - Audit Committee Charter**                      | **65** |
|                                                            |   |
| **Schedule "B" - Risk Factors.**                                | **69** |

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ANNUAL  INFORMATION FORM – December 31, 2016 

| Preliminary Notes |
|-------------------|

In thisannual information form (“AIF”) reference to the Company or Nevsun or NRL meansNevsun Resources Ltd. and all of its wholly and majority owned subsidiaries, andexcept as otherwise noted herein, the information in this AIF is as of December31, 2016. We prepare the financial statements referred to in the AIF inaccordance with International Financial Reporting Standards (IFRS) as issued bythe International Accounting Standards Board, and file the AIF with appropriateregulatory authorities in Canada and the United States. Information on our websiteis not part of this AIF or incorporated by reference.  Filings on SEDAR arealso not part of this AIF or incorporated by reference except as specificallystated herein.  Additional financial and other information regarding theCompany can be found in our consolidated financial statements for theyear ended December 31, 2016, together with the auditors’ report thereon dated February22, 2017 and our Management’s Discussion and Analysis (“MD&A”) for the yearended December 31, 2016.

Alldollar amounts in this AIF are expressed in USD, unless otherwise indicated (“USD”denotes United States dollars and “CAD” denotes Canadian dollars).  Allcapitalized terms in this AIF not otherwise defined in the text have meaningsascribed to those terms in the Glossary and Defined Terms section below unlessthe context requires otherwise.

| Forward-Looking Statements |
|----------------------------|

This AIF contains certain forward-lookinginformation and forward-looking statements as defined in applicable securitieslaws (collectively referred to herein as “forward-looking statements”).  Theseforward-looking statements relate to future events or the Company’s futureperformance including anticipated developments in theCompany’s continuing and future operations, and the adequacy of the Company’sfinancial resources and financial projections.  All statements other thanstatements of historical fact are forward-looking statements. Forward-lookingstatements are frequently, but not always, identified by words such as“expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,”“possible,” “budget” and similar expressions, or statements that events,conditions or results “will,” “may,” “could” or “should” occur or be achieved. Inaddition, the Bisha Technical Reports and the Timok PEA contain forward-lookingstatements related to the Bisha Property and the Timok Property respectively.An update to the Mineral Reserves and Mineral Resources on the Bisha Propertyis expected to be completed by the end of the second quarter of 2017 and apre-feasibility study on the Timok Project is expected to be completed bySeptember 2017. As a result, readers are cautioned that the scientificand technical information contained in this AIF may change and caution shouldbe used by readers in relying upon forward looking information related to theBisha Property and the Timok Project.

Forward-looking statements involve known andunknown risks, uncertainties and other factors that may cause the actualresults or events to differ materially from those anticipated in suchforward-looking statements. This is particularly the casewith respect to forward-looking statements contained in the past BishaTechnical Reports and the Timok PEA given the expected updated technical reports.These statements speak only as of the date of this AIF.

Forward-lookingstatements include, but are not limited to statements concerning:

- forecastsor outlook and guidance related to construction, exploration drilling programs andproduction targets, timetables and estimates of capital and operating costs;
- thetiming, nature and extent of future zinc, copper and gold production, the estimation ofmineral reserves and resources, methodologies and models used to prepareresource and reserve estimates as set out in the Bisha Technical Reportsconcerning the Bisha Property and the Timok PEA concerning the Timok Project;
- estimatesof the quantity, quality and the realization of mineral reserves and resources,theconversion of mineral properties to reserves and resources as set out in the Bisha TechnicalReports concerning the Bisha Property and the Timok PEA concerning the TimokProject;
- interpretationof drill results as such information constitutes a prediction of whatmineralization might be found to be present if and when a project is actuallydeveloped;

| 1 | Nevsun Resources Ltd. |
|---------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

- statementsbased on certain assumptions that a mineral deposit can or may be economicallyexploited;
- anypending litigation to which the Company is a party;
- thetiming and success of improving the quality of copper and zinc circuit productsby resolving the metallurgical challenges from the variable ore materials beingprocessed to produce concentrate from both circuits;
- theeffect on resource or reserve estimates due to the possible inability toresolve the metallurgical challenges on the variable ore materials beingprocessed on a timely basis or at all;
- thepotential to expand resources, reserves and mine life;
- exploration,environmental, health and safety initiatives;
- futureexploration budgets, plans, work programs and capital expenditures;
- integrationor expansion of operations and requirements for additional capital;
- anticipatedtiming of grant of permits, licenses, mining and development plans and activities;  
- in-situand ore feed grades, processing rates and net cash flows;
- metalprices and exchange rates;
- reclamationcosts and unanticipatedreclamation expenses;
- environmentalrisks;
- dividendplans and policy;
- governmentregulation of mining operations and project development;
- politicalrisks and uncertainties;
- generalbusiness and economic conditions; and
- otherevents or conditions that may occur in the future. 

Forward-lookingstatements are statements about the future and are inherently uncertain, andactual achievements of the Company or other future events or conditions maydiffer materially from those reflected in the forward-looking statements due toa variety of risks, uncertainties, assumptions and other factors, including,without limitation, the risks more fully described under the Section titled“Risk Factors” in Schedule B. 

Althoughthe Company has attempted to identify important factors that could cause actualresults to differ materially from those contained in forward-lookingstatements, there may be other factors that could cause actual results todiffer from what is anticipated, estimated or intended. TheCompany’s forward-looking statements are based on the beliefs, expectations andopinions of management on the date the statements are made and the Companyassumes no obligation to update such forward-looking statements in the future,except as required by law.  There can be no assurance that such statements will proveto be accurate, as actual results and future events could differ materiallyfrom those anticipated in such statements. For the reasons setforth above, readers should not place undue reliance on forward-looking statements.

| Cautionary Note Regarding Disclosure as set out in the current Bisha Technical Reports and Timok PEA |
|------------------------------------------------------------------------------------------------------|

**Although the latest Bisha Technical Reports and the TimokPEA are “current” as defined in NI 43-101, an updated Mineral Reserve andMineral Resource estimate and associated technical report on the Bisha Propertyand a pre-feasibility study (“PFS”) on the Timok Project are expected in June2017 and in September 2017, respectively. These studies may or may not containmaterial scientific and technical information that differs from that containedin the Bisha Technical Reports and the Timok PEA. As a result, readers arecautioned that the scientific and technical information contained in this AIFmay change and caution should be used by readers in relying upon suchinformation.**

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

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ANNUAL  INFORMATION FORM – December 31, 2016

| Cautionary Note to US Readers Regarding Disclosure of Mineral Reserves and Resource Estimates |
|-----------------------------------------------------------------------------------------------|

The disclosure in this AIF uses mineral resource andmineral reserve classification terms that comply with Canadian securities lawsthat differ in certain material respects from the requirements of United Statessecurities laws.  Disclosure has been made in accordance with Canadian NationalInstrument 43-101 – *Standards of Disclosure for Mineral Projects*(“NI43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum’sClassification System.  The NI 43-101 is a rule developed by the CanadianSecurities Administrators that establishes standards for all public disclosurean issuer makes of scientific and technical information concerning mineralprojects. These standards differ significantly from the disclosure requirementsof the Securities and Exchange Commission (“SEC”).   

The SEC’s disclosure standards normally do not permit theinclusion of information concerning “measured mineral resources”, “indicatedmineral resources” or “inferred mineral resources” in documents filed with theSEC, unless such information is required to be disclosed by the law of theCompany’s jurisdiction of incorporation or of a jurisdiction in which itssecurities are traded.  Consequently, mineral resource and mineral reserveinformation contained in this AIF is not comparable to similar information thatwould generally be disclosed by US companies in accordance with the rules ofthe SEC. 

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

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 these terms and US companies are generallynot permitted to use these terms in documents they file with the SEC. Readers arecautioned not to assume that any part or all of the mineral deposits in thesecategories will ever be converted into SEC defined mineral “reserves.” Further,“inferred mineral resources” have a great amount of uncertainty as to theirexistence and as to whether they can be mined legally or economically. 

Therefore, readers are also cautioned not to assume thatall or any part of an inferred mineral resource exists. In accordance with reportingstandards in Canada, estimates of “inferred mineral resources” cannot form thebasis of feasibility or other economic studies, except in rare cases. Inaddition, 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.

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

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ANNUAL  INFORMATION FORM – December 31, 2016

| Glossary and Defined Terms |
|----------------------------|

| 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 filed March 24, 2014.                                                                                  |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                             |
| Ag:                       | silver.                                                                                                                                                                                                                                                          |
|                      |                                                                                                                                                                                                                                                             |
| Au:                       | gold.                                                                                                                                                                                                                                                            |
|                      |                                                                                                                                                                                                                                                             |
| Bisha Main:               | a large precious metal (Au) and base  metal rich (Cu, Zn) VMS deposit on the Bisha Property.                                                                                                                                                                     |
|                      |                                                                                                                                                                                                                                                             |
| Bisha Mining  License:    | the mining  license issued to BMSC in 2008 which is valid for 20 years covering an area  of 16.5 square kilometers over the Bisha Main and Northwest Zone deposits                                                                                               |
|                      |                                                                                                                                                                                                                                                             |
| Bisha  Property:          | the Company’s  principal mineral property in Eritrea as more particularly described under  the heading “Description of the Business”.                                                                                                          |
|                      |                                                                                                                                                                                                                                                             |
| Bisha  Technical Reports: | means,  collectively the 2013 Technical Report effective  December 31, 2013; the December 31, 2015 Mineral Resource estimate effective  December 31, 2015; and the December 31, 2015 Mineral Reserve estimate for  Bisha and Harena effective December 31, 2015. |
|                      |                                                                                                                                                                                                                                                             |
| BMSC:                     | Bisha Mining  Share Company, an Eritrean entity that owns and operates the Bisha Mine and  is a 60% owned indirect subsidiary of NRL with the 40% balance of the  outstanding shares owned by ENAMCO.                                                            |
|                      |                                                                                                                                                                                                                                                             |
| Board:                    | board of  directors of Nevsun Resources Ltd.                                                                                                                                                                                                                     |
|                      |                                                                                                                                                                                                                                                             |
| C1 cash cost:             | C1 cash cost per pound is a non-GAAP  measure and represents the cash cost incurred at each processing stage, from  mining through to recoverable metal delivered to customers, less net  by-product credits.                                               |
|                      |                                                                                                                                                                                                                                                             |
| CIM:                      | Canadian  Institute of Mining, Metallurgy and Petroleum.                                                                                                                                                                                                         |
|                      |                                                                                                                                                                                                                                                             |
| CSAMT:                    | Controlled Source Audio Magneto-Telluric survey.                                                                                                                                                                                                                 |
|                      |                                                                                                                                                                                                                                                             |
| Cu:                       | copper.                                                                                                                                                                                                                                                          |
|                      |                                                                                                                                                                                                                                                             |
| EITI:                     | Extractive Industries Transparency  Initiative.                                                                                                                                                                                                                  |
|                      |                                                                                                                                                                                                                                                             |
| ENAMCO:                   | Eritrean National Mining  Corporation, an Eritrean entity owned by the State of Eritrea.                                                                                                                                                                         |
|                      |                                                                                                                                                                                                                                                             |
| g/t:                      | grams per  metric tonne (1,000 kilograms or 2,204 pounds).                                                                                                                                                                                                       |
|                      |                                                                                                                                                                                                                                                             |
| 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 kilometers located approximately 10 kilometers from the Bisha Mine.                                                                 |
|                      |                                                                                                                                                                                                                                                             |
| HSE:                      | High Sulphidation Epithermal mineralization.                                                                                                                                                                                                                     |
|                      |                                                                                                                                                                                                                                                             |
| IFC:                      | International Finance Corporation.                                                                                                                                                                                                                               |

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

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ANNUAL  INFORMATION FORM – December 31, 2016

| 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 in the ground prior to excavation, processing and transport.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| IP:                         | induced  polarization survey.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| LG:                         | Lerchs-Grossmann,  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.                                                                                                                                                                                                                                                                                                                                                     |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| LOM:                        | life of  mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 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. |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 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.                                                                                                                                 |

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

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ANNUAL  INFORMATION FORM – December 31, 2016

| Mining  Agreement:                         | the mining  agreement between BMSC and the Government of the State of Eritrea dated  December 2007, as amended or supplemented from time to time, covering the  future development and operations for the Bisha Property, including all  substantive requirements of international financial institutions.                                                                                                                                                                                           |
|--------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Moz:                                       | million ounces.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Mt:                                        | metric tonne.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| New Mogoraib  River   Exploration License: | the exploration license acquired by  the Company in 2012 from Sanu Resources, a subsidiary of NGEx Resources, and  subsequently materially expanded in 2016 to 630 square kilometers of area  located to the west and north of the Bisha Mining License.                                                                                                                                                                                                                                             |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| NI 43-101:                                 | a national instrument for the  Standards of Disclosure for Mineral Projects within Canada involving a  codified set of rules and guidelines for reporting and displaying information  related to mineral properties.                                                                                                                                                                                                                                                                                 |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| NRL:                                       | Nevsun Resources Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 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.                                                                                                                                                                                                                                                              |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 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.                                                                                          |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| QAQC:                                 | quality  assurance quality control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| QP:                                        | a qualified person as defined in NI  43-101.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| reserve:                                   | see “mineral  reserve”.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| resource:                                  | see “mineral  resource”.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Run of  mine (ROM):                        | generally ore material excavated from  a mine that has not been crushed or screened.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| SEC:                                       | United States Securities and  Exchange Commission.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| SEDAR:                                     | the System for Electronic  Document Analysis and Retrieval (SEDAR) is a filing system developed for the  Canadian Securities Administrators to facilitate the electronic filing of  securities information as required by Canadian Securities Administrator;  allow for the public dissemination of Canadian securities information  collected in the securities filing process; and provide electronic  communication between electronic filers, agents and the Canadian Securities  Administrator. |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| SEIA:                                      | Social and Environmental Impact  Assessment.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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

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ANNUAL  INFORMATION FORM – December 31, 2016

| SEMP:                         | Social and Environmental Management  Plan.                                                                                                                                                                                                                                  |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |                                                                                                                                                                                                                                                                        |
| Tabakin Exploration  License: | an exploration license issued to  BMSC in 2016 for a period of 10 years, covering an area of 184 square  kilometers, located immediately between the Bisha Mining License and the  Harena Mining License.                                                                   |
|                          |                                                                                                                                                                                                                                                                        |
| Timok  PEA:                   | 2016 Preliminary  Economic Assessment of the Cukaru Peki Upper Zone Deposit concerning the  Timok Project.                                                                                                                                                                  |
|                          |                                                                                                                                                                                                                                                                        |
| Timok Project:                | a copper-gold development asset in  eastern Serbia focused on the Cukaru Peki deposit, which includes the high  grade Upper Zone (characterized by massive and semi-massive sulphide  mineralization) and the Lower Zone (characterized by porphyry-style  mineralization). |
|                          |                                                                                                                                                                                                                                                                        |
| TMF:                          | tailings  management facility, historically referred to as tails storage facilities or  tailings ponds.                                                                                                                                                                     |
|                          |                                                                                                                                                                                                                                                                        |
| TSX:                          | the Toronto Stock Exchange.                                                                                                                                                                                                                                                 |
|                          |                                                                                                                                                                                                                                                                        |
| VMS:                          | volcanogenic massive sulphides.                                                                                                                                                                                                                                             |
|                          |                                                                                                                                                                                                                                                                        |
| Zn:                           | zinc.                                                                                                                                                                                                                                                                       |

| 7 | Nevsun Resources Ltd. |
|---------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Corporate Structure |
|---------------------|

| Name, Address and Incorporation |
|---------------------------------|

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

The head office of NRL is located at 760 - 669 HoweStreet, Vancouver, British Columbia, V6C 0B4 and its registered and recordsoffice is located at 1000 - 840 Howe Street, Vancouver, British Columbia,V6Z 2M1 and its website address is http://www.nevsun.com.

| Intercorporate Relationships |
|------------------------------|

The following diagram explains the intercorporaterelationships among NRL, and its wholly and partially owned subsidiaries,(collectively referred to as “Nevsun” or the “Company”); the name and place of incorporationof each subsidiary; and the percentage of voting securities legally and beneficiallyowned:

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

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ANNUAL  INFORMATION FORM – December 31, 2016

| General Development of the Business |
|-------------------------------------|

| Three Year History |
|--------------------|

|  |
|--|

The Company’s major achievements during the past threefiscal years include:

-  completing the    acquisition of Reservoir Minerals Inc. (“Reservoir”), and its ownership    interest in the high-grade Timok Project;
-  successfully    integrating and now advancing the development of the Timok Project Upper Zone to    production; 
-  completing the Bisha zinc expansion project on time    and under budget, declaring commercial production October 1, 2016;
-  completing the    acquisition of significant additional exploration licenses in the Bisha    District which now total 814 square kilometers, up    1,891% from the previous square kilometers;
-  maintaining    an industry leading safety performance record at Bisha; 
-  generating    $958 million of after-tax operating cash flows since the commencement of    commercial gold, copper and zinc production; 
-  continually    replacing and increasing potentially available mineral resources for the Bisha    mill;
-  declaring    and paying industry-leading dividends to shareholders; and 
-  enhancing    its corporate social responsibility programs.

| **2016 Significant      Developments** |
|----------------------------------------|

**Acquisition**

OnJune 23, 2016, the Company completed its acquisition of 100% of the issued andoutstanding shares of Reservoir. The acquisition of Reservoir and its principalasset, its ownership interest in the Timok Project, located in eastern Serbianear the Bor Mining and Smelting complex, is the culmination of a long-termstrategic objective of the Company to grow through merger and acquisition(“M&A”) transactions. The transaction fits the Company’s M&A criteriaof a transformative, high quality, copper and gold project in a differentgeographical location. Based on the Company’s due diligence and long-termcommodity price expectations, the transaction is expected to generate a strongreturn for the Company’s shareholders. Additional benefits of the transactioninclude exploration potential in Serbia and Macedonia and the addition of bothFreeport-McMoRan Exploration Corp. (“Freeport”) and Rio Tinto plc as majorstrategic partners.

TheTimok Project is focused on the Cukaru Peki deposit, which includes the highgrade Upper Zone (characterized by massive and semi-massive sulphidemineralization) and the Lower Zone (characterized by porphyry-stylemineralization). The Upper Zone has an extremely high copper and gold contentconsisting of 1.7 million tonnes of indicated resource grading 13.5% copper and10.4 g/t gold and 35.0 million tonnes of inferred resource grading 2.9% copperand 1.7 g/t gold.

TheTimok Project is a joint venture between the Company and Freeport. The Company isthe operator of the Timok Project until the occurrence of certain events andwill advance the development of both the Upper Zone and the Lower Zone. TheCompany will fund 100% of the Upper Zone development costs and will solely fundthe first $20 million of agreed Lower Zone work. The Company and Freeport willfund additional Lower Zone work based on their respective ownership interestsin the Lower Zone. After delivery of a feasibility study on either the UpperZone or the Lower Zone, Freeport’s ownership in the Lower Zone will increase to54% and the Company will own 100% of the Upper Zone and 46% of the Lower Zone. TheCompany and Freeport will be entitled to their pro rata share of the economicbenefits of the Lower Zone, and the Company will be entitled to 100% of theeconomic benefits of the Upper Zone.

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

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ANNUAL  INFORMATION FORM – December 31, 2016

Theacquisition of Reservoir was completed under a plan of arrangement pursuant toan arrangement agreement dated April 22, 2016 as amended on June 16, 2016 (the“Arrangement Agreement”). Under the terms of the Arrangement Agreement, eachissued and outstanding common share and restricted share unit of Reservoir wasexchanged for two Nevsun common shares plus CAD$2.00 in cash. The ArrangementAgreement included $135 million of funding to Reservoir (via a privateplacement for 19.9% of the issued shares of Reservoir and an unsecured loan). The $135 million of funding allowed Reservoir to exercise its right of firstoffer (“ROFO”) with Freeport on May 3, 2016.  After exercising the ROFO,Reservoir had increased its ownership in the Upper Zone of the Timok Project to100% and in the Lower Zone to 60.4%.  Upon completion of the plan ofarrangement on June 23, 2016, Nevsun and Reservoir shareholders owned approximately67% and 33% of the Company, respectively.  The total purchase price for theacquisition was $512,554.

**Bisha Mine Operations**

During 2016 the Company produced 56 million pounds ofcopper at C1 cash costs of $1.04 per payable pound sold as well as 90 millionpounds of zinc from primary ore, generating operating cash flows before taxes of$71 million.  The Company completed its zinc expansion project on time andunder budget with commercial production declared on October 1, 2016.  Total projectcost was approximately $78 million, compared to a budget of $100 million. 

Since commissioning commenced in June 2016,the existing copper circuit and the new zinc circuit have producedapproximately 100,000 dry metric tonnes (“DMT”) of commercially saleable zincconcentrate.

**Exploration Activities**

Timok Project (Serbia)

-  Upper    Zone – Ongoing drilling of the Upper Zone at the Timok Project confirms    continuity and the high grade nature of this zone, which is part of an    approximately 50,000 meter drill program for both resource infill drilling and    technical drilling that will support delivery of a pre-feasibility study on the    Upper Zone in September 2017.
-  Lower    Zone – The Company commenced an approximate 60,000 meter drill program to define    higher grade areas at shallower depths and to further expand the mineralization    footprint.

Bisha(Eritrea)

-  During 2016 the Company announced    a series of assay results for its Asheli prospect as part of its ongoing    regional exploration at Bisha.  New drill results demonstrated the continuity    and high grade nature of the Asheli mineralization with further expansion    potential.
-  Based on the prospectivity of    Bisha’s VMS District, BMSC increased its total land package of exploration licenses    to 814 square kilometers, up from the previous 41 square kilometers. NRL funded    its share of these newly acquired exploration licenses via a $22.6 million reduction    in the amount receivable from ENAMCO.  

**Dividends**

NRL declared an annualized dividend of $0.16per share, the sixth consecutive year of dividend declarations since the startof commercial production at the Bisha Mine in 2011.

In September 2016, the Company adopted a DividendReinvestment Plan (“DRIP”) to offer shareholders an opportunity to increasetheir investment without additional transaction costs by reinvestingtheir cash dividends into additional common shares of the Company at a 3%discount to the prevailing market price.  Participation in the DRIP is optionaland shareholders holding approximately 13% of the outstanding shares of theCompany are currently participating in the DRIP.

**Legal Update**

Please refer to the section titled “Legal Proceedings” on page 62 ofthis AIF for the update on current legal proceedings.

**Corporate Social Responsibility**

The Company released its 2015 Corporate  Social Responsibility Report in May highlighting its safety record of only one  lost time injury and over 6.1 million hours without an incident effective date  of that report; second independent human rights audit progress; training mine  security on the Voluntary Principles for Security and Human Rights; community infrastructure  pilot projects; local employment and training; social and environmental  programs at Bisha Mine and nearby communities; taxes and royalties paid to the  state of Eritrea and dividends paid to ENAMCO.

| 10 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| **2015 Significant      Developments** |
|----------------------------------------|

****In 2015, the Company produced 135.9 million pounds ofcopper in concentrate from the Bisha Mine at C1 cash costs of $1.31 per payablepound sold which lead to earnings and operating cash flows with year-endworking capital of $462 million including $434 million in cash. NRL declared anannualized dividend of $0.16 per share, representing a fifth consecutive yearof increased dividend declarations since the start of commercial production atthe Bisha Mine in early 2011. The Company also advanced the zinc expansionproject.

Exploration drilling results at the Harena depositduring 2015 continued to demonstrate continuity of mineralization down dip andplunge and as a result, the Company announced revised mineral resources forHarena on February 17, 2016.  The Company announced that drilling at Harenaadded 0.5 million tonnes of indicated resource and 4.5 million tonnes ofinferred resource.  It further disclosed that the total indicated resource atHarena was now 3.7 million tonnes (including in-situ 70 million pounds copper,258 million pounds zinc, 70,000 ounces gold and 3.3 million ounces silver) andthe total inferred resource was 11.0 million tonnes (including in-situ 348million pounds copper, 952 million pounds zinc, 360,000 ounces gold and 14.4million ounces silver).  The deposit remained open at depth with the grade andthickness of the massive sulphides increasing in the deepest tier ofexploration holes.

In Q2, the Company announced the discovery ofa new massive sulphide deposit at the greenfield Asheli prospect on theMogoraib River Exploration License located 20 kilometers southwest of the Bishaprocessing plant. Highlight drill holes include: 

- MX-052 which graded  2.29% Cu, 4.50% Zn,  0.45 g/t Au, 37 g/t Ag over  22.9 meters, including 3.67% Cu, 8.04% Zn, 0.68 g/t Au, 50 g/t Ag over 7.4 meters and 7.92% Cu, 3.89% Zn, 1.14 g/t Au, 101 g/t Ag over 2.9 meters; and
-  MX-056 which graded 1.26% Cu, 6.08% Zn, 0.28 g/t Au, 26 g/t Ag    over 20.9 meters including 1.71% Cu, 8.51% Zn, 0.37 g/t Au, 35 g/t Ag over 10.9    meters.  

The deposit is associated with highly alteredfelsic volcanics and is open to expansion with numerous untested geochemicaland geophysical targets occurring along at least 4 kilometers of similarstratigraphy.

The Company also provided an update on itshuman rights and reported that it commissioned an independent human rightsimpact assessment (HRIA) in 2013 which was completed in and published in April2014 with cooperation from the State of Eritrea.  

The Company released its 2014 CorporateSocial Responsibility Report in April highlighting its safety record, communityengagement efforts and local employment, successful environmental managementand practices, and progress on independent human rights impact assessmentfollow-up recommendations in training and development.

On February 3, 2015 the Company announced the updatedmineral resource estimate effective December 31, 2014 for the Bisha and Harenadeposits.  The Bisha primary indicated resource grew by 0.9 million tonnes andprimary inferred resource grew by 0.6 million tonnes.  This primary zone growthadded indicated resources of 83 million pounds of zinc and 40 million pounds ofcopper, and inferred resources of 96 million pounds of zinc and 21 millionpounds of copper. The Harena open pit indicated resource grew by 1.4 million tonnesadding 113 million pounds of zinc and 32 million pounds of copper, and primaryinferred resources increased by 6.1 million tonnes for an addition of 408million pounds of zinc and 156 million pounds of copper.

| 11 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| **2014 Significant      Developments** |
|----------------------------------------|

****In 2014, the Company produced 196 million pounds ofcopper in concentrate from the Bisha Mine against guidance of 180 million to200 million pounds at C1 cash costs of $1.05 per payable pound sold which leadto earnings and cash flows with year-end working capital of $520 millionincluding $442 million in cash.

The Company conducted a 27,300 meter drilling program andprogressed zinc plant expansion on time and on budget.

In 2014, NRL declared a cash dividend of $0.04 per commonshare in the fourth quarter, payable on January 15, 2015, an increase of 14%from the cash dividends declared in the first three quarters of 2014 of $0.035per common share quarterly which were paid to shareholders on April 15, 2014,July 15, 2014 and October 15, 2014, respectively.  Dividends declared in 2014totalled $28.9 million. 

The Company conducted significant exploration drilling atthe Harena Mining License as part of an ongoing program designed to expand thedeposit beyond the known resource.  The drilling program successfully extendedthe deposit by 250 meters down dip and increased the strike length from 300 metersto over 600 meters.  Highlight drill holes include massive sulphidesintersected in the southern extension discovery hole HX-005 which graded 1.77%Cu, 3.99% Zn, 1.22 g/t Au, 78 g/t Ag over 18.5 meters and hole HX-040 whichgraded 1.78% Cu, 5.78% Zn, 0.53 g/t Au, 31 g/t Ag over 32.0 meters.  Boreholegeophysics suggests that Harena has considerable further down dip extensionpotential.  Also intersected were a number of precious metal-bearing stringerzones found below and along strike of the massive sulphides such as hole HX-008which returned 0.71% Cu, 0.22% Zn, 6.15 g/t Au, 242 g/t Ag over 17.2 meters.

The Company issued an updated mineral resource andmineral reserve estimate effective December 31, 2014 for the Bisha and Harenadeposits.  The Bisha primary indicated resource increased by 0.9 milliontonnes, adding 83 million pounds of zinc and 40 million pounds of copper, andprimary inferred resource increased by 0.6 million tonnes, adding 96 millionpounds of zinc and 21 million pounds of copper.  The Harena pit indicated resourceincreased by 1.4 million tonnes, adding 113 million pounds of zinc and 32million pounds of copper, and primary inferred resources increased by 6.1million tonnes for an additional 498 million pounds of zinc and 156 millionpounds of copper.

In 2014 the Bisha supergene reserve, inclusive ofstockpiles, decreased by 3.9 million tonnes, which included 295 million poundsof copper.  Of this reduction, approximately 1.8 million tonnes and 230 millionpounds of copper were due to mine depletion.  The remaining reduction of 2.1million tonnes and 65 million pounds of copper came from reclassification ofsupergene to primary ore, removal of the hanging wall copper ore pendingfurther metallurgical test work, pyrite sand displacement and elevatedoperating costs.  The Company announced that reclassification and a deepeningof the Bisha Main pit, lead in part to the Bisha primary reserve increasing by1.7 million tonnes including an increase of 91 million pounds of copper and 270million pounds of zinc.  The Harena primary reserve increased by 0.3 milliontonnes including 8 million pounds of copper and 26 million pounds of zinc.

The Company received strong support at the 2014 annualgeneral meeting for the election of NRL’s nominees as directors as well as itsapproach to executive compensation and the continuation of the shareholderrights plan. 

The Company released its 2013 Corporate Social ResponsibilityReport highlighting its safety record, local employment opportunities andevolving environmental and social performance governance programs at the BishaMine aimed at reinforcing its commitment to making a collaborative, positiveimpact in Eritrea.

The Company filed the 2013 Technical Report in March 2014.

The Company announced maiden open pit mineral resourceestimates on February 18, 2014 for Hambok and the Northwest deposits for acombined 92 million pounds copper and 60 million pounds zinc and an updatedmineral reserve estimate for the Bisha Main pit and Harena open pit mines.  Thisresulted in a 29% increase in the total indicated mineral resource estimate ofthe combined Bisha property tenements by an additional 9.3 million combinedoxide gold, supergene copper and primary copper-zinc zone tonnes which resultedin an additional 247 million pounds of in-situ copper for a 22 percent increasein contained copper and an additional 47 million pounds of in-situ zinc. 

| 12 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| Description of the Business |
|-----------------------------|

The Company’s two principal properties are the Timok Project in Serbia which hosts the copper-gold Cukaru Peki deposit on the Brestovac-Metovnica Exploration Permit (the “B-M Permit”) and the Bisha Property in Eritrea which hosts the copper-zinc-gold Bisha deposit and includes potential satellite VMS deposits at Harena, Northwest, Hambok and Asheli. 

The Company’sprincipal mining operation is the Bisha Mine which is located on the BishaProperty and is owned and operated by BMSC.  The MiningAgreement governs the development of the Bisha Property and covers an area of 46.5square kilometers which contains the Bisha Mine and the Bisha Mining License andthe Harena Mining License.  In addition, the Company owns the New MogoraibRiver Exploration License which covers an area of 630 square kilometers and theTabakin Exploration License covering 184 square kilometers both adjacent to theBisha Mining License.  

| The Bisha Mine |
|----------------|

The Bisha Mine, located on the Bisha Property, is ownedand operated by BMSC.  The Company is a 60% shareholder in BMSC with theremaining 40% interest held by ENAMCO.  BMSC is governed under the terms of ashareholder agreement between the Company and ENAMCO.  The Bisha Mine begancommercial production of gold in February 2011 that allowed an early payback ofgold phase capital and allowed for complete funding of both the copper and zincphase expansions. The Bisha Mine transitioned from gold production to copperproduction in late H2 2013 and commenced commercial production of copper inDecember 2013 and commercial production of zinc in October 2016 following thecompletion of the zinc expansion project. Mining of the supergene copper orecontinued until late Q2 2016 when the operation commenced processing primaryore.  The primary phase ore contains a significant amount of zinc andcopper.

| The Timok Project |
|-------------------|

The Timok Project is located in eastern Serbia near the Bor Mining and Smelting complex. The Timok Project is focussed on the Cukaru Peki (“Timok”) deposit which includes the high grade Upper Zone (characterized by massive and semi-massive sulphide mineralization) and the Lower Zone (characterized by porphyry-style mineralization).  The Upper Zone has an extremely high copper and gold content consisting of 1.7 million tonnes of indicated resource grading 13.5% copper and 10.4 g/t gold and 35.0 million tonnes of inferred resource grading 2.9% copper and 1.7 g/t gold.  The Timok Project is a joint venture between Nevsun and Freeport. Nevsun owns a 100% interest in the Upper Zone and currently a 60.4% interest in the Lower Zone and is the operator of the Timok Project.  Nevsun’s ownership interest in the Lower Zone will decline to 46% once a feasibility study has been prepared for either the Timok Upper or Lower Zone. 

| Metal Sales |
|-------------|

There are numerous customers for the copper and zincconcentrates and by-product gold and silver, as well as for stockpiled goldmaterial.  Accordingly, the Company is not dependent upon any one customer.  Copperand zinc concentrates as well as stockpiled material sold as Direct Ship Ore areproduced at site and transported in country by truck and trailer to the port ofMassawa and then loaded into ocean freighters for transport to customers inEurope and Asia.

| 13 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| Methods of Production |
|-----------------------|

At Bisha, the Company began processing supergene copper ore in 2013 using selective flotation to recover copper as a sulphide concentrate.  The commissioning of a zinc circuit was completed in October 2016, thereby enabling production of both high quality copper and zinc concentrates from primary ore. During 2016 the Company achieved commercial production of zinc, meeting guidance of 90 million pounds in concentrate but was not able to produce commercially viable copper concentrate from primary ore due to metallurgical challenges. A clear priority remains to resolve these challenges which are related to dilutive pre-activation of zinc minerals along with pyrite in the copper flotation circuit.  The Company continues to work diligently to solve this problem by utilizing selected external specialists, conducting further diamond drilling, completing new geo-metallurgical test work, flotation testing and campaigning batch trials at the plant. The Company’s 2017 guidance is to produce 200 to 230 million pounds of zinc at a C1 cash cost per payable pound of zinc of $0.70 to $0.90 and 10 to 20 million pounds of copper at a C1 cash cost per payable pound of copper of $0.90 to $1.10 and to monetize 10,000 to 15,000 gold equivalent ounces from stockpiles.

The current open pit mine life effective at December 31,2015 was estimated to be 9.5 years, which includes three to six months ofprocessing remnant gold oxide ores to produce gold doré in the final year ofmine life by restarting the original carbon-in-leach circuit.  An updated lifeof mine plan commensurate with the updated mineral resource and mineral reserveeffective at December 31, 2016 will be completed and published before the endof Q2 2017. The Company continues with its efforts to expand mineral resourceswith ongoing exploration drilling programs with an expectation of subsequentconversion into mineral reserves. The Company has been conducting ongoing drillingprograms on the Bisha and Harena Mining Licenses and on the Tabakin and New MogoraibRiver Exploration Licenses with the plan to further extend the life at theBisha Property.  Exploration on the Bisha and Harena Mining licenses hasfocussed mainly on expanding the known deposits, while work on the Tabakin and NewMogoraib River Licenses is entirely directed at discovering new satellite deposits.Many untested geophysical targets remain on these properties and new targetsare being generated which will be evaluated with future drilling. Thisexploration work, as in the past, has a high potential to provide significantadditional near and long-term mineral resources for the Bisha operations.  Asreferenced above, the updated drilling results from 2016 are being analyzedand will be reflected in an updated Mineral Reserves and Resource estimate forBisha which is expected to be finalized during Q2 2017.

| Skill and Knowledge |
|---------------------|

BMSC has built a management team of skilled mining, processing,exploration, maintenance, environmental, financial, and administrativepersonnel located at and reporting to the General Manager at the Bisha Mine. The General Manager is in charge of mine production, the process plant andshipping facilities and exploration programs.   The specialized knowledge andskills required in all areas of mining include mining, engineering, geology,metallurgy, environmental permitting, drilling, and exploration programplanning and implementation is available on-site. The Bisha Mine was the firstmodern mining operation in Eritrea. Training of local staff to attain andmaintain the requisite skills in all aspects of mining operations remains a highpriority. 

| Employees |
|-----------|

In Eritrea, BMSC directly employs approximately 1,200 Eritreansand 100 expatriates at the Bisha Mine and provides a safe and supportiveworking environment. 

The Company strives to ensure that its presence has apositive social and economic impact in all jurisdictions that it operates. 

Specifically with respect to Eritrea, the spin-offeffects from local suppliers for certain goods and services required by theBisha Mine has created meaningful employment for thousands of Eritreans. Compensationfor Eritreans directly employed by BMSC is well above the average wage in Eritrea.Employees are provided food and accommodations, access to medical care at themine’s health clinic, and commuting both locally and to Asmara, at companyexpense. These employees also receive training and have opportunities foradvancement. The use of national service labour at Bisha is not permitted, andBMSC has strong practices and procedures which include the inspection ofnational service discharge documentation for all Eritrean workers as acondition of pre-employment at Bisha.******

| 14 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

In Serbia, the newly acquired Rakita Explorations d.o.o.Bor (“Rakita”) (the legal entity that operates the Timok Project) employsapproximately 95 Serbian staff and 4 expatriates at the Timok Project  TheCompany plans to cultivate the same strong safety culture that has beensuccessful at its Bisha Mine in Eritrea.

| Corporate Social Responsibility |
|---------------------------------|

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. 

Since commencement of commercial gold production in early2011, the Company has contributed over $1 billion in cash remittances to theEritrean government and government-owned entities in various forms of taxationand for the provision of goods and services. The Bisha Mine is a significantbenefit to Eritrea and its direct contribution through salaries, wages,benefits, local supply-chain purchases and community assistance, is a significantbenefit to the national economy and the local communities. The resulting impactthrough the indirect multiplier effect on the economy of Eritrea issignificant.  The Company will look to cultivate a similar positive impact inSerbia as it develops the Timok Project and advances it toward full production.

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.

The Company has also undertaken an independent humanrights impact assessment and a follow-up audit, and implemented numerousmeasures and safeguards to further advance human rights at the Bisha Mine andthe surrounding communities.  The Company has adopted a Human Rights Policy andhas embedded mandatory training in human rights at all of its operations anddevelopment projects.  Spot audits/validation on human rights compliance forthe direct workforce, contractors, subcontractors and suppliers has also beenembedded into standard operating procedures.

| **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 its business within a frameworkthat promotes worker and community health and safety, environmental protection,community involvement, community benefits and quality of life for employees andtheir families.  The Company is committed to****responsible****operationsand practices at all of its operations and development projects, based on nationaland international standards of safety, environmental management, governance andhuman rights and strives to ensure that the Company’s presence has a positivesocio-economic impact to the national economy and the nearby local communities.Some ofthe Company’s social responsibility commitments and practices 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 national service    labour is prohibited and inspection and audits of national service discharge are    conducted;

| 15 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

-  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;
-  promoting    the use of various grievance mechanisms to enable ongoing constructive feedback    with workers and communities alike;
-  procuring    materials, goods and services in a manner that enhances local benefits and    protects against unethical practices such as child labour and forced labour;
-  investing    in nearby community infrastructure projects to assist in local community    development for the purposes of increasing the quality of life for its    citizens;
-  establishing    social responsibility performance criteria; and
-  monitoring    and reporting performance to senior management through periodic audits.

| **Health and Safety** |
|-----------------------|

****The Company recognizes that the safety and security ofits employees and the communities in which it operates is an integral part ofits business.  The Company strives to maintain industry leading safety performanceat Bisha and Timok in order for employees and contractors of the Company tooperate injury-free, regardless of what role they perform. TheCompany likewise has advanced its corporate responsibility initiatives toreflect evolving international standards. The Company has maintained topquartile safety performance at the Bisha Mine to December 31, 2016 where employeesworked 12.8 million consecutive hours to December 31, 2016 since the Company’s lastlost time injury (“LTI”) experienced in February 2015.  Timok experienced asingle lost time injury in November 2016 since the transaction closed betweenReservoir and Nevsun.

Toachieve its health and safety objectives, the Company is training employees towork in a safe and responsible manner.  This includes:

-  carrying    out risk assessments for all construction and operational activities; 
-  conducting    thorough investigations when incidents do occur to understand the underlying    causes;
-  taking    the appropriate corrective actions to avoid recurrence of incidents;
-  ensuring    that health and safety performances comply with relevant legislation and    regulation;
-  adhering    to local laws as well as international standards on law enforcement in securing    its operations, particularly those that relate to the use of force; and 
-  carrying    out risk assessments in relation to security issues at each of its project    sites, ensuring that security is managed in a way that respects and protects    human rights, avoids creating conflict, and addresses security threats in as    peaceful a way as possible.

**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 to thegoal 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;

| 16 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

-  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 two principal properties are the Timok Project in Serbia, which hosts the copper-gold Cukaru Peki deposit on the B-M Permit; and the Bisha Property in Eritrea, which hosts the copper-zinc-gold Bisha deposit and includes satellite VMS deposits at Harena, Northwest, Hambok, Aderat and Asheli.

**The Timok Project**

The Timok Project, located in Serbia, is focused on the Cukaru Peki deposit, which includes the high grade Upper Zone (characterized by massive and semi-massive sulphide mineralization) and the Lower Zone (characterized by porphyry-style mineralization).  Cukaru Peki is contained within the B-M Permit, through Rakita Exploration d.o.o. (“Rakita”), a Serbian entity that is indirectly owned upstream by the Timok JVSA (BVI) Ltd., a joint venture that is owned 45% by Global Reservoir Minerals (BVI) Inc. (a 100% owned subsidiary of the Company) and 55% by Freeport International Holdings (BVI) Ltd. (a company with a dual share structure of A and B class shares, of which Global Reservoir Minerals (BVI) Inc. owns 100% of the Class A shares and 28% of the Class B shares).  The Class A shares relate to the Upper Zone and the Class B shares relate to the Lower Zone.  The Company effectively owns 100% of the Upper Zone and 60.4% of the Lower Zone through its indirect interests in both Timok JVSA (BVI) Ltd. and Freeport International Holdings (BVI) Ltd.  Nevsun’s ownership interest in the Lower Zone will decline to 46% once a feasibility study has been prepared for either the Timok Upper or Lower Zones.    

Unless otherwise stated, therelevant technical and scientific information included in this AIF concerningthe Timok Project is derived from the Timok PEA (the 2016 Preliminary EconomicAssessment of the Cukaru Peki Upper Zone Deposit) prepared by Martin Pittuck,CEng, FGS, MIMMM (SRK Consulting (UK) Limited) and Tim McGurk, CEng, FIMMM (SRKConsulting (UK) Limited), effective March 31, 2016. These authors are QPswithin the meaning of NI 43-101. The Timok PEA for Reservoir is available forreview on SEDAR (www.sedar.com) andEDGAR (http://www.sec.gov/edgar.shtml).

The key 2017 milestones for the Timok UpperZone are the PFS completion in September 2017 and commencing the exploration declinein Q4 2017.  The PFS remains on time and budget.  The Company has completed approximatelyhalf of the required permitting obligations necessary for decline constructionpermit and is expecting to receive approval during the second half of 2017. TheCompany will begin the tendering process for the decline development during Q22017. 

Other key activities, including theEnvironmental Impact Assessment (EIA) and land acquisition, are progressingwell.  Keeping the Upper Zone on track for production by approximately mid-2021is the number one priority of the Company.

**TheBisha Property**

The Bisha Property, located in Eritrea, hosts the BishaMine. The property is owned and operated by BMSC which in turn is controlled60% by the Company and 40% by ENAMCO.  BMSC is governed under the terms of ashareholder agreement between the Company and ENAMCO.  Under Eritrean MiningLaw, ENAMCO initially held a 10% free carried interest in BMSC.  In October 2007,ENAMCO agreed to purchase an additional 30% interest in BMSC, the terms ofwhich were finalized in 2011.  In December 2007, BMSC concluded a MiningAgreement with the State of Eritrea. Royalties payable to the State of Eritreainclude a 5.0% royalty on precious metals and a 3.5% royalty on base metals. 

The Bisha Mine on the Bisha Property began commercialproduction in February 2011 with approximately 784,000 ounces of gold in dorébeing produced from oxide mineralization until late 2013.  The Bisha Mine achievedcommercial production of copper derived from supergene mineralization inDecember 2013 with the production of approximately 438 million pounds (198,800tonnes) of copper during the supergene phase. The Company transitioned toproduction of both copper and zinc from the primary zone in Q2 2016, althoughchallenges currently remain with copper production in a separate clean copper concentrate. Construction and commissioning of a zinc flotation circuit required for futurezinc production from the primary sulphide zone was completed on time and underbudget.

| 17 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016 

Unless otherwise stated, therelevant technical and scientific information included in this AIF concerning theBisha Property is derived from either the 2013 Technical Report prepared byPaul Gribble, C. Eng., FIMMM, Chief Resource Geologist, BMSC; Jay Melnyk,P.Eng. AGP; and Peter Munro, BAppSc. Mineralurgy Pty. Ltd. effective December31, 2013; the December 31, 2015 Mineral Resource estimate completed by PhilJankowski, MAusIMM (CP), (BMSC), effective December 31, 2015; or from theDecember 31, 2015 Mineral Reserve estimate for Bisha and Harena completed byAnoush Ebrahimi, P.Eng., PhD. (SRK Consulting Canada Inc.), effective December31, 2015 (collectively the “Bisha Technical Reports”). These authors are QPswithin the meaning of NI 43-101. The 2013 Technical Report is available forreview on SEDAR (www.sedar.com) andEDGAR (http://www.sec.gov/edgar.shtml). 

**Although the Bisha Technical Reports are current asdefined in NI 43-101, an updated Mineral Reserve****and Resourceestimate on the Bisha Property is expected by the end of the second quarter of2017.  This report may or may not contain material scientific and technicalinformation that differs from that contained in the Bisha Technical Reports.****As aresult, readers are cautioned that the scientific and technical informationcontained in this AIF may change and caution should be used by readers inrelying upon such information.******

| 18 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| Timok Project – Project Description and Location |
|--------------------------------------------------------|

The Timok Projectislocated ineastern Serbia on a gently rollingplateau between 300 and 400 meters above sea level and has a moderate-continental climate.It is located5 kilometers south of the town of Bor, which is a regionaladministrative and miningcentre, located approximately 245 kilometers by roadsoutheast of Belgrade, the capitalof Serbia. The siteis favourably locatedfor mining infrastructure (road, rail, power, water) and nearby the recentlyupgraded coppersmelter complex in Bor.  TheUniversal Transverse Mercator System (UTM) coordinates (the World GeodeticSystem, 1984) of the Cukaru Peki deposit is 4874888 N and 590706 E (UTM zone34).

| **Figure 1 – Timok Project      Location** |
|--------------------------------------------------|

****

The original B-M Permit, exploration field no.1926, was granted to Rakita on 28 February 2012, under the terms of the 2011 Law on Mining and Geological Explorations. The Permit was originally valid until February 28, 2015 with any future extensions subject to approval by the Ministry of Natural Resources, Mining and Spatial Planning (the “Ministry of Mines”).

On February 28, 2015 the B-M Permit was renewed and is now valid until February 28, 2017. A renewal of the B-M Permit was submitted on January 27, 2017 to the Ministry of Mines and the Company is awaiting confirmation of extension of the B-M Permit to February 28, 2020.  Under the terms of the 2011 Law on Mining and Geological Explorations, 25% of the original shape of the original B-M Permit was relinquished. The relinquished area forming the southwestern and southern fringe of the original area was re-applied for under a new Exploration Permit named Brestovac-Zapad.

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ANNUAL  INFORMATION FORM – December 31, 2016

Future extensions are now subject to approval by the Ministry of Natural Resources, Mining and Spatial Planning. The Company interprets the new Law to mean that:

- the B-M Permit can be extended for a final renewal of two years and the re-applied area may remain the same or be reduced when compared to the original area specified in the approval for exploration (article 38 and 39). This Final extension would need to be granted before February 28, 2017.
- Brestovac-Zapad can be extended    for two consecutive periods of up to three years    for the first renewal    and two years for the second renewal.    The re-applied area may remain    the same or be reduced    compared to the original    area according to the request    of the entity in charge of the exploration (article    38 and 39). This final    extension would need to be granted    before April 30, 2018.

Land in the project area is mainlyused for agricultural purposes, but it also includes municipal land, military land and the Bor Municipality airport. The land in the project area is divided into hundredsof small portionsof land which will have to be acquiredto develop the mine. Many of the land parcelsare owned by the same familieshaving been passed on through the generations.

Ahead of application to developa mine, Rakita will need to secure surface rights, in the form of land ownership or easementagreements on 80% of the area for which a mining permitapplication is made.

The processof obtaining surfacerights started in 2015 and has beenadvancing as a separate work stream to the current primary objective ofdelivering a PFS by the end of Q3 2017. It is estimated by Rakita that up to 800 hectaresof land will be required to secure the Mine Use Permit for theUpper Zone project. 

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ANNUAL  INFORMATION FORM – December 31, 2016 

| **Figure 2 – Brestovac-Metovnica      and Bretovac-Zapad Exploration Permits** |
|--------------------------------------------------------------------------------------|

****

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ANNUAL  INFORMATION FORM – December 31, 2016 

**Agreementsand Encumbrances**

The Serbian governmentlevies a royalty of 5% net smelter return (‘‘NSR’’) for metallic raw materials(status as of 2011, Guidefor Investors, Ministryof Natural Resources,Mining and SpatialPlanning) and then there are additional royalties which may be due; theseare individually negotiated for each minerallicense.

The Brestovac portion of the Brestovac-Metovnica property to the west of CukaruPeki is subject to a2% NSR royalty on gold and silver and a 1% NSR royalty on other mineralspursuant to a royalty agreement (‘‘Eurasian Agreement’’).

The Metovnica portion of the Brestovac-Metovnica property which contains the Cukaru Peki deposit is subject to a 0.5% NSR sliding royalty pursuant to a royalty agreement. As the Metovnica property was previously owned by Freeport, who conducted geophysics and limited drilling, the NSR royalty will not apply to any portion of the property eventually owned by Freeport and does not apply to the portion of the property that has been purchased by Reservoir through the exercise of the ROFO.

For exploration, agreements have been reachedwith landowners of each drill site. The agreements covercompensation for disturbance and the requirement for full rehabilitation of the site.Drill sites arephotographed before commencement of the drilling,and after completion of the rehabilitation.

**Significant Factors That May Affect Access, Title, or the Ability to Work**

In December2015 the SerbianGovernment introduced a new Law on Mining and Geological Explorations. The new Law introduces the concept of mineral and other geologicalresources of strategicimportance, including copper.In case of mineral resourcesof strategic importance, the procedure for the expropriation of the relevant landto be used for miningcan be implemented, even when the prospective exploitation is to be done by private parties.

Under the new Law, geological exploration permit holdersare entitled to submit a request for thepreservation of their priority rights for exploitation of the specificexploration area at least thirty days prior tothe expiration of the durationof the permit for geological exploration, in order to preparethe documentation necessary to issue a decision on the approvalof the exploitation field. Such a preservation of rights can beapproved for a period of up to two years and, in case of mineral resourcesof strategic importance, for up to three years. In either case, the preservation of rights cannot be prolonged.

The new Law provides for issuing of five permits:

- Permit for Geological Explorations;
- Certificate of Resources    and Reserves;
- Exploitation Field Permit;
- Mine Building Permit; and
- Mine Use Permit.

The processfor obtaining the above five permits is governed by thenew Law on Mining and Geological Explorations and a seriesof rulebooks.  

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ANNUAL  INFORMATION FORM – December 31, 2016

| Accessibility, Climate, Infrastructure & Physiography |
|-----------------------------------------------------------|

| **Accessibility** |
|-------------------|

****The Timok Project area is easily accessible by pavedroads that connect with the Serbian main road network.Travel time from Belgradeto Bor and the Timok Project area by road is about3hours. In addition, there are numerous small agricultural and forestry trackswithin the permit area that are suitable for four-wheel drive vehicles.

A regional bus service connectsBor with Belgrade and other cities and towns. Bor is integrated into the Serbian railwaysystem and connects to Belgrade and the main lines.The line from Bor is primarily for freight,but there are regular passenger servicesto Belgrade. The site is also favourablysituated for export freight logistics.

| **Climate** |
|-------------|

****The climate of Serbia is described as moderate-continental with local variations. July is the warmestmonth with mean monthly temperatures, dependingon altitude, in the range 11oC to 22oC (reachingup to 42oC).The lowest temperatures are registered in January and range from -35oC to -21oC. The majority of Serbia has most rainfallduring May and June, particularly in eastern Serbia, which is furthest from the influenceof the Mediterranean precipitation patterns. Exploration drillingcan continue throughout the year. Other field activities are constrained by snow cover during the wintermonths which can extendfrom December to April.

| **Infrastructure** |
|--------------------|

****The Cukaru Peki deposit is located about 5 kilometers southeast from Bor town and is accessible by paved road. The road and rail access to Bor is good.  Bor is an active mining town and contains a regional administrative centre possessing the facilities, services and experienced workforce required for advanced mineral exploration projects. Reliable power is available with power lines passing through the B-M Permit area. NRL’s subsidiary, Reservoir Minerals Inc., maintains an office in the town as a technical base for exploration activities on the B-M Permit and other exploration permits in the Timok region and is located close to the major centre of drilling.

InJanuary 2011 Outotec signed a contractwith SNC LavalinInternational to design, supply and install a new copper flash smeltingfurnace and related servicesfor Rudarsko toipioničarski basenBor d.o.o. (“RTB Bor”) in central Serbia. RTB Bor has recently upgraded the smeltercapacity at Bor, utilizinga loan from the Canadian Development Bank, guaranteed by the SerbianGovernment. The smelterwas constructed by SNC Lavalin, and commissioning work was undertakenprior to its departure in late 2015. The smelteris currently treating a mixture of concentrates from the existing RTB Bor miningoperations, alongsideimported concentrates from overseas. Though there is no requirement under Serbian law to treat concentrates within country, it is envisaged that there could be spare capacityat the facility whichthe Company may utilize,should the opportunity arise. This is an attractive option sincethe smelter facility is only 7 kilometers from the Timok Project and could significantly reduce concentrate transport costs.

| **Physiography** |
|------------------|

****The reliefof the Timok Project area is markedby a gently rollingplateau with elevations approximately between 300 to 400 metersabove sea level. The CukaruPeki deposit itself is at an elevation of approximately 375meters above sea level. The Crni Vrh hills to the west of the exploration permit rise to over 1,000 meters abovesea level.

Inthe immediateTimok Project area there is plentyof accessible flat or gently undulating land to accommodate surface processing facilities and waste storage as necessary.There are a few river valleyswhich are of sufficient depth to providethe necessary volume of tailings storage.

Vegetation in the area comprisesmostly arable crops, some grassland and deciduouswoodland.

The Timok River is the major drainage system in the projectarea, with multiple tributaries such as the Brestovac, Bor and Borska. It originates in the north of the Svrljig Mountains in the Carpathian-Balkan region in easternSerbia running 203 kilometersbefore discharging into the Danube River. Topographic elevation within the Timok catchmentranges from 142 meters abovesea level at the Timok-Danube confluence, to 1,049 metersabove sea level in the upper reaches of the catchment. 

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ANNUAL  INFORMATION FORM – December 31, 2016 

The Crni Vrh plateau is incised by the southeast-flowing drainage of the Brestovac River and its tributaries, and by the Bor River in the northeast of the B-M Permit area. The Brestovac River descends from about 280 meters in the northwest corner of the property perimeter to about 160 meters, where it flows across the south boundary of the exploration permit. The highest elevation is recorded as 464 meters on the eastern margin of the property.

Anthropogenic features related to the mining activity,including waste dumps, dominatethe physiography to the north of the exploration permit.The Bor open pit, approximately 2 kilometersnorth of the northern perimeter of the B-MPermit, is approximately 300 meters deep and 1.0 kilometer long.

| Mineral Property History |
|--------------------------|

| **Historical Exploration      and Mining to 2004** |
|----------------------------------------------------|

****The Cukaru Peki exploration site in the B-M Permit is located five kilometers south of the Bor mining complex. Exploitation of the surface outcrops, primarily for gold, of the massive sulphide mineralization at Coka Dulkan and Tilva Ros may have commenced during the Bronze Age and again by the Romans, who were active throughout the region. Serbian investors financed prospecting and exploration at Coka Dulkan and Tilva Ros during 1897-1902, and mine development during 1903-1905. Mining commenced in 1907, and the Serbian investors sold to a French group (Society of the Bor Mines) that controlled the mines until 1941. The mines and smelter were rehabilitated after the Second World War and have operated since then under the Yugoslav, and later Serbian, state-owned companies, RTB Bor Mining and Smelting Basin Bor.

Trial mining of copper and zinc mineralization south of Brestovacvillage, within the Timok Project area, was undertaken from an adit and blind shaft south of Brestovacby a French group in the 1930’s, howeverthere are only incomplete records and no meaningful recorded production.

There are records of approximately 41 RTB Bor drill holes at various locations in and near the project area from 1975 to 1988. Most drilling took place in small clusters, and targeted gravity and other geophysical anomalies. The records are not complete, and no drill core was retained. Most holes were relatively shallow, with depths less than 500 meters. The Cukaru Peki mineralization was not intersected in any drill holes from this time and no discoveries were reported, other than one hole south of Brestovac village showing enhanced gold grades in altered andesite, for which the sampling and analytical records are incomplete. This hole was followed up by an exploration program in 2006 by Eurasian Minerals, Inc. (“Eurasian”). 

No effectivemineral exploration was undertaken in the period 1990-2002 due to the periodof political uncertainties in the former Yugoslavia and Serbia at that time. Mineral exploration resumed when the Serbiangovernment issued exploration permitsand concessions after 2002.

| **Historical Exploration      2004-2010** |
|-------------------------------------------|

****The first Brestovacexploration permit was awardedin 2004 to SoutheastEurope Exploration d.o.o (“SEE”), a 100% owned subsidiary of Eurasian.In 2006, Eurasian validated the reportsofgold mineralization encountered in a historical drill hole from the 1970s. Diamonddrill hole BN-01 was terminated at 296.8 meters, and intersected gold and copper mineralization in the upper 60 meters including22.4 meters at 4.51g/t gold, and non-auriferous replacement zinc mineralization from 286-294 meters. Ground magnetometry, IP and resistivity geophysical surveys indicated an area with very high chargeability and conductivity characteristics in the so-called“Corridor Zone” extendingthrough drill site BN-01.

In2007, SEE becamea 100% owned subsidiary of Reservoir Capital Corp. During 2007-2008, Reservoir CapitalCorp. undertook furthergeophysics and soil geochemical surveys in theBrestovac area, and outlined a high-grade epithermal copper-gold system in the "Corridor Zone" along a strike length of 550 meters, defined by 14 drill holes (total 1,937 meters). Drill hole BN-19, at the easternend of the Corridorclose to the interpreted extension of Bor Fault, intercepted a massive sulphidezone with 24.8 meters at 0.33% copper and 0.16 g/t gold, which supportedthe concept that theepithermal gold mineralization of the Corridor Zone grades into a copper-rich zone. 

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ANNUAL  INFORMATION FORM – December 31, 2016 

During2006-2009, Phelps Dodge Exploration Corp. (“PDEX”) undertookgeological and large-scale IP geophysical surveys on the adjacent Metovnica exploration permit. PDEX also completed 14 drillholes (including three holesdrilled duringa joint venture with Euromax ResourcesLtd.) in the west and south of the Metovnica exploration permit. None of these holes intersected significant mineralization.

| **Geological Setting** |
|------------------------|

Geologically, the region is part of the Western or Eurasian Tethyan Belt, whichhosts Mesozoic to Cenozoic subduction-related gold and base metal deposits from Romania and Serbia through to Turkey,Iran and Pakistan.Locally, the Timok Metallogenic Complex has one of the highestconcentrations of copper enrichment in the Belt, containing world-class examples of porphyryand high sulphidation epithermal types of copper-gold deposits, such as Bor and Majdanpek, which have an estimated historical production of some sixmillion tonnes of copper and nearly ten millionounces of gold. The Bor cluster of deposits is hosted by Upper Cretaceous andesites and volcanoclastics that continue at least five kilometers south to CukaruPeki, where the Cretaceous is overlain by a Miocene basin containing clastic sedimentsthat can reach up to 600 metersin thickness.

The Cukaru Peki depositis subdivided into an Upper Zone of high-sulphidation epithermal mineralization and the underlyingLower Zone of porphyry type mineralization which has not yet been modelled due to insufficient drill data and geometrical understanding, and is not included in current resourceestimates. Despite incompletedrill coverage in the Lower Zone, there are indications of a large deposit that may be amenableto a bulk mining method. The Lower Zone is currentlyan exploration target that remains open to the north and at depth below the UpperZone, with severaldrill hole intersections that outline the potentialmagnitude of the mineralized system.

The close spatial association of the high sulphidation and porphyry copper-gold mineralization at CukaruPeki is very similarto that observed and describedfrom the activeBor mining district, and Company geologists interpret the LowerZone and Upper Zone mineralization at Cukaru Peki to be comparable to, respectively, the porphyryand high sulphidation mineralization in the Bor District. The porphyry style mineralization at Bor includesthe Borska Reka deposit and the spatiallyassociated high sulphidation coppergold mineralization at Bor which occurs in severaldeposits (Tilva Ros, Tilva Mika, Coka Dulkan, etc.) that have been mined out with past production estimated as approximately 200 Mt at 1.5% copper and 0.8 g/t gold.

| **Exploration History Since 2010** |
|------------------------------------|

Since 2010 exploration in the B-M Permit was undertaken under the terms of an earn-in agreement between Reservoir Minerals Inc. and Freeport.

During2010-2012 field work included geological mapping, geochemical surveys and large scale CSAMT and additional IP surveys.These surveys covered areas where Miocenesediments (known as the Miocene sedimentary basin target),concealed the target Upper Cretaceous volcanic rocks, as well as the Ogasu Kucajna target areas. Orientation surveys over known depositsin the Bor districtwere also carried out.

The CSAMT survey highlighted the positionof the base of the Miocene and the location of high/lowresistivity zones and potentialstructural zones which is over the Upper Zonedeposit. The CSAMT data has been used for exploration targeting and contributed significantly to the initial (drill defined) discovery of the Cukaru Peki deposit. Drill hole to surface IP resistivity measurements were conducted around drillhole FTMC1210, but the results were not sufficiently encouraging to justifyfurther downholeIP surveys.

During 2013-2015 field work included geological mapping, structural investigations and geochemical sampling, large scale CSAMT and IP/Resistivity surveys. A seismicexperimental investigation was also carried out to establish the feasibility of the application of theseismic reflection method for investigation of mineraldeposits and deep structures. Seismic data was acquiredusing a combination of small explosive charges placed in shallow boreholes and an accelerated weight drop. Active receiverspread consisted of 174 channels arranged in a split spread configuration. 

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ANNUAL  INFORMATION FORM – December 31, 2016 

In 2016 limited drilling was conductedduring the first six months due to the Freeport sale process which wasconcluded in June with the Company acquiring ownership in the project andbecoming the operator.  Since that time, drilling on the Upper Zone has beenramping-up with a goal of increasing the confidence in the resource model byconverting the inferred resource to indicated resource with tighter spaceddrilling.  Geotechnical and hydrologic drilling also commenced to determine theoptimum location of potential access ramp locations and for otherinfrastructure and mining considerations.  Drilling was also restarted on theLower Zone in an effort to determine areas of higher grade mineralization andto expand the known footprint of the deposit.  Limited geochemical andgeophysical surveying, including borehole electromagnetic and gravity surveyingwas also completed.

| **Mineralization** |
|--------------------|

Three  styles  of  mineralization  are  defined at Cukaru  Peki,  based  on  core logging and petrographic studiesby Cvetković et al (2012) and Pačevski et al (2013):

- HSE mineralization comprising massive    to semi massive sulphide    and vein stockworks. The Upper    Zone comprises a single coherent    zone of HSE mineralization, ranging    in depth from 400 to over 1,000 meters below surface.    The predominant sulphides are pyrite and covellite, with minor enargite and rare bornite.    The massive sulphides are generally    fine-grained and often display    breccia textures indicative of replacement and or open-space infill.
- Porphyry    mineralization comprises quartz-sulphide vein stockwork,    veinlets and disseminations    of    chalcopyrite and pyrite,    locally bornite and with    rare molybdenite. Anhydrite veins are commonly associated with this type of mineralization. This type of mineralization occurs in the Lower    Zone of the Cukaru Peki deposit, at    depths greater than about 1,000 meters.
- An overprinting epithermal mineralization phase is locally present where    Lower Zone mineralization has been overprinted by argillic    to locally advanced argillic alteration. It is transitional    between the shallower    high sulphidation and deeper porphyry styles. It comprises    covellite-digenite-pyrite and locally enargite    replacing the primary sulphides (chalcopyrite-pyrite) in porphyry    style mineralization, and is associated with quartz-clay+sericite+alunite alteration assemblages.

| **Upper Zone** |
|----------------|

The high sulphidation UpperZone comprises an irregular but broadlyovoid-shaped body of mineralization with a very distinctive internal layering.The long axis of the UpperZone mineralization plunges steeply (approximately 60°) to the northwest, whereas the internallayering generally dips shallowly(approximately 30°) to the southwest. The overall sequenceprogresses from a high-grade covellite-pyrite massivesulphide breccianear the top of the Upper Zone, down into a mixed zone comprising both covellite-pyrite massiveto semi massive sulphide breccia and veined or brecciated advancedargillic altered andesite.With increasing depth,the proportion of massive sulphidegenerally decreases and the proportion of advanced argillic altered(with associated silicification) andesite increases as mineralization becomesmore vein-controlled. This downward changein mineralization style broadly corresponds with decreasing copper and gold grades.

| **Lower Zone** |
|----------------|

The Lower Zone mineralization has significantly less drilling and thus itsoverall geometry is not as well constrained as the UpperZone, particularly its lateral and depth extents.The sulphide mineralogy (chalcopyrite-pyrite, borniteand locally overprinted covellite) and distribution of potassic/phyllic/argillic alteration defines a somewhat irregular ‘upper surface’  to the porphyrymineralization; however,when looking at the copper and molybdenum assays a sub-planar grade boundarybecomes apparentwhich dips shallowly (approximately 30°) to the west-southwest and may relate to a low angle structural control.

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ANNUAL  INFORMATION FORM – December 31, 2016 

Within the LowerZone mineralization there are also distinctdomains of relative lowerand higher grades, thesevariations are possiblycaused by a combination of multiplemineralization phase events related to multipleintrusive phases. Offsetting of mineralization by faults may also be locally important.

| **Drilling** |
|--------------|

A total of 111 holes totalling 90,739meters were completed by Rakitaat the Cukaru Peki Project as of December14, 2015. 

The drillingwas performed by contractors and managed by Rakita’sgeological team. The drilling programwas completed by utilizing four drilling contractors: Drillex International, Geops Balkan DrillingServices, S&VDrilling Mine Services, and Geomag Drilling.

All drillingwas completed by diamond core drilling–aside from holeFMTC1224 where an attempt was made to drill through the Mioceneand Upper Cretaceous sedimentary cover rocks withreverse circulation drilling.  This attempt was unsuccessful and the approach abandoned.

Diamond drillingwas performed with the use of a double tube with casing reducing from PQ to HQ and NQ rods at the appropriate depths.

Corewas produced in 3 metercore runs and then placed by hand into an open V-rail for measurement of recovered core length,before being transported to the drill site geologist. This geologistthen inspected the core beforetransporting the coreinto numbered plastic core boxes.Cut plastic blockswere used to record core depths.

All drill sites were initiallylocated with the use of a handheld GPSwith final locationsrecorded by a surveyoronce the drillingwas completed.

In 2016 diamond drilling continued at Cukaru Peki on theUpper Zone following the acquisition of the project by the Company.  A total of12,247 meters of infill drilling was completed in 21 holes by Geops BalkanDrilling Services Ltd.  As part of the program to test areas of proposedinfrastructure such as portal access location, tailings facilities and othergeotechnical and hydrogeological sites for future Upper Zone mining, a further4,581 meters of diamond drilling was completed by S&V Drilling MineServices, Geops Balkan Drilling Services and Geomag Drilling.  For the LowerZone, drilling also re-started with 7,004 meters in 5 holes being completed byCapital Drilling to the end of the year.  All drilling at Cukaru Peki ismanaged by Rakita’s geological team.

Diamond drilling was also completed in 2016 on the Rakitaowned exploration licenses: Jasikovo – Durlan Potok and Leskovo.  At Jasikovo-DurlanPotok, 1,712 meters of drilling was completed in 3 holes by Geomag Drilling andGeops Balkan Drilling Services.  A total of 1,391 meters of drilling in 3 holeswas completed by S&V Drilling Mine Services and Geops Balkan DrillingServices at Leskovo.  These drill programs were supervised by the geologicalstaff of Rakita.

On the Tilva JV, (a Joint Venture with Rio Tinto funding100% of the work), diamond drilling was completed on the Tilva Njagra property with 2 holes (2,094 meters)being completed by Capital Drilling and Geops Balkan Drilling Services and onthe Coka Kupjatra property where 2,683 meters of diamond drilling was completedin 2 holes by Capital Drilling and Geomag Drilling.  This work was supervisedby Tilva geologists.

At the Balkan Exploration andMining d.o.o. (“BEM”) owned Bobija property, S&V Drilling Mine Servicescompleted 950 meters of diamond drilling in 11 holes under the supervision ofgeologists from BEM.

| **Sampling and Analysis** |
|---------------------------|

All drill core is logged for corerecovery and rockfracture quality at the drill site before being transported to the core storage facilityfor photography and geological logging. A portablehand held Niton x-raydefraction meter is used to assist with visual copper grade estimationand a Terraspec spectrometer for mineral identification. Sampling lengths are then allocated (typically 1 meter and 2 meters for the UpperZone and Lower Zone respectively), guided bygeological contacts and the core is subsequently split using a diamond core saw. Samples are placed into heavy duty plastic bags and QAQC materials are inserted into the sample stream.

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ANNUAL  INFORMATION FORM – December 31, 2016 

| **2011-2013** |
|---------------|

For the 2011-2013 drill program,samples were sent for sample preparation to the EurotestControl EAD Laboratory in Bulgaria (“ETC”).ETC was previously the laboratory of the Geological Survey of Bulgariaand then privatized in 2000. Since September 2011, the company has new purpose-built premises that house in one building the entire laboratory and processing procedures as well as management and quality control. ETC has accreditation ISO 17025 for commercial analytical laboratories valid until May 31, 2016 and also ISO 9001 certification for their quality management system.

Sample preparation involvedcrushing to (>)95%passing -10 mesh (2 millimeters) using a jaw crusherprior to a 400 gram split being takenand pulverized to better than 90% passing 140 mesh (140 μm) with an LM2 pulverizing ring mill.

ETC analyzedthe samples for gold by Aqua Regia Digestionwith AAS finish until April 2013. After this date, sampleswere assayed for gold by fire assay with AAS finish(which showed improvedanalytical performance), with high grade samplesre-assayed using gravimetric finish. Copper and arsenic were assayed forby Aqua Regia with ICP-AES, with high grade copper(1-11%) re-assayed by AAS and very high gradecopper (>11%)re- assayed by ICP-AESusing a 0.1 gram aliquot.

| **2014-2015** |
|---------------|

Fordrilling completed subsequent to 2013, samples were sent for sample preparation to the ALS laboratorylocated at Bor in Serbia. Sample preparation involved crushingto (>)80% passing -10 mesh (2 millimeters) prior to a 400 gram split being taken and pulverized to better than 85% passing140 mesh (140 μm).

Sampleswere sent for analysisto the ALS Laboratories in Loughrea, Ireland and (for gold only) in Rosia Montana, Romania.After March 2015 all samples were sent to ALS Loughrea. Gold was assayed for by fire assay with AAS or ICP-AES, with high grade samplesre-assayed using gravimetric finish. Copperand arsenic were assayed for by Aqua Regia or 4 Acid digest with ICP-AES or ICP-MS, with high grade copper (>1%) re-assayed by ICP-AESusing a 0.5 g aliquot.Both ALS Loughrea and ALS Rosia Montanaare ISO 17025 accredited.

| **2016** |
|----------|

****Following the completion of theacquisition of the Timok Project by the Company, Rakita completed assaying ofbacklogged samples drilled in late 2015. A total of 10 drill holes were sampledand base metals assays completed.  Rakita continued to use the same preparationand analytical laboratories as in 2015. Samples were submitted to ALSfacilities in Bor, Serbia, for sample preparation (crushing and pulverizing)and then sent to ALS in Loughrea for analysis.

Copper was analyzed by inductivelycoupled plasma – mass spectroscopy (ICP-MS) after four-acid digestion. Highergrade copper samples containing more than 1% copper underwent repeat analysisusing ICP-AES after longer sample digestion times and higher dilution. Goldwas analyzed by fire assay (30 gram samples) with an ICP-AES finish.  Samplescontaining greater than 3 g/t gold were re-analyzed by fire assay (30 gramsamples) with a gravimetric finish.

Beginning with drill hole TC160112drilled in August 2016, a period of transition of the analytical methodprotocol for gold analysis and control samples percentage within the analyticalbatches, started.  As in the past, all samples were analyzed for gold by fireassay (30 gram samples) with ICP-AES finish; however, samples containinggreater than 9 g/t gold were re-analyzed by fire assay (30 gram samples) with agravimetric finish.  The number of internal control samples to check laboratoryprecision and accuracy was increased from 10% to 17% both for copper and goldanalytical batches.

Drill core samples were collectedin accordance with the Company protocols that are compatible with acceptedindustry procedures and best practice.  Most drill core samples through themineralized intervals were one meter in length. Beginning with drill holeTC160112 the sample interval length was increased from 1 meter to 1.5 meters. At the Lower Zone, sample interval lengths were increased to 3 meters for the2016 drilling.

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ANNUAL  INFORMATION FORM – December 31, 2016 

The Company continues to conductits own analysis of QAQC results generated by the systematic inclusion ofcertified reference materials, blank samples and duplicate samples. Companyused well homogenized certified material prepared of project drill holesintervals in order to cover three different mineralization intensity (3 CRMwith <1% copper grades, 3 CRM with copper grades for interval with 5-10%copper, and two for very high grade assays >10% of copper). The analyticalresults from the quality control samples have been evaluated and demonstratedto conform to best practice standards.

| **Security of Samples** |
|-------------------------|

Samples are collectedfrom the Rakita core facility by the accredited ALS laboratory in Bor on a weekly basis and transported to their facilities for preparation and assay.  Once core logging and sampling iscomplete, all core boxes are coveredand stored in the centralized Rakita core storage buildingfor permanent record.

| **Mineral Resource Estimate** |
|-------------------------------|

The mineralresource estimateprepared by SRK utilizes 90,739 meters of drillingfor a total of 111 drill holes at the CukaruPeki site. The Mineral Resource estimatewas supervised by Mr. Martin Pittuck, C.Eng, FGS, MIMMM an“independent qualified person” as definedinNational Instrument 43-101. The effectivedate of the resourcestatement is March31, 2016.

On a 100% attributable basis, the Cukaru Peki Upper Zone Mineral Resourcecomprises an IndicatedMineral Resource of 1.7 Mt above a cut-off grade of 0.75% copper, with average grades of 13.5% copper, 10.4 g/t gold and 0.23% arsenic and an Inferred Mineral Resource of some 35.0 Mt above a cut-off grade of 0.75% copper,with average gradesof 2.9% copper,1.7 g/t gold and 0.17% arsenic. The Table ES1-1gives the current Mineral Resource estimatewhich has been prepared in accordance with the CIM Code.

This Mineral Resource estimate is currently being updatedand categories upgraded for inclusion in the upcoming PFS due September 2017and will be published at that time; however, after completion of approximately30 percent of this planned infill Mineral Resource drilling program as at December31, 2016, there appear to be no material changes with this current Resource estimate.

| **Table 1.1 Mineral Resource Estimate Cukaru Peki Deposit Upper Zone      SRK, Effective Date: March 31, 2016** |
|----------------------------------------------------------------------------------------------------------------------|

| **Category**        | **Grade Category** | **Tonnes Mt** | **Grade** | **Metal** |
|---------------------|--------------------|---------------|-----------|-----------|
| **% Cu**            | **% Cu**           | **g/t Au**    | **% As**  | **Cu Mt** | **Au Moz** |
| **Indicated**       | >10.0           | 1.2           | 15.5      | 12.4      | 0.21 | 0.2 | 0.5 |
| 0.75-10.0           | 0.5                | 8.2           | 5.1       | 0.27      | 0.04 | 0.08 |
| **Inferred**        | >10.0           | 1.2           | 13.2      | 10.5      | 0.20 | 0.2 | 0.4 |
| 0.75-10.0           | 33.8               | 2.5           | 1.4       | 0.17      | 0.8 | 1.5 |
| **Total Indicated** |               | 1.7           | 13.5      | 10.4      | 0.23 | 0.2 | 0.6 |
| **Total Inferred**  |               | 35.0          | 2.9       | 1.7       | 0.17 | 1.0 | 1.9 |

| (1) | The cut-off grade used for the estimate is 0.75% Cu. |
|-----|------------------------------------------------------|

| (2) | All figures are rounded to reflect the relative accuracy of the estimate. |
|-----|---------------------------------------------------------------------------|

| (3) | Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. |
|-----|---------------------------------------------------------------------------------------------|

| (4) | The Mineral Resource is reported on 100% basis; currently 45% is attributable to Reservoir. |
|-----|---------------------------------------------------------------------------------------------|

The majority of the estimateis an Inferred MineralResource, which SRK expects can be upgradedto an IndicatedMineral Resourcewith further drilling and sampling. There are no MineralReserves at this time.

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Bisha  Mine – Project Description and Location** |
|----------------------------------------------------------|

The Bisha Mine is located 150 kilometers west ofAsmara, 43 kilometers southwest of the regional town of Akurdat and50 kilometers north of Barentu, the regional or zone Administration Centreof the Gash-Barka District, in Eritrea.  The Universal Transverse Mercatorsystem (UTM) coordinates (The World Geodetic System, 1984) of the centre of theBisha Property are 1,711,000 N and 334,500 E (UTM zone 37). The followingFigure 3 shows the location of the Bisha Property. 

| **Figure 3 – Bisha Site Location** |
|------------------------------------------|

****

Onsite infrastructure includes two open pits (Bisha and  Harena), a process plant (crushers and primary and secondary grinding mills;  leach, flotation, thickener, and other tanks; and filter presses), a wet tailings  facility and waste rock storage facilities, offices, maintenance and laboratory  facilities, fuel storage areas, an on-site power plant, an 1,100 main person  camp, a 225 construction person camp and an airstrip nearby. 

The Bisha Property consists of the 100% BMSC owned BishaMining License, the Harena Mining License, the New Mogoraib River ExplorationLicense and the Tabakin Exploration License.  The Bisha Property hosts theBisha deposit, a large precious metal (Au) and base metal rich (Cu, Zn) VMSdeposit currently being mined, as well as the Harena VMS deposit where aportion of the oxide gold cap mineralization was mined until mid-2013. Additional potential satellite-feed VMS deposits include Northwest, Hambok,Aderat and Asheli.

BMSC has the exclusive right of land use in the areascomprising the BMSC mining licenses. 

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ANNUAL  INFORMATION FORM – December 31, 2016

BMSC’stotal land package of exploration licenses consists of 814 square kilometers inEritrea’s Bisha VMS District. The exploration license area consists of two landpackages:

-  184 square kilometers surrounding    the existing BMSC mining licenses (“Tabakin Exploration License”), providing    continuous coverage for 15 kilometers over the Bisha Mine stratigraphy; and
-  630 square kilometers in the    vicinity of the Bisha mine, combining new and previously relinquished property    and the New Mogoraib River Exploration License that hosts the Hambok, Asheli    and Aderat deposits.  

TheTabakin Exploration License includes the area between the Bisha and Harenamining licenses. BMSC will be permitted to hold the area covered by the TabakinExploration License for ten years before any partial relinquishments. The NewMogoraib River Exploration License will be subject to a relinquishment regimefor exploration licenses (three years of no relinquishment, followed by twoone-year renewals with a 25% annual area reduction beginning after year three).

Annual fees are approximately $96 per square kilometerfor the mining licenses and $32 per square kilometer for the explorationlicenses.

| **Figure 4 – BMSC Resource Areas      and License Map** |
|---------------------------------------------------------------|

****

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ANNUAL  INFORMATION FORM – December 31, 2016

| Accessibility, Climate, Infrastructure & Physiography |
|-----------------------------------------------------------|

**Accessibility**

Access to the Bisha Mine is by paved road from Asmara toAkurdat, a distance by road of 181 kilometers and then 52 kilometers fromAkurdat via an all-weather road which is currently being upgraded with over 35 kilometersnow paved. The drive from Asmara to the Bisha camp (also referred to as BishaVillage) takes approximately four to six hours by passenger vehicle or bus.  Asmarais the capital city of Eritrea and is serviced currently by regularinternational flights out of Cairo, Dubai and Istanbul.

**Climate**

The climate is semi-arid, with elevated temperaturesyear-round.   During the hot season in April and May, the average temperatureis +42°C.  Total annual rainfall is sparse, with between 250 millimeters and300 millimeters.  The main rainy season is between June and September and localheavy rains can result in flash floods of the Mogoraib and Barka Rivers. Miningactivities are planned on a year-round basis.

**Physiography**

The Bisha Property is mainly located on a flat,desert-like outwash plain.  The plain is at 560 meters above sea level andcontains scattered vegetation and few trees.  Locally, steep hills and ridgesrise above the plain with the Bisha, Wade, and Neve peaks reaching elevationsof up to 1,226 meters above sea level.

The Bisha Property is crosscut by the Mogoraib River, a tributaryof the Barka River, as well as seasonal streams that all flow northwards.  Asmall seasonal tributary of the Mogoraib River, the Ferektatet River, originallypassed immediately over the Bisha Property but has since been diverted aroundthe deposit.

**Infrastructure**

The principal port for importation of heavy equipment andshipment of concentrate is Massawa on the Red Sea coast which is about 350 kilometersfrom the Bisha Property.  Massawa is connected to Asmara by all-weather pavedroad.  The Company has a special loading system to accommodate the handling andbulk loading of both copper and future zinc concentrates onto shipping vessels.

The village of Mogoraib located 6 kilometers from theBisha Mine is the closest settlement and is the local administration centre forthe Dighe Sub-zone within the Gash-Barka District.  The village contains awell-equipped, eight-person health centre with nursing staff capable of takingcare of small medical problems.  Better-equipped hospitals are found in Akurdatand Keren.  Camp Mogoraib is a military site located just outside the villageboundaries and provides basic security to the Mine area.  Basic goods arecommercially available in the immediate region near the Bisha Mine at Mogoraibor Akurdat, but the main centre for support is the capital city of Asmara.

Freshwater is supplied to the Bisha Property fromgroundwater.  Two well farms have been established by the Company, the firstapproximately 1 kilometer south of the open pit on the western bank of theFerektatet River (which also serves to dewater the Bisha pit), and the second,5 kilometers to the west, adjacent to the Mogoraib River.  Potable watersourced from the well fields is pumped to a potable water plant utilizingchlorination filtration and ultraviolet radiation treatment.  

Process water is recycled within the plant as much aspossible to minimize the use of fresh groundwater.  Water from the pit andseasonal water from the tailings management facility will be treated in a watertreatment plant that was completed in H2 2016 to supplement and reduce thedependence on raw water although currently at lower capacity than originallyplanned.

Electric power for the mine and processing plant site issupplied from a diesel-fuelled power station located adjacent to the processfacilities. Site communication is via a satellite communications system andincludes wireless internet access at the village and administration buildings.

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ANNUAL  INFORMATION FORM – December 31, 2016

| Mineral Property History |
|--------------------------|

TheCompany has no record of any previous exploration or mining activities on theproperty or surrounding areas prior to 1998.  In June 1998, the Company signeda prospecting license agreement with the State of Eritrea.  In 1999, thisagreement was converted to an exploration license that covered an area of 49square kilometers.  This license was expanded to an area of 224 square kilometersin 2003.

| Geological Setting |
|--------------------|

Eritreais divided into several north or northeast trending Proterozoic terranes whichare separated by major crustal sutures.  The Bisha Property is in the Nakfa Terranewhich comprises low-grade metamorphosed calc-alkaline volcanics and sediments.

TheVMS deposits at the Bisha Property are hosted by a bimodal sequence of volcanicrocks.  Felsic volcanics directly host and both underlie and overlie themineralization at Bisha, Harena and Northwest deposits.  These felsic volcanicsare flow dominated, indicating proximity to volcanic vents.   Mafic volcanicrocks occur deeper in the footwall to the east of the known mineralized zones. Alteration of the felsic volcanics is often very intense with the primarymineralogy being converted to sericite and chlorite.  The Hambok deposit, incontrast to the Bisha deposits, is entirely hosted in mafic volcanic rocks.  Allrock-types are variably foliated and metamorphosed.

| Exploration History |
|---------------------|

Initial work on theproperty began in 1998 but was suspended between 1999 and late 2002 due to theborder war with Ethiopia.  The Bisha deposit was discovered in November 2002 bydiamond drilling geophysical and geochemical anomalies associated with aprominent gossan that locally had highly anomalous gold values.  A VMS deposit wasdefined and found to be overlain by a supergene copper-enriched zone and agold-enriched gossan cap.

Between 2003 and 2006, 403 diamond drill and 33 reversecirculation holes were completed at Bisha to enable a Feasibility Study.  Additionalwork included mapping, geochemical sampling, trenching, ground and airborne geophysics,metallurgical test work and environmental baseline studies.  The Northwest andHarena deposits were discovered with 26 and 27 holes being drilled respectively.

No holes were drilled in 2007 and 2008 and only minorgravity surveying, geological mapping and mechanical trenching were completed. In 2009 and 2010, 35 mainly geotechnical holes were completed at Bisha and 51holes were completed at Harena to better define the oxide zone. Thirteen diamonddrill holes were drilled to test gravity targets in the Harena area.  Nosignificant mineralization was intersected.  

In 2011, 167 diamond drill holes were drilled at Bisha forresource upgrading as well as for metallurgical and geotechnical studies.  AtHarena, five regional exploration holes were drilled to test coincidentgravity/EM/soil geochemical anomalies with no significant mineralization beingencountered.  Drilling began to define the Northwest deposit to bring it to amaiden resource estimate.  A total of 22 holes were drilled.

In 2012 the majority of drilling was focussed on thedevelopment of the Northwest deposit.  Seventy-five holes were drilled todefine a maiden resource.  At Harena, exploration diamond drilling included atotal of 6 holes with one of the holes intersecting mineralization peripheralto the Harena open pit.

In 2013 diamond drilling consisted of 27,828 meters ofexploration and resource development drilling at Bisha Main, the Northwest depositand Hambok.  At Bisha, 23 holes for 6,223 meters were completed in theimmediate Bisha area testing geophysical targets.  A further 8 holes testedbelow the northern portion of the Bisha Main deposit.  Drilling concluded at Northwestwith 93 holes being completed.  At Hambok, 8 holes were completed to infillareas of the deposit that had large gaps in the geological model.  This workallowed for a new open pit constrained mineral resource estimate to be completed.

In 2014 a total of 91 drill holes were  completed at Bisha and Harena, around Hambok and Aderat and near Tekewuda to  complete 27,300 meters of exploration diamond drilling.  A total of 230 line kilometers of ground and  44 holes of Transient EM surveying was conducted and a 2,500 line kilometer  Versatile Transient Electromagnetic (“VTEM”) survey was flown.  A significant new extension of the Harena  deposit was discovered and new mineralization was found at Aderat on the New  Mogoraib River Exploration License.

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ANNUAL  INFORMATION FORM – December 31, 2016

In 2015 a total of 35,805 meters of exploration diamond drilling (72 holes), approximately 30 square kilometers of ground geophysical surveying, geophysical surveying of 85 drill holes and other geological work was completed.  Drilling at Harena continued to be successful and the deposit was further defined at depth where it remains open to further expansion.  In the immediate Bisha Mine area, exploration efforts were ramped-up, testing for extensions to the main pit deposit both along strike and at depth.  Exploration on the New Mogoraib River Exploration License resulted in the discovery of the Asheli deposit in mid-2015.  Drilling was suspended as per usual practice due to the annual rainy season in Q3 2015 and no further drilling was completed. However, further geological work resulted in the definition of new targets along strike and to the east of Asheli.  Further drilling was also completed at the Aderat prospect which was discovered in 2014. 

In 2016 a total of 44,210 meters of diamond drilling was completed property-wide in 91 holes.  In addition, ground and borehole geophysical surveys and soil and rock sampling programs were also completed.  Forty-three holes (20,595 meters) were drilled at Bisha (21 within the pit and 22 outside of the pit), 36 holes (15,645.5 meters) were completed on the New Mogoraib River Exploration License (20 Asheli, 5 Shabyt, 2 Railway, 1 Bisha Village), 8 holes were drilled at Harena (6,079.5 meters) and 4 holes (1,890 meters) were completed on the Tabakin Exploration license.  Work at Bisha included testing the deposit at depth below the currently defined pit.  This work has defined the Bisha deposit at depth and will be included in the resource update in early 2017.  Condemnation drilling for potential waste dumps defined a number of altered and mineralized horizons trending south of the Bisha open pit that will be continued to be tested in 2017.  At Harena, drilling was focussed on continuing to define the down dip extension of the deposit which remains open.  Drilling at Asheli was successful in delimiting the massive sulphide intersections made in 2015 which will be included in a maiden resource in early 2017.  In late 2016, a new massive sulphide lens was discovered 200 meters to the north of the main deposit at Asheli and this will be the focus of further drilling in 2017.  Planning and permitting was finalized for a VTEM survey to be initiated in January 2017 over all the new exploration ground that has not previously been surveyed.

| **Mineralization** |
|--------------------|

Mineralizationat the Bisha deposit is divided into three major zones: oxide, supergene andprimary sulphide.  The host rocks are felsic volcanics that have been alteredto chlorite and sericite.

| **Oxide** |
|-----------|

In the surficial oxide zone, deep weathering affected theprimary massive sulphides producing a high-grade stratified gossanous zone thatwas enriched in gold.  This zone varied in composition from highly siliceousand somewhat ferruginous to a massive goethite-hematite-jarosite.  The depth ofthis oxidation zone was on the order of 35 meters.  The oxidation of themassive sulphides generated strong acid solutions that had progressivelydestroyed the sulphides and host rock.  Gold remained in the oxide zone and becameconcentrated.  This zone is now largely mined out.

| **Supergene** |
|---------------|

As the acid solutions percolated downward, they depositedtheir dissolved copper at the primary sulphide interface to produce acopper-rich supergene zone. A horizon of extremely acid-leached material or“soap” was developed between the oxide and supergene/primary domains and thehost rocks.  The principal copper mineral in the supergene zone was covellite. This zone was mostly mined with its majority excavated by mid-2016, althoughremnants do remain for potential future minor campaign processing over the nextfew years.

| **Primary Sulphide** |
|----------------------|

This zone is a typical VMS with pyrite, chalcopyrite andsphalerite mineralogy in the massive sulphide and chalcopyrite in the stringerzones.  Mining and stockpiling of primary zinc ores commenced in March 2014 andby the end of the 2016 year, stockpiles of 2.5 million tonnes of zinc oreformed part of the stockpile inventory.

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ANNUAL  INFORMATION FORM – December 31, 2016

The Harena deposit is also a typical massive sulphidebody that has been affected by weathering.  The host rocks to the Harenadeposit are intensely chloritized and sericitized hydrothermally-altered felsicvolcanic rocks.  Surficial weathering processes have produced a surficialoxide/gossan zone with good gold grades underlain by a primary massive sulphidedeposit.  Supergene mineralization is not well developed at Harena.  Theprimary massive sulphide body is currently being explored and is mainlycomposed of pyrite, chalcopyrite and sphalerite.  Chalcopyrite-rich stringerzones occur stratigraphically beneath the massive sulphides, some of which havehigh precious metal contents.

The Hambok deposit consists of a single massive sulphidelens.  Base metal values are generally higher nearer to surface along the topand outer edges of the body. The deposit is hosted by variably chloritizedmafic volcanic rocks and is dominantly composed of massive pyrite with zones offinely banded chalcopyrite and sphalerite. Intervals of near massive magnetiteare often found associated with the massive sulphides.

Mineralization at the Northwest Zone occurs in a seriesof predominantly pyrite massive sulphide lenses hosted within altered felsicvolcanic rocks.  Copper and zinc-rich stringer sulphide mineralization issporadic within the massive sulphide lenses and in stockwork zones. Some of themassive sulphides have been exposed to weathering at surface creating an oxide zonethat is locally enriched in gold. Beneath these areas, some supergene coppermineralization may also be present. 

The Asheli deposit consists of a massive sulphide bodycomposed of pyrite, chalcopyrite and sphalerite with minor galena underlain byassociated pyrite and pyrrhotite stringer mineralization.   A second lens ofmassive sulphide was intersected to the north of the main deposit in late 2016which will be the focus of further drilling in 2017.

| Drilling |
|----------|

Diamond drilling at the Bisha, Harena,Northwest, Hambok and Asheli deposits has been undertaken by contractors in anumber of campaigns since 2002, with Boart Longyear being the most recent suppliersin 2016*. *For drilling prior to 2014, please refer to the**2013Technical Report*.*

In 2015 and 2016, drilling was completed using LongyearLF90 track mounted drill rigs.  In late 2016, a larger Longyear LF240 drill rigcapable of drilling holes in excess of 1,500 meters was employed at Harena. Holesare typically initially collared HQ size diameter and reduced to NQ sizediameter after approximately 75 meters.  In difficult ground conditions, PQsize diameter may also be used to start holes until the broken groundconditions improve and the hole can be reduced to HQ size diameter.  All drillhole collars are surveyed and down-the-hole surveys were completed with ReflexEZ-Shot camera methods.

At the Bisha Main deposit, massive sulphidemineralization has been well defined with drilling spaced at 25 meters by 25 metersor closer in some areas.  Drilling density decreases with depth but isnominally at 100 meter centres to a depth of 600 meters where it now appearsclosed off.  

At the Harena deposit, massive sulphide mineralizationwas drilled on a 30 meter by 50 meter pattern prior to 2014.  Post 2014,drilling down to a depth of 200 meters was on a 50 meter by 50 meter patternwhile deeper holes were on a 100 meter by 100 meter pattern or wider.  Thedeposit has been traced to a depth of 900 meters and remains open at depth.

At the Hambok deposit, much of the massive sulphidemineralization has been well defined with drilling spaced at 50 meters by 50 metersor closer in some areas.  Drilling density decreases with depth and the depositremains open at depth and along strike to the north.  No drilling was completedat Hambok in 2015 or 2016.

At Northwest, the deposit is well defined with drillingspaced at 25 meters by 25 meters or closer in some areas.  Drilling densitydecreases with depth and the deposit is open in a number of directions. Corerecovery problems in the oxide zone and supergene zone were countered byclassification of this material as Inferred Resources.  No drilling wascompleted at Northwest during 2015 or 2016.

The Asheli deposit has been defined down to a depth of500 meters on a 50 meter by 100 meter drill pattern.  The main deposit appearsto be closed off at this depth, but a new massive sulphide body has beendiscovered about 200 meters to the north which remains open for expansion alongthis strike direction.

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Sampling  and Analysis** |
|----------------------------|

Forsampling programs prior to 2014, please refer to the 2013 Technical Report.

For2014, 2015 and 2016, holes were nominally sampled over all sulphide-bearingintervals at a target length of 1.0 meter per sample which was reduced to 0.5 meterper sample to better understand the metal zonation.  Sample intervals varybased upon mineralogical and lithological contacts. The logging geologist setsout the sample regime. Standard diamond cutting blades flushed with fresh waterare used to halve the core.  

Highlybroken core pieces are cut along the axis if possible or the core is splitusing a trowel down the middle of the tray row and handpicked or scooped toensure representative samples are obtained.  Cutting lines may be drawn on thecore. The remaining half core is returned to the box and boxes stacked innumerical order by hole.

Thetechnicians or samplers under the supervision of technicians place half of thecore in individual trays laid out in numerical order.  Samples are then placedin a drying oven for 12 to 18 hours at between 80°C and 100°C. The samples thenpass through a jaw crusher to greater than 75% of sample passing 10 mesh (2millimeter) screen.  The sample is then split using a Jones-type rifflesplitter to achieve a sub-sample weight of approximately 200 to 300 grams.  Thesample reject is then bagged, labelled with the original sample ID and put intostorage at Bisha site.  The sub-samples are pulverised to better than 85%passing 75 microns.  Samples are analyzed at the accredited on-site SGSlaboratory for 37 elements.  Any result that may be used in resourcecalculation work is then forwarded to Genalysis. When ready for shipping, thepulps are then dispatched by courier in twenty-litre sealed plastic pails alongwith a sample list and sample submission form to the Genalysis laboratory inPerth, Western Australia for analysis.  Results from the Genalysis re-assay aregiven priority in the assay database used for resource calculation work.

Bulkdensity for all samples is determined using Archimedes principle. Rock samplesare dried and then wrapped in foil prior to weighing in air and water. 

| **Security  of Samples** |
|--------------------------|

The chain-of-custody for core samples collected, analyzedand being 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 are within a fenced and    guarded compound.
-  Core    samples are crushed, sub-sampled and pulverized and sent to the on-site SGS lab    in containers of 84 samples. 
-  Once    analyzed, selected sample intervals are placed in sealed pails.
-  Each    pail has a list of samples written on the outside of the container.
-  A    sample submission form accompanies each pail.
-  Pails    are transported to Asmara in company-owned vehicles managed by BMSC.

The sample pails are submitted to the Eritrean Ministryof Energy and Mines for inspection and submission to customs, a customs seal isplaced on the pails and they are shipped via air transport directly to theanalytical laboratories of Genalysis.

| Mineral Resource Estimate |
|---------------------------|

**Although the Bisha Technical Reports are current asdefined in NI 43-101, an updated Mineral Reserve****and Resource estimate on the Bisha Propertyis expected by the end of the second quarter of 2017.  Therefore, allcommentary below refers to the Mineral Resource effective December 31, 2015.****This upcoming report for Mineral Resources effectiveDecember 31, 2016 may or may not contain material scientific and technicalinformation that differs from that contained in the latest Bisha TechnicalReport and Mineral Resource statements**.  **As aresult, readers are cautioned that the scientific and technical informationcontained in this AIF may change and caution should be used by readers inrelying upon such information.**

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ANNUAL  INFORMATION FORM – December 31, 2016

Commencingin 2005, an initial mineral resource model for Bisha Main was constructed byAMEC.  This model was subsequently updated with new information.  In 2012, AGPMining Consultants Inc. (“AGP”), an independent mining and geologicalconsulting firm that had not previously reported on the Bisha Property,estimated an updated mineral resource at Bisha.  In 2012, AMEC estimated amineral resource at Harena.  In August 2012, AGP prepared a new combined Bishaand Harena mineral reserves estimate with an effective date of May 31, 2012with a technical report which was subsequently filed on SEDAR and EDGAR.

Inlate 2013, new revised updated mineral resources were estimated with aneffective date of December 31, 2013 for both the Bisha Main and Harena depositswhich took into effect mine depletion, additional drill, structural mapping andmetallurgical test data, and a more refined and slightly differing approach tomineral resource modeling.  Likewise, an updated mineral resource estimate wasgenerated for the Hambok deposit succeeding the past historic mineral resourcegenerated by the previous owner Sanu Resources which importantly employs aconstraining pit shell.  In addition, a maiden mineral resource estimate wascompleted for Northwest.  Details and methodology of this mineral resourceestimate can be viewed more fully in the 2013 Technical Report.

Subsequentto the 2013 Technical Report, the resources for both Bisha Main and Harena wereestimated by independent consultants Cube Consulting with an effective date ofDecember 31, 2014.

EffectiveDecember 31, 2015 a mineral resource estimate was completed for the Bisha Mainand Harena deposits by BMSC and announced on February 17, 2016 from anadditional 2,819 meters of diamond drilling completed in 2015.

Thecurrent December 31, 2015 interpretation and estimation for Bisha was completedusing diamond drilled cored holes and recent RC grade control holes.  Themajority of the RC holes were drilled as part of a grade control program forthe supergene copper phase beginning in 2013 while almost all the diamonddrilled holes were drilled prior to May 2012. Diamond drill data for theNorthwest and Harena deposits include a significant proportion of drillingcompleted from 2012 onwards.  All data for Hambok acquired from Sanu Resources wasvalidated before being used.

Indicatedresources at Harena as at December 31, 2015 grew from the year previous due toinfill drilling by 480,000 tonnes or 15% adding 12 million pounds of copper, 20thousand ounces of gold and 560 thousand ounces of silver, offset by zincindicated resources decreasing slightly by 10 million pounds.  The inferredresources at Harena during this same period were increased by the additionaldrilling of the down-plunge extension which added 4.5 million tonnes or 69%from the year earlier for an additional 186 million pounds of copper, 423million pounds of zinc, 230 thousand ounces of gold and 6.47 million ounces ofsilver.  In-situ metal grade estimates in the inferred resource category alsoincreased as contained copper grew by 115%, zinc by 80%, gold by 177% andsilver by 82%. 

Despitethe lower commodity prices used in 2015 for NSR calculations as compared with2014, the measured and indicated resource at Bisha remained essentiallyunchanged from the year previous while the inferred resource decreased slightlyby 0.30 million tonnes.  The Bisha measured and indicated resources ofcontained zinc, gold and silver increased by 5%, 11% and 11% respectively; the25% reduction in copper was mainly due to mining depletion of the supergenezone.

Bulkdensity values were assigned on the basis of rock type and oxidation state, asdefined by the interpreted geological wireframes. The values are based on acombination of bulk densities from the previous resource estimate and in-situ measurementsin use at the mine derived during mining.

For all deposits, theestimation process involved the creation of 3D geological and mineralizationshapes from interpreted cross sections, statistical domaining, flagging ofdatabase, compositing of samples, variography, and estimation of grades byordinary kriging using search parameters optimized by kriging neighbourhoodanalysis. Each domain was separately estimated using the unique set ofcomposite samples associated with that domain.  

Visualand statistical validation of the copper, zinc, lead, gold, and silver gradeestimates for Bisha demonstrate that the model is a reasonable representationof the input data. A comparison of the copper supergene estimate to actualproduction to date also demonstrated that the model is a good predictor ofproduction.

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ANNUAL  INFORMATION FORM – December 31, 2016

Themineral resource for all deposits is a global estimate representing a reliableestimate of the total contained metal at the applied cutoffs, but the blockestimates are likely to vary significantly compared with the actualgrade/tonnage distribution that will be achieved during selective mining andover short production periods; this variability was considered when applyingresource classifications.

Themineralization at each deposit has been sufficiently drilled and sampled toallow classification as a combination of Measured, Indicated or InferredMineral Resource in accordance with the current CIM Definition Standards forMineral Resources and Mineral Reserves. The classification employed reflects apractical combination of both geological knowledge and estimation qualityparameters that may be more numerical in nature. This approach toclassification aims to avoid creating a complex classification system.

Reasonableprospects for economic extraction were made by applying an NSR-based cutoff toblocks within a constraining optimized pit shell using Lerchs-Grossmannoptimization.

Theassumed long-term metal prices used for the optimization work as applied toMineral Resources are shown in the footnotes of the mineral resource tablesbelow. These metal prices are approximately 15% higher than those used in theestimation of Mineral Reserves. 

TheNSR calculation and pit optimization process considers many of the parametersused in the mineral reserve estimation, as these parameters are wellestablished within the working mine. These parameters include commodity price,budget costs for production and processing, process recoveries, concentrategrade, selling costs, and other ore-based costs. The optimization process alsouses the current geotechnical model for the pit design. 

Forthe Bisha and Harena deposits, mineralization below the pit shell describedabove was studied for potential for underground mining. A high-level assessmentin 2015 concluded that an appropriate underground mining cost per tonne wouldbe $60/t. The mineralization was then analyzed for contiguous blocks with NSRvalues exceeding $100/t. A shape of sufficient tonnage and value was identifiedand this tonnage is included in the Inferred Resource category given in theMineral Resource statement. An update to this initial Underground Scoping Studywill be released along with the updated Mineral Resource and Reserve and associatedtechnical report no later than the end of Q2 2017 and may or may not containmaterial scientific and technical information that differs in views in terms ofunderground mining potential and associated Inferred resources as noted above.

Thefollowing tables are based on the December 31, 2015 mineral resource statement,as certified by the identified QPs as of the effective dates indicated. Mineralresources that are not mineral reserves do not have demonstrated economicviability. Mineral Resources reported here for Bisha and Harena are inclusiveof Mineral Reserves. 

**Asnoted above, an updated Mineral Resource estimate is expected by the end of thesecond quarter of 2017 that may or may not contain material scientific andtechnical information that differs from that contained in the tables below. ****As aresult, readers are cautioned that the scientific and technical informationcontained in this AIF may change and caution should be used by readers inrelying upon such information.**

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Table 2.1 Mineral Resource Estimate (Combined Bisha, Harena, Northwest and Hambok)      Phil Jankowski, MAusIMM (CP), (BMSC), Effective Date: December 31, 2015** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Measured **          | **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**            |                 |   |   | 0.0 | 0 |   |   |   |   |
| **Supergene  Phase**        | 550                  | 2.42 |   | 0.6 | 13 | 30,000 |   | 10 | 230 |
| **Primary  Phase**          | 1,150                | 2.79 | 3.55 | 0.8 | 48 | 71,000 | 90,000 | 30 | 1,770 |
| **Total  Measured**         | **1,700**            |   | **101,000** | **90,000** | **40** | **2,000** |
|                        |                 |
| **Indicated **         | **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**            | 300                  |   |   | 13.6 | 427 |   |   | 130 | 4,120 |
| **Supergene  Phase**        | 1,490                | 1.56 |   | 0.4 | 12 | 51,150 |   | 20 | 580 |
| **Primary  Phase**          | 36,540               | 1.00 | 4.31 | 0.6 | 33 | 806,390 | 3,471,490 | 650 | 39,300 |
| **Total  Indicated**        | **38,330**           |   | **857,540** | **3,471,490** | **800** | **44,000** |
|                        |                 |   |   |   |   |   |   |   |
| **Measured  and Indicated** | **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**            | 300                  |   |   | 13.6 | 427 |   |   | 130 | 4,120 |
| **Supergene  Phase**        | 2,040                | 1.80 |   | 0.5 | 12 | 81,150 |   | 30 | 810 |
| **Primary  Phase**          | 37,690               | 1.06 | 4.29 | 0.6 | 34 | 877,390 | 3,561,490 | 680 | 41,070 |
| **Total  Meas & Ind**   | **40,030**           |   | **958,540** | **3,561,490** | **840** | **46,000** |
|                        |                 |   |   |   |   |
| **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**             | 1,060                |   |   | 3.6 | 35 |   |   | 121 | 1,180 |
| **Supergene Phase**         | 1,400                | 1.23 |   | 0.2 | 4 | 38,000 |   | 10 | 190 |
| **Primary Phase**           | 12,572               | 1.40 | 4.18 | 1.0 | 42 | 388,430 | 1,158,410 | 400 | 16,860 |
| **Total Inferred**          | **15,032**           |   | **426,430** | **1,158,410** | **531** | **18,230** |
|                        |                 |   |   |   |   |   |   |   |   |   |   |

| 39 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| **Table 2.2 Bisha Mineral Resource Estimate    Phil Jankowski, MAusIMM (CP), (BMSC), Effective Date: December 31, 2015** |
|-------------------------------------------------------------------------------------------------------------------------------|

| **Measured **         | **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**            |                |   |   |   |   |   |   |   |   |
| **Supergene Phase**        | 550                 | 2.42 |   | 0.6 | 13 | 30,000 |   | 10 | 230 |
| **Primary Phase**          | 1,150               | 2.79 | 3.55 | 0.8 | 48 | 71,000 | 90,000 | 30 | 1,770 |
| **Total Measured**         | **1,700**           |   |   |   |   | **101,000** | **90,000** | **40** | **2,000** |
|                       |                |   |   |   |   |
| **Indicated**              | **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**            | 300                 |   |   | 13.6 | 427 |   |   | 130 | 4,120 |
| **Supergene Phase**        | 470                 | 1.76 |   | 0.6 | 17 | 18,000 |   | 10 | 250 |
| **Primary Phase**          | 23,430              | 0.98 | 5.56 | 0.7 | 43 | 506,000 | 2,872,000 | 520 | 32,730 |
| **Total Indicated**        | **24,200**          |   | **525,000** | **2,872,000** | **660** | **37,110** |
|                       |
| **Measured and Indicated** | **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**            | 300                 |   |   | 13.6 | 427 |   |   | 130 | 4,120 |
| **Supergene Phase**        | 1,030               | 2.11 |   | 0.6 | 15 | 48,000 |   | 20 | 490 |
| **Primary Phase**          | 24,590              | 1.07 | 5.47 | 0.7 | 44 | 577,000 | 2,962,000 | 550 | 34,500 |
| **Total Meas & Ind**   | **25,920**          |   | **625,000** | **2,962,000** | **700** | **39,110** |
|                       |                |
| **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**            | 400                 |   |   | 4.3 | 60 |   |   | 60 | 780 |
| **Supergene Phase**        | 1,300               | 1.28 |   | 0.1 | 3 | 36,000 |   | 0 | 120 |
| **Primary Phase**          | 1,600               | 1.09 | 5.94 | 0.7 | 50 | 38,000 | 204,000 | 40 | 2,520 |
| **Total Inferred**         | **3,200**           |   | **74,000** | **204,000** | **100** | **3,420** |

| 40 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| **Table 2.3 Harena Mineral Resource Estimate      Phil Jankowski, MAusIMM (CP), (BMSC), Effective Date: December 31, 2015** |
|----------------------------------------------------------------------------------------------------------------------------------|

| **Indicated ** | **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**     |                |   |   |   |   |   |   |   |   |
| **Primary Phase**   | 3,720               | 0.86 | 3.14 | 0.6 | 27 | 70,000 | 258,000 | 70 | 3,260 |
| **Total Indicated** | **3,720**           |   | **70,000** | **258,000** | **70** | **3,260** |
|                |                |   |   |   |   |   |   |   |   |
| **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**     | 130                 |   |   | 2.0 | 21 |   |   | 10 | 90 |
| **Primary Phase**   | 10,870              | 1.45 | 3.97 | 1.0 | 41 | 348,000 | 952,000 | 350 | 14,280 |
| **Total Inferred**  | **11,000**          |   | **348,000** | **952,000** | **360** | **14,360** |
|                |                |   |   |   |   |   |   |   |   |   |   |

| **Table 2.4 Northwest Mineral Resource Estimate      Phil Jankowski, MAusIMM (CP), (BMSC), Effective Date: December 31, 2014 (not updated as no change to drill information)** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Indicated **  | **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**     |                 |   |   |   |   |   |   |   |   |
| **Supergene  Phase** | 1,020                | 1.47 |   | 0.2 | 10 | 33,150 |   | 10 | 330 |
| **Primary  Phase**   | 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**     | 500                  |   |   | 3.7 | 18 |   |   | 50 | 300 |
| **Supergene  Phase** | 100                  | 0.8 |   | 3.7 | 19 | 2,000 |   | 10 | 70 |
| **Primary  Phase**   | 100                  | 0.9 | 0.9 | 2.9 | 15 | 2,400 | 2,400 | 10 | 60 |
| **Total  Inferred**  | **700**              |   | **4,400** | **2,400** | **70** | **430** |
|                 |                 |   |   |   |   |   |   |   |   |   |

| 41 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| **Table 2.5 Hambok Mineral Resource Estimate      Phil Jankowski, MAusIMM (CP), (BMSC), Effective Date: December 31, 2014 (not updated as no change to drill information)** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Indicated ** | **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**     |                |   |   |   |   |   |   |   |   |
| **Primary Phase**   | 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**     | 20                  |   |   | 1.5 | 17 |   |   | 1 | 10 |
| **Primary Phase**   | 2                   | 0.9 | 0.2 | 0.2 | 8 | 30 | 10 | 0 | 0 |
| **Total Indicated** | **22**              |   | **30** | **10** | **1** | **10** |

Bishaand Harena notes to be read in conjunction with the Resource tables above:

| (1) | Mineral Resources are defined within an optimal LG pit shell, generated using metal prices for copper, zinc, gold and silver of $3.15/lb, $1.10/lb, $1,265/oz and $21/oz respectively using blocks of all Resource categories. The mining cost and total ore based cost (process, G&A and stockpile rehandle) applied was approximately 10% below the long term view on costs with appropriate ore haulage costs for each satellite deposit. Overall pit slopes varied from 31 deg to 44 deg for Bisha and 29 deg to 44 deg for Harena NSR cut-off ($US/t) used were: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Bisha: $37.50 for Oxide Phase; $37.00 for Supergene and $38.50 for Primary Phase. |
|--------|----|-----------------------------------------------------------------------------------|

|   | b. | Harena: $40.00 for Oxide Phase and $41.00 for Primary Phase. |
|--------|----|--------------------------------------------------------------|

| (2) | Net Smelter Return values were calculated for each block using all resource categories, metal prices, recoveries, appropriate smelter terms and downstream costs. Metallurgical recoveries, supported by metallurgical test work, were applied as follows: |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Bisha oxide zone: recoveries of 88% and 22% were applied for gold and silver respectively. |
|--------|----|--------------------------------------------------------------------------------------------|

|   | b. | Harena oxide zone: a recovery of 75% and 22% were applied for gold and silver respectively. |
|--------|----|---------------------------------------------------------------------------------------------|

|   | c. | Bisha Supergene zone; recoveries of 83.3%, 55.5% and 70% were applied for copper, gold and silver respectively. |
|--------|----|-----------------------------------------------------------------------------------------------------------------|

|   | d. | Bisha Primary zone; recoveries to copper concentrate of 85%, 36% and 29% were applied for copper, gold and silver respectively. Recovery to zinc concentrate of 83.5% was applied for zinc. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e. | Harena primary zone; recoveries to copper concentrate of 85%, 36% and 29% were applied for copper, gold and silver respectively. A zinc recovery to zinc concentrate of 72% was applied. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mineral Resources are reported within the pit shell generated using the specified commodity prices, using NSR block grade cut-off derived as above. Tonnage is rounded to the nearest 10,000 tonnes and grades are rounded to two decimal places for copper and zinc, one decimal place for gold and zero decimal places for silver. Tonnages and grades for the Inferred category are further rounded reflecting the uncertainty that attaches to this category. Contained metal for copper and zinc are rounded to the nearest million pounds for Bisha and Harena. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

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

| (6) | Stockpile tonnages are included in the total given in the tables for Bisha and Harena, with their resource category generally reflecting the underlying resource category from which they were derived. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Both the Bisha and Harena Primary Inferred Resources include an Underground Resource. These were derived by defining a shape around contiguous blocks outside the optimized resource pit shell, where an overall NSR of $100 was achieved. The value of NSR $100 represents the processing cost plus approximately $60/t mining cost. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

Hambokand Northwest notes to be read in conjunction with the Resource tables above:

| (1) | No change has occurred to Hambok and Northwest since 2014 which used metal prices for copper, zinc, gold and silver of $3.35/lb, $1.05/lb, $1,350/oz and $23/oz, respectively. Mineral Resources are defined within an optimal LG Pit Shell. The mining cost and total ore based cost (process, G&A and stockpile rehandle) applied was approximately 10% below the long term view on costs with appropriate ore haulage costs for each satellite deposit. Overall pit slopes varied from 39 to 45 for Northwest and 40 overall for Hambok (preliminary assessment). NSR cut-off ($US/t) used were: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

|   | a. | Northwest: $40.70 for Oxide Phase, $39.70 for Supergene and Primary Phase. |
|--------|----|----------------------------------------------------------------------------|

|   | b. | Hambok: $44.45 for Oxide Phase and $43.45 for Primary Phase. |
|--------|----|--------------------------------------------------------------|

| (2) | Net Smelter Return values were calculated for each block using all resource categories, metal prices, recoveries, appropriate smelter terms and downstream costs. Metallurgical recoveries, supported by metallurgical test work, were applied as follows: |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Northwest oxide zone; recoveries of 88% and 22% were applied to gold and silver respectively. |
|--------|----|-----------------------------------------------------------------------------------------------|

|   | b. | Northwest Supergene zone; recoveries of 87%, 46% and 50% were applied for copper, gold and silver respectively. Zinc has not been assigned a recovery as the values are isolated on the fringes of the deposit. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | Northwest Primary zone; recoveries to copper concentrate of 87%, 36% and 29% were applied for copper, gold and silver respectively. Recoveries to zinc concentrate of 81%, 36% and 29% were applied for zinc, gold and silver respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | Hambok oxide zone; recoveries of 88% and 22% were applied to gold and silver respectively. |
|--------|----|--------------------------------------------------------------------------------------------|

|   | e. | Hambok; recoveries to copper concentrate of 88%, 87%, 36% and 29% were applied for copper, zinc, gold and silver respectively. Preliminary metallurgical characterization studies, but not full testing, have been completed for Hambok. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mineral Resources are reported within the pit shell generated using the specified commodity prices, using NSR block grade cut-off derived as above. Tonnage is rounded to the nearest 10,000 tonnes and grades are rounded to two decimal places for copper and zinc, one decimal place for gold and zero decimal places for silver. Tonnages and grades for the Inferred category are further rounded reflecting the uncertainty that attaches to this category. Contained metal for copper and zinc are rounded to the nearest million pounds for Bisha and Harena. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

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

| 43 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

| **Mineral  Reserves** |
|-----------------------|

**Although the Bisha Technical Reports are current asdefined in NI 43-101, an updated Mineral Reserve****and Resource estimate on the Bisha Propertyis expected by the end of the second quarter of 2017.  Therefore, allcommentary below refers to the Mineral Reserves effective December 31, 2015.****This upcoming report for Mineral Reserves effectiveDecember 31, 2016 may or may not contain material scientific and technicalinformation that differs from that contained in the latest Bisha TechnicalReport and Mineral Reserve statements**.  **As aresult, readers are cautioned that the scientific and technical informationcontained in this AIF may change and caution should be used by readers inrelying upon such information.**

TheProven and Probable Mineral Reserves at the operation have been classified inaccordance with the 2014 CIM Definition Standards for Mineral Resources andMineral Reserves.  Mineral Reserves were defined within a mine plan, with openpit phase designs guided by Lerchs-Grossmann optimized pit shells, generatedusing long-term metal prices for copper, zinc, gold, and silver of $2.74/pound,$0.95/pound, $1,100/ounce, and $18.50/ounce respectively. These prices were basedon Consensus Market Forecasting that can be applied on long term projects suchas Bisha.

Despite a number of factors including mine depletionduring 2015 and a reduction in metal prices, the Company managed to minimizethe impact of market conditions on any mineral reserve changes effectiveDecember 31, 2015. This was possible primarily because of a) an improvement in theBisha main resource model; b) a reduction in mining costs; and c) a reductionof treatment charges and shipping costs.  The total reserve, inclusive ofstockpiles, decreased by 3.1 million tonnes from the year previous whichincluded 248 million pounds of copper. Of this reduction, approximately 1.9million tonnes and 165 million pounds of copper was due to mill production(mine depletion). The remaining reduction of 1.2 million tonnes and 83 millionpounds of copper came from minor changes in the resource model and an increasein cut-off grade for primary ore. Overall, due to higher processing costsforecast for primary ore than the year previous, the Bisha primary reservedecreased by 0.1 million tonnes including a decrease of 1 million pounds ofcopper and 70 million pounds of zinc. The Harena primary reserve decreased by0.4 million tonnes including 4 million pounds of copper and 39 million poundsof zinc.

The NSR Cut-Offs (per tonne) are: oxide zone $41.58 forBisha; supergene zone $41.18 for Bisha; and primary zone $42.92 for Bisha; and$45.48 for Harena.

Pit slope design criteria reflect no change from theprevious reserves estimate with overall pit slopes varied from 31.0° to 44° forBisha, and from 29° to 35.5° for Harena. Revenue will continue to be generatedfrom the sale of copper concentrates (which contain payable co-products of goldand silver) during the supergene ore phase. For Mineral Reserve purposes, theassumption was that both copper and zinc concentrates would be produced duringthe primary ore phase of the operation that was expected to start in late Q22016. Small quantities of oxides remaining in the stockpiles will be processedat the end of the mine life through the currently inactive carbon-in-leachcircuit, producing doré with payable gold and silver. Some of the high gradegold stockpiles are saleable as Direct Shipping Ore (“DSO”) and most were monetizedin 2016 and there are some to be monetized in 2017. 

To capture the multi-rock ore types, variable recoveriesby rock type, and multi-element complexity NSR values were calculated for blockvaluation.  The NSR grade determination considers the recoveries, concentrategrades, and penalties (where applicable) for each rock type, and applies themetal prices as noted above and various cost parameters, resulting in a netvalue per tonne 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.

The waste and ore-based costs applied for pitoptimization and mine planning for the 2015 Mineral Reserve process were basedon 2016 budget costs developed by BMSC. The mining cost (inclusive of loading,hauling, and support including maintenance) was $2.62 per tonne, plus anappropriate incremental haulage cost per bench. The total ore-based costs forBisha (ore control, geology, lab services, process, G&A and stockpilere-handle) totaled $41.58 per tonne for supergene and $42.92 for primary ores.For Harena, the ore-based costs include an additional $2.56 per tonne foroverland ore haulage.

| 44 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

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 areundiluted.  A 1.0 meter dilution skin was added at the time of ore and wastedelineation for mine planning purposes (i.e., as a part of the Mineral Reservesprocess).  Dilution is calculated to be 8% at Bisha main pit. No mining lossadjustments 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;operating cost estimates; and effectiveness of surface and groundwatermanagement.

The QPs who prepared this information were of the opinionat the time that these potential modifying factors had been adequatelyaccounted for using the assumptions in the Bisha Technical Report, andtherefore the mineral resources within the mine plan could be converted tomineral reserves. Factors that may affect the assumptions in this report are asfollows: 

-  Commodity    price assumptions.
-  The    actual Zinc and Copper metallurgical recovery in primary ore.
-  The    assumed predominant mineralogy of the primary ore being chalcopyrite and    sphalerite absent of metallurgically detrimental elements.
-  Non    adverse geotechnical structural complexity as currently modelled in the    resource model.
-  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 variables are    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.  For now, none of this is foreseen    to occur.
-  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 is shown in thefollowing tables. The Company as of December 31, 2016 had not completed any re-estimates.

**As noted above, an updated Mineral Reserve estimate isexpected by the end of the second quarter of 2017 that may or may not containmaterial scientific and technical information that differs from that containedin the tables below. ****As a result, readers are cautioned that the scientificand technical information contained in this AIF may change and caution shouldbe used by readers in relying upon such information.**

| 45 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Table 3.1 Mineral Reserve Estimate (Combined Bisha and Harena)      Anoush Ebrahimi, P.Eng, Ph.D., effective December 31, 2015** |
|------------------------------------------------------------------------------------------------------------------------------------|

| **Proven**                   | **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)** |
| **Supergene**                | 236                  | 3.09 | - | 0.56 | 14.0 | 16,067 | 0 | 4 | 106 |
| **Primary**                  | 141                  | 1.75 | 5.00 | 0.80 | 41.8 | 5,450 | 15,529 | 4 | 190 |
| **Total**                    | **377**              |   | **21,517** | **15,529** | **8** | **296** |
|                         |                 |   |   |   |   |   |   |   |   |
| **Probable**                 | **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**                    | 300                  | - | - | 13.17 | 415.2 | 0 | 0 | 127 | 4,000 |
| **Supergene**                | 633                  | 1.84 | - | 0.56 | 14.7 | 25,660 | 0 | 11 | 299 |
| **Primary**                  | 20,891               | 1.09 | 5.57 | 0.68 | 43.9 | 503,973 | 2,565,325 | 458 | 29,468 |
| **Total**                    | **21,824**           |   | **529,633** | **2,565,325** | **596** | **33,767** |
|                         |                 |   |   |   |   |   |   |   |   |
| **Total  Reserve (P&P)** | **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**                    | 300                  | - | - | 13.17 | 415.2 | 0 | 0 | 127 | 4,000 |
| **Supergene**                | 869                  | 2.18 | - | 0.56 | 14.5 | 41,727 | 0 | 16 | 405 |
| **Primary**                  | 21,032               | 1.10 | 5.57 | 0.68 | 43.9 | 509,423 | 2,580,854 | 461 | 29,658 |
| **Total**                    | **22,201**           |   | **551,150** | **2,580,854** | **604** | **34,063** |

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Table 3.2 Bisha Mineral Reserve Estimate      Anoush Ebrahimi, P.Eng, Ph.D., effective December 31, 2015** |
|--------------------------------------------------------------------------------------------------------------|

| **Proven**                  | **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)** |
| **Supergene**               | 236                 | 3.09 | - | 0.56 | 14.0 | 16,067 | 0 | 4 | 106 |
| **Primary**                 | 141                 | 1.75 | 5.00 | 0.80 | 41.8 | 5,450 | 15,529 | 4 | 190 |
| **Subtotal**                | **377**             |   | **21,517** | **15,529** | **8** | **296** |
|                        |                |   |   |   |   |   |   |   |   |
| **Probable **          | **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**                   | 300                 | - | - | 13.17 | 415.2 | 0 | 0 | 127 | 4,000 |
| **Supergene**               | 633                 | 1.84 | - | 0.56 | 14.7 | 25,660 | 0 | 11 | 299 |
| **Primary**                 | 19,866              | 1.10 | 5.68 | 0.69 | 44.8 | 483,861 | 2,486,459 | 440 | 28,614 |
| **Subtotal**                | **20,799**          |   | **509,521** | **2,486,459** | **579** | **32,913** |
|                        |
| **Total Reserve (P&P)** | **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**                   | 300                 | - | - | 13.17 | 415.2 | 0 | 0 | 127 | 4,000 |
| **Supergene**               | 869                 | 2.18 | - | 0.56 | 14.5 | 41,727 | 0 | 16 | 405 |
| **Primary**                 | 20,007              | 1.11 | 5.67 | 0.69 | 44.8 | 489,311 | 2,501,988 | 444 | 28,803 |
| **Subtotal**                | **21,176**          |   | **531,038** | **2,501,988** | **587** | **33,208** |

| **Table 3.3 Harena Mineral Reserve Estimate      Anoush Ebrahimi, P.Eng, Ph.D., effective December 31, 2015** |
|---------------------------------------------------------------------------------------------------------------|

| **Probable** | **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)** |
| **Primary**  | 1,025                | 0.89 | 3.49 | 0.52 | 25.9 | 20,112 | 78,866 | 17 | 855 |
| **Subtotal** | **1,025**            |   |   |   |   | **20,112** | **78,866** | **17** | **855** |

Notesto be read in conjunction with the Reserve tables above:

| (1) | NSR Cut-Off ($US/t): Oxide zone $41.58/t, Supergene zone $41.18/t and Primary zone $42.92/t for Bisha. The only mineable resource in Harena is Primary zone and the NSR Cut-Off  used is $45.48/t. Mineral Reserves are defined within  a mine plan, with phase designs guided by LG Pit Shells, generated using metal prices for copper, zinc, gold and silver of $2.74/lb, $0.95/lb, $1100/oz, $18.50/oz respectively. The mining cost was $2.62/t, plus $0.015/t/5 m bench for ore and waste below reference elevations of 560 masl and 600 masl for Bisha and Harena respectively. The total ore-based cost (process, G&A, stockpile and rehandle) are 41.58/t for oxide, $1.18/t for supergene and $42.92/t primary ores. Harena ore-based costs include an additional $2.56/t overland ore haulage cost for 10km distance between Harena pit and the crusher. Overall pit slopes varied from 31 degrees to 44 degrees for Bisha and from 29 degrees to 35.5 degrees for Harena. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Economic values for the multi-metal, multi zones were modelled using Net Smelter Return values. Each block NSR value was calculated using diluted grades, metal prices, recoveries and appropriate smelter terms and downstream costs. Metallurgical recoveries, supported by metallurgical test work, were applied as follows: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

|   | Bisha oxide zone: recoveries of 85% and 30% were applied for gold and silver respectively. |
|--------|--------------------------------------------------------------------------------------------|

|   | Bisha Supergene zone: recoveries of 83.3%, 55.5% and 70% were applied for copper, gold and silver respectively. Zinc has not been assigned a recovery as most of the supergene zone will be processed prior to start-up of the zinc flotation plant. An arsenic recovery of 60% was applied for smelter penalty inclusion in the NSR calculation and cash flow analysis. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Bisha Transition zone has applied the same metallurgical parameters as Bisha supergene phase. In this zone if the copper to zinc ratio is less than 5 then it is not included in the reserve. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Bisha Primary zone: recoveries to copper concentrate of 85%, 36% and 29% were applied for copper, gold and silver respectively. A zinc recovery to zinc concentrate of 83.5% was applied. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Harena primary zone: recoveries to copper concentrate of 85%, 36% and 29% were applied for copper, gold and silver respectively. A zinc recovery to zinc concentrate of 72% was applied. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mineral Reserves are reported within Bisha and Harena ultimate pit designs, using NSR block grade, where the marginal cut-off is the total ore based cost stated above. Tonnages are rounded to the nearest 1,000 tonnes. Grades of copper, zinc and gold are rounded to two decimal places. Grades of silver are rounded to one decimal place. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

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

| (6) | The life of mine strip ratios (by weight) for Bisha and Harena are 6.50:1 and 5.74:1 respectively. |
|-----|----------------------------------------------------------------------------------------------------|

| (7) | The Bisha oxide Probable Mineral Reserves, which include DSO Reserves, are 300 kt at 13.17 g/t Au and 415.17g/t Ag in stockpile as of 31 Dec 2015. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | The Bisha supergene Probable Mineral Reserves are inclusive of 221 kt at 1.83% Cu in stockpile as of 31 Dec 2015. |
|-----|-------------------------------------------------------------------------------------------------------------------|

| (9) | The Bisha primary Probable Mineral Reserves are inclusive of 983 kt at 3.36% Zn and 3% Cu in stockpile as of 31 Dec 2015. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

| (10) | 8% dilution was estimated in Primary zone in Bisha after applying 1.0 m "skin" of dilution at ore/waste contacts. |
|------|-------------------------------------------------------------------------------------------------------------------|

| (11) | No mining losses adjustments are made; a 0.5% shipping loss for concentrates have been accounted for. |
|------|-------------------------------------------------------------------------------------------------------|

| (12) | The end of December 2015 topography was used for this calculation. |
|------|--------------------------------------------------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Mining Operations |
|-------------------|

The table belowhighlights the three-year key mine and process metrics at Bisha.

| **Table 4.1 Key Production Highlights – 3 Year History** |
|----------------------------------------------------------------|

|                                            | **2016**  | **2015**   | **2014**   |
|-------------------------------------------------|-----------|------------|------------|
| Oxide ore mined, tonnes                         | -         | 240,000    | 225,000    |
| Supergene ore mined, tonnes                     | 902,000   | 2,064,000  | 1,936,000  |
| Primary ore mined, tonnes                       | 2,741,000 | 846,000    | 121,000    |
| Waste mined, tonnes                             | 9,367,000 | 10,654,000 | 12,277,000 |
| Strip ratio, (using tonnes)                     | 2.6       | 3.4        | 5.4        |
|                                            |      |       |       |
| Processing – supergene ore:               |      |       |       |
| Tonnes milled                                   | 1,055,000 | 1,929,000  | 1,789,000  |
| Copper feed grade, %                            | 2.8       | 3.9        | 5.9        |
| Recovery, % of copper                           | 85.2      | 82.6       | 85.0       |
| Copper in concentrate produced, millions pounds | 55.8      | 135.9      | 196.0      |
|                                            |      |       |       |
| Processing – primary ore:                 |      |       |       |
| Tonnes milled                                   | 1,223,000 | -          | -          |
| Zinc feed grade, %                              | 5.7       | -          | -          |
| Copper feed grade, %                            | 0.9       | -          | -          |
| Recovery, % of zinc                             | 58.8      | -          | -          |
| Zinc in concentrate produced, million of pounds | 90.2      | -          | -          |

The ultimate Bisha Main pit is planned to beapproximately 1.3 kilometers long and 0.7 kilometer wide.  The maximum planned slopeheight is 240 meters. 

The metallurgical recovery of zinc at 58.8% noted in thetable above, while much different than assumed in the latest December 31 2015Mineral Reserve estimate footnotes, was reflective of a combination ofcommissioning start-up issues for 3 months prior to commercial production andongoing metallurgical challenges predominantly with the production of a cleancopper concentrate but also adversely affecting recovery of zinc intoconcentrate.  These matters are subject to ongoing test work and analyses withprogressive improvements expected during 2017.

Geotechnical domains have been revised and were updatedin 2016, with updated slope design recommendations having been provided foreach design sector in each geotechnical domain. Design sectors are defined bythe average azimuth of the planned wall orientations, based on geological structuralcontrols on slope stability. Geotechnical domains result from the combinationof structural domains and geotechnical units, resulting in ten discretegeotechnical domains within the footwall, and eight within the hanging wall.Recommended inter-ramp angles vary from 41° - 46° depending on the designsector and geotechnical domain. The 2016 geotechnical design recommendationspredominantly resulted in minor increases of slope inter-ramp angles due to theincreased level of knowledge and data accuracy.  All of the slope designsassume that controlled blasting will be undertaken for the final walls of thepit.

Depressurization of the open pit slopes is required to achievethe open pit slope design in some areas of the pit, and is carried out throughthe installation of sub-horizontal depressurization drainage holes. Dewateringof the open pit floor is conducted primarily through the use of in-pit sumps.In-pit vertical dewatering bores have proven to be ineffective due to therestricted nature of the flow paths being located on discrete and predominantlysub-vertical structures making intersection with a dewatering bore difficult toachieve.

The Bisha and Harena deposits are being mined byconventional truck and shovel open pit mining methods.  

The Harena deposit is scheduled to recommence mining at  the tail end of the Life of Mine. The original Bisha pit consisted of nine  individual pit phases (although in mid-2015 there was a suspension of waste  mining pending further investigation of Phase 9 economics), where the first  three phases targeted oxide ore production, the second three targeted supergene  ore production, and the final three phases planned to target primary ore  production.  The oxide pit phases have  now been exhausted, as have Phases 4, 5 and 6 which provided supergene  ore.  Stripping for the primary  mineralization started with Phase 8 in late 2013 and Phase 9 in 2014 and a  re-optimization resulted in the suspension of Phase 9 stripping from mid-2015  while ongoing updated  LOM and  underground scoping study  value optimization investigations continue, with results expected  no later than the end of Q2 2017 in the upcoming technical report.

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ANNUAL  INFORMATION FORM – December 31, 2016

The Harena pit features two pit phases, one targetingoxide production (which was mainly completed in mid-2013 with some remnantmaterial remaining), and the final phase targeting primary production to beactive in 2021 for waste stripping with ore extraction scheduled commencing 2023as per the latest Life of Mine plan dated December 31, 2015.  The Harena pit iscurrently inactive for mining but additional exploration drilling was completedduring 2016 with exploration drilling continuing to further highlight growingat depth with the deposit to be investigated for underground mining potential.

Although the initial oxide production phase of theoperation is complete, oxide ore has since been mined and placed instockpiles.  The higher grade portion of these stockpiles (100,000 tonnes) wasdirectly shipped and sold during 2016 realizing 90,000 equivalent gold ounces. Additional oxide gold stock (30,000 tonnes) will be direct shipped and sold in2017 and the remaining 130,000 tonnes will be processed at the end of the minelife.  

The open pit designs for Bisha Main include double laneramp design widths of 24 meters, based on 3.5 times the width of the Cat 775truck, ramp gradient of 10%, and smoothing of walls in areas where convex“noses” may potentially cause geotechnical issues. 

The mine plan for the current December 31, 2015 mineralreserves was developed using an average throughput of 2.4 million tonnes perannum for all materials. Descent rates in the pit were limited to 50 vertical metersper year.  Drilling and blasting will be performed on 5 meter benches in oreand waste ranging between 5 and 10 meters.  The mine is scheduled to work 360days a year, with five days allowed for delays due to weather disruptions.  Theplant is scheduled to operate 365 days a year.

The mine delivers ore to the ROM pad, where it is sorted intoseveral different short-term stockpiles.  This ore is then reclaimed by afront-end loader to the crusher, following a blending plan that is provideddaily and modified as required based on process 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 2006 Bisha Feasibility Study was to mine and process each zonein succession starting with the top oxide zone (now ceased).  The oxide plantfacilities included a primary jaw crusher, a single Semi-Autogenous Grindingfollowed by single ball grinding mills, cyanide leach/carbon-in-leach circuit,cyanide destruction circuit, refinery to produce doré bullion, tailingsthickener, tailings discharge system, and the necessary reagent, water, and airsystems. Additional process equipment as part of the copper flotation plant totreat the supergene mineralization was commissioned by mid-2013 and installeddownstream of the crushing and grinding “front end” part of the carbon-in-leachplant which treated the oxide ore.  This equipment consists of flotation cellsfor copper roughing and cleaning requirements, 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.  A decision wasmade in 2014 and construction completed in Q1 2016 to replace the 4 x Metsovertical regrind mills in the copper flotation plant with an IsaMillTMregrind mill, to be commissioned in Q2 2016.  A near identical duplicate ofthis copper flotation circuit has been constructed downstream for the zincflotation circuit, that was commissioned in June 2016.

Due to the sub-horizontal and undulating contact betweenthe supergene and primary mineralized materials, there could be a multi-yearperiod where both minor amounts of supergene and dominant primary materials aremined and processed during 2017 and through 2019.  During this overlap period,both supergene and primary ores could be treated in campaigns of appropriatedurations.  Some stockpiling of supergene and primary mineralization types hasand will continue to occur.  The effect of any possible sulphide mineraloxidation on flotation performance is expected to be minimized by managementpractices currently used in the base metal sulphide sector, such as reducedwetting of broken ore.

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ANNUAL  INFORMATION FORM – December 31, 2016

The current life of mine plan is being updated and will be completed before the end of Q2 2017, and will be published in the upcoming Mineral Resource and Mineral Reserve statement and associated technical report. The latest life of mine plan started from the December 2015 end-of-month surveyed surface.  For this current LOM, it was envisioned that the waste rock which would be produced from the Bisha Main and Harena pits would continue to be placed in two waste rock facilities to the east and southeast of the Bisha Main open pit, as well as in a backfill dump located in the north end of the ultimate Bisha Main pit.  The east waste rock facility nominally covers 80 hectares, and the southeast waste rock facility nominally covers 90 hectares.  An operational scheduling plan has been prepared for placement of the rock within the dumps that allows potential acid rock drainage issues to be appropriately managed during operations and closure.

At the end of 2016, there were four distinct types ofstockpiled material – 400,000 tonnes of pyrite sand material, 130,000 tonnes ofoxide ore, 2,500,000 tonnes of primary ore, inclusive of boundary layermaterial, and 40,000 tonnes of supergene ore.

The pyrite sand material consists of approximately 10,000tonnes of high grade material, and 390,000 tonnes of lower grade material.Further study is required to determine the most economic method of monetizingthe lower grade stockpiled pyrite sand.

The 2,500,000 tonnes of primary ore include 2,300,000tonnes of boundary layer material. The boundary layer material had beenintended to be either processed in a blended manner with in-pit fresher primaryore through both the existing copper flotation plant followed by the new zincflotation plant, and/or processed via an alternative method based on futureplanned boundary material processing studies commencing later this year. TheCompany has decided to segregate and stockpile all boundary primary materialfor future processing pending these technical investigations.

The composition of stockpiled materials as at December31, 2016 is as follows:

| **Table 4.2 Stockpiled Materials** |
|------------------------------------|

|             | **Total** | **Current** | **Non-current** |
|------------------|-----------|-------------|-----------------|
| Supergene  ore   | 40,000    | -           | 40,000          |
| Primary  ore     | 2,500,000 | 200,000     | 2,300,000       |
| Oxide  ore       | 130,000   | 30,000      | 100,000         |
| Pyrite  sand ore | 400,000   | -           | 400,000         |

| **Underground Scoping      Study** |
|------------------------------------|

**The discussion in the section below on underground miningpotential at Bisha is based on information as at the end of 2015. An updatedunderground scoping study as at the end of 2016 is ongoing (being conducted bySRK Consulting Canada) and will be completed and published in the upcomingMineral Reserve****andResource estimate and associated technical report that is expected by the endof the second quarter of 2017.  Therefore, all commentary below is derived fromthe internal underground scoping study a year previous, as at the end of 2015**.  **As a result, readers are cautioned that the scientificand technical information contained in this AIF may change and caution shouldbe used by readers in relying upon such information.**

In Q2 2015, Nevsun commissioned SRK Consulting (Canada)Inc. to conduct an internal conceptual study of the potential for undergroundmining at Bisha and Harena as well as to conduct a Life of Mine optimizationstudy considering all Bisha regional resources. As this optimization study usedinferred mineral resources, no mineral reserves had been estimated. The statusof those assessments from end of 2015 for Harena and Bisha are outlined below.The deposits at Hambok and Northwest remain of interest, but of lower priority,for potential eventual economic extraction based upon a number of variablesincluding size, projected costs and metal prices.  As the assessments of Hambokand Northwest were less encouraging as compared with Harena and Bisha, theCompany elected to allocate investment capital to Harena and Bisha in 2017 withlimited investment for Hambok and Northwest.

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ANNUAL  INFORMATION FORM – December 31, 2016

**Bisha Underground**

Ongoing investigations during H2 2015 continued to assessthe reasonable prospects of eventual economic extraction of the currentlydefined Indicated and Inferred mineral resources at Bisha Main pit by means ofunderground mining methods. Conceptual mining constraints were used to assessthe potential optimum interfaces between open pit mining and underground miningfor the purposes of updating future mineral reserves and the associatedproduction profile which may be revised as a result. The interim results of theongoing internal study indicated that underground mining at Bisha Main Pit wasplausible and that some of the material currently in the open pit mine plan maybe more economic if extracted by underground bulk mining methods as comparedwith high strip ratio open pit cutbacks.  This may or may not change, dependingon the updated underground scoping study to be completed and published in theupcoming Mineral Reserve and Resource estimate and associated technical reportexpected in Q2 of 2017.  Any decisions regarding future underground developmentincluding a potential exploration decline will be made following receipt of theupcoming Mineral Reserve and Resource estimate and associated technical report. 

**Harena Underground**

The Harena underground mining conceptual investigationsused the Mineral Resource that was announced on February 17, 2016. The findingsbased upon this Mineral Resource implied a potentially mineable deposit withmarginal economics that remains sensitive to metal prices and metallurgicalrecoveries. Updated metallurgical recoveries have since been conducted andsubsequent study results will be detailed in the upcoming Mineral Reserve andResource estimate and associated technical report expected in Q2 of 2017. Anydecision to invest in an exploration decline will be made at time of thisupcoming technical report as well.

| **Capital and Operating      Costs** |
|--------------------------------------|

Capitaland operating costs for the Bisha Property are shown in the table below.

| **Table 4.3 Capital and Operating Costs (‘000s)** |
|---------------------------------------------------------|

|                                                                | **2016 Actuals $** | **2017 Outlook $** |
|---------------------------------------------------------------------|--------------------|--------------------|
| **Operating Expenses**                                              | 103,442            | 175,000            |
| **Capital Expenditures:**                                           |               |               |
| Bisha Mineral  Properties Acquisition                               | 37,630             | -                  |
| Zinc Plant  Expansion                                               | 13,240             | -                  |
| Pre-commercial  zinc phase costs capitalized, net of sales receipts | 21,072             | -                  |
| Capitalized  Exploration                                            |               |               |
| Bisha                                                               | 10,643             | 9,000              |
| Sustaining Capital (including expansion  of tailings facility)      | 7,516              | 14,000             |
| **Total Capital Expenditures**                                      | 90,101             | 23,000             |

Operating expenses include mine operating costs as wellas commercialization costs comprised primarily of trucking, port and shippingcosts. In 2016, $40 million of operating expenses were capitalized for thepre-commercial phase of the new zinc plan but not included in the 2016operating expenses shown in the above table.  

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ANNUAL  INFORMATION FORM – December 31, 2016

| Metallurgical Test Work and Process Plant Design |
|--------------------------------------------------|

The Bisha Property mineral resource contained three oretypes: a gold and silver bearing oxide cap, underlain by a more complexsecondary copper mineralized supergene ore which was in turn underlain by primarycopper-zinc ore where chalcopyrite (copper) and sphalerite (zinc) are the maineconomic minerals.

The metallurgical performances of the three ore typescorresponding with metallurgical test data completed in 2013 and 2014 coupledwith actual observed behaviour in 2013 through 2015 are summarized in the tablebelow.

| **Table 4.4 Key Processing Highlights – 3 Year History 2013 through 2015** |
|----------------------------------------------------------------------------------|

|                             | **%Au Recovery** | **%Ag Recovery** | **%Cu Grade** | **%Cu Recovery** | **%Zn Grade** | **%Zn Recovery** |
|----------------------------------|------------------|------------------|---------------|------------------|---------------|------------------|
| Historical                       |             |             |          |             |          |             |
| Bullion from Bisha Oxide Ore     | 88               | 22               | -             | -                | -             | -                |
| Bullion from Harena Oxide Ore    | 75               | n/a              | -             | -                | -             | -                |
| Cu Conc from Bisha Supergene Ore | 54               | 74               | 22-30         | 80-87            | -             | -                |

However,after commissioning of the zinc flotation plant expansion in mid-2016, theactual metallurgical performance was not as expected due to challenges with theprimary ore and pre-activation of the zinc ore sphalerite in the coppercircuit.  This resulted in dilution of the concentrate produced from the copperflotation circuit with much higher than planned zinc and pyrite reporting tothe concentrate, leading to a saleable bulk zinc rich concentrate in additionto the good quality zinc concentrate produced from the newly expanded zincflotation circuit.  The metallurgical performance for since June 2016 is highlightedbelow:

| **Table 4.5 Key Processing Highlights – June 2016 – December 2016** |
|---------------------------------------------------------------------------------|

|                             | **%Au Recovery** | **%Ag Recovery** | **%Cu Grade** | **%Cu Recovery** | **%Zn Grade** | **%Zn Recovery** |
|----------------------------------|------------------|------------------|---------------|------------------|---------------|------------------|
| Historical                       |             |             |          |             |          |             |
| Bulk Conc from Bisha Primary Ore | 8                | 16               | 5-10          | 10-58            | 29-39         | 8-35             |
| Zn  Conc from Bisha Primary Ore  | -                | -                | 3-4           | 9-19             | 43-49         | 26-39            |

A  significant amount of work from Q4 2016 has been conducted to try to overcome  the metallurgical challenges due to the highly variable primary ore body, from recent  process plant operating and design improvements, geo-metallurgy test work with  additional diamond drilling, metallurgical flotation testing and the extensive  use of external specialist companies who have been on site during Q4 2016 and  Q1 2017.  The results of this work and  the updated drilling results from 2016 are being analyzed and will be reflected  in an updated Mineral Reserves and Resource estimate for Bisha and will include  a forecast of expected metallurgical recoveries and concentrate quality in the  Bisha flotation plant, with the 2017 technical report expected to be finalized  in  Q2 2017.

Theoxide, supergene and primary ores required different processing techniques andequipment.  Oxide ore processing ceased in Q2 2013 whereupon supergeneore commenced. Supergene ore processing ceased near the end of Q2 2016. The currentplan is to mine the remaining primary zones at Bisha Main first followed by thelower grade but mineral resource expanding (with ongoing successful resourcedrilling) Harena deposit.

Theadditional equipment installed for the completed zinc flotation circuitincluded zinc roughing and cleaner flotation sections, zinc rougher concentrateregrinding, zinc concentrate thickener and pressure filters, a zinc concentrateload-out facility, zinc flotation reagents system, a tailings return watertreatment facility to recycle approximately 50% of water sent to tails and additionalflotation air blowers. 

In2013, 89,800 dry metric tonnes (“DMT”) of concentrate was produced with thecopper grade of 24.3% containing 21,800 tonnes of copper. In 2014, 337,500 DMTof concentrate was produced with the copper grade of 26.3% containing 88,900tonnes of copper. Average copper recovery in 2014 was 85%.  In 2015, 260,900 DMTof concentrate was produced with the copper grade of 23.6% containing 61,600 tonnesof copper.  Average copper recovery in 2015 was 83%. In 2016, 113,800 DMT of copperconcentrate was produced with a copper grade of 22.2% containing 25,300 tonnesof copper; 49,500 DMT of bulk concentrate was produced with a zinc grade of 33.6%containing 16,600 tonnes of zinc; and 52,800 DMT of zinc concentrate wasproduced with a zinc grade of 46.0% containing 24,300 tonnes of zinc.  Averagecopper recovery in 2016 to both concentrates was 46.7% and average zincrecovery to both concentrates was 58.8%. 

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ANNUAL  INFORMATION FORM – December 31, 2016

Concentrateis loaded from the dewatered mine site stockpile, sealed in special shippingcontainers and transported to the existing container port of Massawa on the RedSea by truck. The concentrate is exported using a proven system with industryleading environmental controls. The sealed containers are stockpiled in Massawaat the container port facilities while waiting for ship arrival. The mobile crane system then lifts the containerswith a specialized 360-degree rotating spreader (termed a Rotainer system) and dischargesthe concentrate from the containers into bulk vessels. The empty containers arereturned to the Bisha Mine for re-loading. The bulk vessels deliver the concentrateto copper smelters worldwide.

| **Mine Waste      and Water Management** |
|------------------------------------------|

Waste rock from the Bisha open pit isbeing placed in two separate waste rock dumps, non-acid generating (“NAG”) andpotentially acid generating (“PAG”). The decision on where to place futurewaste rock excavated during pit stripping is based upon waste rockcharacterization laboratory work. Waste rock characterization at Harena hasindicated there is no potential acid generating for the oxide zone andconsequently no requirement for drainage and sump systems. Waste rock dumplocations are determined taking into account the level of environmental impact,optimizing mining operations, and permit expansion of mining areas based onfurther exploration programs. The Bisha PAG waste rock dump has been designedwith a compacted low permeable soil base layer, drainage and seepage collectionsystem, and sumps to facilitate re-use of any seepage in the process plantshould it occur. Design criteria at both pits allows for gravity drainage tothe open pits on closure.  PAG waste will be encapsulated with NAG waste rockto control potential acid leachate generation.

Tailings generated from the processes are pumped to the TailsManagement Facility (TMF) situated to the north of the process plant. Siteselection of the TMF was based on storage characteristics of the basin andnatural topography, extent of environmental impact and embankment constructionrequirements.  The TMF is lined with an impermeable High Density Polyethyleneliner to reduce any potential impact to groundwater aquifer and/or downstreamusers and is subject to regular geotechnical inspections to monitor wallintegrity.  Tailings deposited since commissioning is approximately 10.3 milliontonnes (4.5 million tonnes from the oxide zone and 4.8 million tonnes from thesupergene zone and 1.0 million tonnes from the primary zone). A return watermethodology of operation ensures re-use of this valuable resource as far aspracticable but further work was undertaken in 2016 to further improve TMFreturn water rates.  As the gold phase was complete in the middle of 2013 (andhence no longer using cyanide, and a subsequent lift completed to the tailsfacility in mid-2014), cyanide in the TMF has dissipated through natural solardestruction and is no longer a concern. The first 3 meter lift of the existingTMF was completed in April 2014 and there are currently 3.1 meters of freeboardremaining and another lift commenced in Q4 2016 due for completion Q1 2018.

Natural acid generation from the sulphides of thesupergene zone is a new issue in the pit and steps were put in place tomitigate this influence on the environment by sending all pit water to thelined TMF.  BMSC is currently in the process of upgrading its TMF return waterneutralization circuit that will have sufficient capacity to manage both TMFreturn water and pit water.

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 Ferektatet River ensurethat storm water is directed away from operations to both the east (ShateraRiver) and the west (Mogoraib River). Groundwater is the main water source forthe process plant, the volume of which is reduced by a zero discharge policy,judicious re-use of poor quality pit sump water and maximum use of dewateringwell waters.  

| 54 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Socioeconomic and      Environmental Assessment and Approval** |
|------------------------------------------------------------------|

The environmental assessment phase of Bisha Minecommenced with baseline studies in 2004. The Eritrean Ministry of Energy andMines approved the Terms of Reference for the SEIA project in March 2006 andthe SEIA was completed in December 2006.  During 2009 the Company completed anupdate report which augmented the 2006 SEIA and addressed the revisions to theconfiguration of the project that had occurred since the 2006 Bisha FeasibilityStudy.  The project SEMPs were extended to capture the additional details ofthe project resulting from the advancement of engineering and development andto ensure full compliance with the Eritrean National Standards. The Companycontinues to consult and work closely with government ministries on matterspertaining to social and environmental aspects and will continue to do sothrough the LOM.  There have been no material adverse social or environmentalimpacts identified.

The Company is aligning its environmental systems with theIFC Performance Standards and developing its management plans accordingly.  Theplans have been subject to review by the host country, as well as part of anextensive due diligence by international bankers who at one time wereconsidered for funding.  The social and environmental plans have beenimplemented and have subsequently been audited by an independent third party.Staff training and engagement with local authorities, as well as significantemployment from both local and other in-country sources are key elements of theCompany’s social and environmental management.  Department heads for both humanresources and environment are experienced professionals with a solidunderstanding of local requirements as well as IFC Performance Standards.  TheCompany continues to place significant emphasis on all social and environmentalimpacts of its operations.

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 Impact Review Committee. An independent review and update ofthe SEMP was completed in Q2 2013 and has addressed the updated roles andresponsibilities in the SEMP. Internally, policies and statements of intenthave been developed with respect to environmental policy, water conservation,energy conservation, cyanide management and materials management. Thesepolicies will be augmented with training, awareness and toolbox talks, with thegoal of implementing 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, and natural resources, to  measure the effectivenessof the proposed mitigation actions in the environmental management plans. 

The Company continues to consult and work closely withgovernment ministries through the submission of annual and quarterly reportsand quarterly inspections by the Impact Review Committee and will continue todo so throughout the LOM.  There have been no adverse social or environmentalincidents since the commencement of commercial operations.

| **Exploration and      Development** |
|--------------------------------------|

Afurther $9 million in exploration investment is planned for 2017.  Key 2017exploration objectives which will be prioritized on a success basis foradditional work include:

-  Completion    of a 6,386 line kilometer VTEM survey over the newly acquired ground on the New    Mogoraib River and Tabakin Exploration Licenses and follow-up promising results    with ground geophysics and diamond drilling;
-  Further    testing of the potential of the Asheli mineralized system searching for new    mineralized zones;
-  Continued    testing of known high priority greenfield targets on the New Mogoraib River and    Tabakin Exploration Licenses; and BMSC expects to drill in excess of 31,500 meters    during 2017.

| **Risk Factors** |
|------------------|

Risksand risk factors relating to the Company and its business are attached to thisAIF as “Schedule B” in addition to other financial risks which are set out in theCompany’s MD&A for the fiscal year ended December 31, 2016, all of whichare hereby incorporated by reference.

| 55 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Dividends |
|-----------|

NRL declared its first cash dividend of $0.03 per common shareon May 18, 2011. The second dividend was declared on November 21, 2011 for$0.05 per common share, giving shareholders an accumulated annual dividend of$0.08 per common share for a total declared dividend of $15.9 million.

In 2012 NRL declared two cash dividends of $0.05 percommon share ($0.10 per common share annually) on May 15, 2012 and November 15,2012 for a total declared dividend of $19.9 million.

In 2013 NRL declared two cash dividends of $0.07 percommon share ($0.14 per common share annually) on May 15, 2013 and November 14,2013 for a total declared dividend of $27.9 million.

In 2014 NRL declared a cash dividend of $0.04 per commonshare in the fourth quarter, payable on January 15, 2015, an increase of 14%from the cash dividends declared in the first three quarters of 2014 of $0.035per common share quarterly which were paid to shareholders on April 15, 2014,July 15, 2014, October 15, 2014, and January 15, 2015, respectively for a totaldeclared dividend of $28.9 million.

In 2015 NRL declared a cash dividend of $0.04 per commonshare in each quarter which was paid to shareholders on April 15, 2015, July15, 2015, October 15, 2015, and January 15, 2016, respectively for a totaldeclared dividend of $32.0 million.  

In 2016 NRL declared a cash dividend of $0.04 per commonshare in each quarter which was paid to shareholders on April 15, 2016, July 8,2016, October 14, 2016, and January 13, 2017, respectively for a total declareddividend of $40.1 million.  NRL intends to continue its policy of payingdividends to its shareholders on a quarterly basis.

In September 2016, the Company adopted aDividend Reinvestment Plan (“DRIP”) to offer shareholders an opportunity toincrease their investment in NRL without additional transaction costs byreinvesting their cash dividends into additional common shares of the Company. Theshares are currently being issued from treasury at a 3% discount to theweighted average trading price of the common shares on the NYSE during the fivetrading days immediately preceding the dividend payment date.  The 3% discount willremain in effect for all cash dividends that may be declared, if any, byNevsun’s Board of Directors until otherwise announced.  Participation in theDRIP is optional and currently shareholders holding approximately 13% of theissued and outstanding shares of NRL have enrolled.

| Description of Capital Structure |
|----------------------------------|

NRL has authorized capital of an unlimited number ofcommon shares without par value of which 301,869,593 are issued and outstandingat the date of this AIF.  All shares in the capital of NRL are of the sameclass.  The holders of common shares are entitled to dividends, if, as and whendeclared by the Board, to one vote per common share at meetings of theshareholders and, upon liquidation, to share equally in such assets of NRL asare distributable to the holders of common shares. NRL also has stock optionsoutstanding.  See the notes to NRL’s audited consolidated financial statementsfor the year ended December 31, 2016 for additional information regarding NRL’soptions. On May 22, 2014 the shareholders of NRL ratified a shareholder rightsplan (the “Rights Plan”) that was originally adopted on June 8, 2011.  TheRights Plan was adopted to provide the Board with more time to consideralternatives in the event of a takeover bid for the common shares of NRL. Acopy of the Rights Plan is available under NRL’s profile on SEDAR atwww.sedar.com.

| 56 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Market for Securities |
|-----------------------|

NRL’s common shares have traded on the TSX sinceMarch 8, 1996 and on the NYSE MKT since January 12, 2005.  During the 2016financial year, the price of NRL’s common shares on the TSX ranged from CAD$3.27to CAD$4.81, with monthly trading volume on the TSX ranging from 6.8 millionshares in March to 23.8 million shares in June, with an average monthly volumeof 16.2 million shares on TSX plus 13.5 million shares on NYSE MKT, for a totalaverage monthly volume of 29.7 million shares.  There are no seasonal trends tofluctuations in volume or trading price.  The monthly high/low trading pricesand closing prices on the TSX and monthly volume for 2016 are as follows:

| **Common Shares** |
|-------------------|
| **CAD $**         | **High  ($)** | **Low  ($)** | **Close  ($)** | **Volume** |
| January           | 3.93 | 3.27 | 3.81 | 19,678,344 |
| February          | 4.62 | 3.54 | 4.40 | 9,206,168 |
| March             | 4.81 | 4.18 | 4.20 | 6,847,474 |
| April             | 4.81 | 3.85 | 4.69 | 15,612,831 |
| May               | 4.72 | 4.16 | 4.35 | 11,025,282 |
| June              | 4.53 | 3.62 | 3.79 | 23,785,851 |
| July              | 4.42 | 3.71 | 4.32 | 20,931,513 |
| August            | 4.54 | 3.90 | 4.13 | 15,565,260 |
| September         | 4.28 | 3.96 | 3.97 | 19,541,506 |
| October           | 4.04 | 3.55 | 3.89 | 14,665,373 |
| November          | 4.49 | 3.65 | 4.31 | 21,310,972 |
| December          | 4.56 | 4.14 | 4.15 | 16,152,889 |

Inaddition to trading on the TSX and NYSE MKT, NRL’s common shares also trade onvarious alternative exchanges (Alpha, Chi-X, CX2, Pure, Omega, TMX Select,TriAct, LiquidNet, Instinet, Lynx, Aequitas) which all together andcumulatively trade significant volumes over the course of the year.  Thefollowing table shows the overall average monthly total volume for 2016 was 43.6million shares and 30.1 million shares on Canadian exchanges.

|                   | **Volume  all Canadian Exchanges** | **Volume  all USA Exchanges** | **Volume  Total** |
|------------------------|------------------------------------|-------------------------------|-------------------|
| January                | 27,074,247                         | 4,516,958                     | 31,591,205        |
| February               | 18,076,293                         | 6,533,622                     | 24,609,915        |
| March                  | 13,573,678                         | 6,092,927                     | 19,666,605        |
| April                  | 27,693,698                         | 9,390,093                     | 37,083,791        |
| May                    | 20,528,359                         | 9,626,337                     | 30,154,696        |
| June                   | 47,468,067                         | 14,727,083                    | 62,195,150        |
| July                   | 34,403,596                         | 21,813,125                    | 56,216,721        |
| August                 | 31,293,407                         | 21,270,234                    | 52,563,641        |
| September              | 35,642,363                         | 13,087,791                    | 48,730,154        |
| October                | 29,480,766                         | 17,438,917                    | 46,919,683        |
| November               | 46,793,688                         | 19,031,315                    | 65,825,003        |
| December               | 28,663,189                         | 18,605,379                    | 47,268,568        |
| **Cumulative Average** | **30,057,613**                     | **13,511,148**                | **43,568,761**    |

| 57 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Directors and Officers |
|------------------------|

| Name, Occupation and Security Holding |
|---------------------------------------|

The following table sets forth, for each director andofficer of NRL as of the date of this AIF, the name, municipality of residence,office, periods of service and the principal occupations in which each directorand executive officer of NRL has been engaged during the immediately precedingfive years.  Each director of NRL holds office until the next annual generalmeeting of the shareholders of NRL or until his successor is duly elected orappointed, unless his office is earlier vacated in accordance with the articlesof NRL or he becomes disqualified to act as a director.  The Board appointseach executive officer.

| **Name, Municipality of Residence and****Position Held**                                                     | **Principal Occupation for the Past****Five Years**                                                                                                                              | **Director Since** | **Number & Percentage of Shares Held** |
|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------|
| R.  Stuart Angus(1)(3)(5)  Sechelt,  British  Columbia, Canada  Chair and Director                           | Business advisor to the mining industry                                                                                                                                          | January  2003      | 534,901 (<1%)                           |
| Ian R.  Ashby(3)(4)  Campbell,  California, USA  Director                                                    | Non-Executive Director and Corporate Advisor 2012-present;  President–Iron Ore, BHP Billiton Ltd. 2006-2012                                                                | January  2014      | 30,000 (<1%)                            |
| Geoffrey  Chater(2)  Comox,  British Columbia, Canada  Director                                              | Principal of Namron Advisors, a capital markets  consultancy; President and CEO of Luna Gold Ltd. 2014-2015; Independent  Director to international resource companies 2011-2016 | June  2016         | 142,552 (<1%)                           |
| Clifford  T. Davis   Vancouver, British Columbia, Canada  President, Chief Executive Officer,  Director | President, Chief Executive Officer and Director of NRL                                                                                                                           | December  1997     | 1,865,222  (<1%)                        |
| Gary E.  German(1)(2)(4)  Toronto,  Ontario, Canada  Director                                                | Independent Director and Advisor for international  resource companies                                                                                                      | April  1996        | 546,094  (<1%)                          |
| Ian W.  Pearce(1)  Oakville,  Ontario, Canada  Director                                                      | Partner at X2 Resources LLP 2013-present; CEO Xstrata  Nickel 2006-2013                                                                                                          | January  2017      | 0                                          |
| Stephen  V. Scott(3)(5)  West  Vancouver, British Columbia, Canada  Director                                 | CEO of Entrée Gold Inc. 2015-present; various executive  positions with Rio Tinto 2000-2014                                                                                 | June  2016         | 154,092 (<1%)                           |
| David S.  Smith(2)  West  Vancouver, British Columbia, Canada  Director                                      | Corporate Director and Advisor 2015-present; Executive  VP and CFO of Finning International Inc. 2009-2014                                                                       | January  2017      | 17,440 (<1%)                            |

| 58 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| **Name, Municipality of Residence and****Position Held**                                                           | **Principal Occupation for the Past****Five Years**                                                                                                                                                          | **Director Since** | **Number & Percentage of Shares Held** |
|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------|
| Frazer  W. Bourchier(4)  North Vancouver, British Columbia, Canada  Chief Operating Officer                        | Chief Operating Officer of NRL since 2012                                                                                                                                                                    | N/A                | 0                                          |
| Ken  Engquist  Vancouver,  British Columbia, Canada  Vice  President Project Development                           | Vice President, Project Development of NRL since  January 2017; Project Development Executive, Pilot Gold, 2014-2016; Project  Development Executive, Anglogold Ashanti, 2012-2013                           | N/A                | 0                                          |
| Joseph   P. Giuffre  North  Vancouver, British Columbia, Canada  Chief  Legal Officer and Corporate Secretary | Chief Legal Officer and Secretary of NRL since 2013;  Partner of Axium Law Corporation, 2005-2012                                                                                                            | N/A                | 32,500  (<1%)                           |
| Scott A.  Trebilcock  Vancouver,  British Columbia, Canada  Chief Development Officer                              | Chief Development Officer of NRL since 2014; Vice President  Business Development & Investor Relations of NRL, 2010-2014                                                                                 | N/A                | 0                                          |
| Thomas  S. Whelan  Vancouver,  British Columbia, Canada  Chief  Financial Officer                                  | Chief Financial Officer of NRL since 2014; Partner, EY  LLP 2004-2014                                                                                                                                        | N/A                | 51,364 (<1%)                            |
| Peter M.  Manojlovic  Delta,  British Columbia, Canada  Vice  President Exploration                                | Vice President Exploration of NRL since 2012; VP  Exploration, Sabina Gold & Silver Corp., 2010-2012                                                                                                     | N/A                | 0                                          |
| Todd E.  Romaine(4)  West  Vancouver, British Columbia, Canada  Vice  President Corporate Social Responsibility    | Vice President Corporate Social Responsibility of NRL  since 2012; Senior Manager, Land Services (Operations), Enbridge Inc.  2008-2012                                                                      | N/A                | 0                                          |
| Peter  Tam  Vancouver, British Columbia, Canada  Vice President Finance                                            | Vice President Finance of NRL since November 2015;  Independent Mining Consultant 2014-2015; Chief Financial Officer at Elgin  Mining Inc. 2012-2014; Vice President Finance at Aura Minerals Inc. 2011-2012 | N/A                | 0                                          |

| (1) | Member of the Corporate Governance and Nomination Committee |
|-----|-------------------------------------------------------------|

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

| (3) | Member of the Human Resources Committee |
|-----|-----------------------------------------|

| (4) | Member of the Social Environment, Health & Safety Committee |
|-----|-----------------------------------------------------------------|

| (5) | Member of Special Committee |
|-----|-----------------------------|

As of February 23, 2017, the directors and executive officersof NRL, as a group, beneficially owned directly or indirectly, or exercisedcontrol or direction over 3,374,165 common shares or approximately 1.1% of theissued and outstanding common shares of NRL.  The same directors and executiveofficers, as a group, have been granted and currently hold options to purchaseup to 3,121,500 shares of NRL, 753,500 of which were granted in 2016.

| 59 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Cease Trade Orders, Bankruptcies, Penalties or Sanctions |
|----------------------------------------------------------|

Certain directors or executive officers of NRL are, atthe date of this AIF, or have been within the 10 years before the date of thisAIF, a director, chief executive officer or chief financial officer of acompany that: 

(a)          wassubject to a cease trade or similar order, or an order that denied the relevantcompany access to any exemption under securities legislation, that was ineffect for a period of more than 30 consecutive days (an “Order”) that wasissued while the director or executive officer was acting in the capacity asdirector, chief executive officer or chief financial officer, or

(b)          wassubject to an Order that was issued after the director or executive officerceased to be a director, chief executive officer or chief financial officer andwhich resulted from an event that occurred while that person was acting in thecapacity as director, chief executive officer or chief financial officer, 

details of which are described as follows:

> 
R. Stuart Angus was a director of Wildcat Silver    Corporation (“Wildcat”) which requested and received notice from the British    Columbia Securities Commission of the issuance of a management cease trade    order (the “MCTO”) on October 30, 2007 in connection with the late filing of    its annual audited consolidated financial statements for the fiscal year ending    June 30, 2007.  Wildcat’s failure to make the filing within the required time    frame was due to the need to clarify potential foreign tax obligations relating    to an acquisition it made.  The required filing was made on January 7, 2008 and    the MCTO was revoked on January 8, 2008.

| Conflicts of Interest |
|-----------------------|

Tothe best of NRL’s knowledge, thereare no existing or potential material conflicts of interest between NRL or any subsidiary of NRL and a director orofficer of NRLor asubsidiary of NRL.   

| Audit Committee |
|-----------------|

NRL has a separately-designated standing audit committee inaccordance with CSA National Instrument 52-110 Audit Committees and withSection 3(a)(58)(A) of the United States Securities Exchange Act of 1934, asamended.

| Audit Committee Charter |
|-------------------------|

TheBoard has adopted a charter for the Audit Committee which sets out thecommittee’s mandate, composition, responsibilities and duties.  A copy of the AuditCommittee Charter is attached to this AIF as Schedule “A”.

| Independent Advice & Funding |
|----------------------------------|

The Audit Committee shall have the authority to determinethe appropriate funding for the ordinary administrative expenses of the AuditCommittee.  In addition, the Audit Committee may, in its sole discretion,retain, at the expense of NRL, and determine the compensation to be receivedby, such legal, financial or other advisors or consultants as it may deemnecessary or advisable in order to properly and fully perform its duties andresponsibilities hereunder.    

| Composition of the Audit Committee |
|------------------------------------|

TheAudit Committee has three members, all of whom are independent and financiallyliterate, one of which is an audit committee financial expert. An outline ofeach member’s relevant education and experience follows:

> 
***David S. Smith, Chair. ***Mr. Smith    has over 30 years of experience in various senior financial roles, including 14    years as CFO of publicly listed companies.  He has served on the audit    committees of several publicly listed companies, including as chair.  Most    recently he was the Executive Vice President and CFO of Finning International    Inc.  Mr. Smith graduated from California State University, Sacramento with a    Bachelor of Science in Business Administration and became a Certified Public    Accountant in California in 1982.

| 60 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

> 
***Gary    E. German.***Mr. German    has over thirty-five years of senior management and executive positions in    global resource projects and companies, including the provision of strategic    and corporate finance direction and international commodity brokerage    operations. Previously he was Managing Director, Corporate Finance Group    (resources), Kingsdale Capital Corp. (2002-03), and prior to that, Chair of the    Finance Committee and Senior Advisor to the President-CEO of Ma'aden, the    Kingdom of Saudi Arabia's mineral resource development corporation. Mr. German    is a graduate of the University of Toronto (Bachelor of Applied Science,    Industrial Engineering) and the University of Western Ontario (Diploma,    International Management).****

***Geoffrey Chater.***Mr. Chater    has over 30 years of progressive experience in the mineral and mining    industries including as CEO of a gold producer.  He has served on the audit    committees of several publicly listed companies, including as chair.  Mr. Chater    graduated from Texas Christian University with a Bachelor of Science in    Geology.

| Pre-Approval Policies and Procedures |
|--------------------------------------|

TheAudit Committee has adopted policies and procedures for the engagement ofnon-audit services, described as follows:

NRL will not engage its external auditor KPMG LLP(“KPMG”) to carry out any non-audit services that are deemed inconsistent withan auditor’s independence (“Prohibited Service”).  The Audit Committee willconsider the pre-approval of permitted services to be performed by the externalauditor 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, Information    Technology Advisory and Risk Management Services, Forensic and Related    Services, Corporate Recovery Services, Transaction Services, Corporate Finance    Services, Project Risk Management Services, Operational Advisory and Risk Management    Services, Regulatory and Compliance Services.

For permitted services the following pre-approvalpolicies will apply:

A.   AuditServices

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

B.   Pre-Approvalof 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 be subsequently informed atleast annually**of the services on the attached list for which theauditor has been actually engaged.

Any additional requests for pre-approval will beaddressed on a case-by-case specific engagement basis as described in (C)below.  

C.   Approvalof Additional Services

The Company employee making the request will submit therequest for service to the Chief Financial Officer (“CFO”).  The request forservice should include a description of the service, the estimated fee, astatement that the service is not a “Prohibited Service” and the reason KPMG isbeing engaged.

Recommendations, in respect of each engagement, will besubmitted by the CFO to the Chair of the Audit Committee for consideration andapproval.  The full Audit Committee will subsequently be informed of the serviceat its next meeting.  The engagement may commence upon approval of the Chair ofthe Audit Committee.

| 61 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| External Auditor Fees |
|-----------------------|

All dollar amounts in this section are expressed inCanadian currency.

The following table sets forth the aggregate fees incurredby the Company for the years ended December 31, 2016 and 2015 for KPMG’sservices:  

|                                 | **Year  ended****December  31,  2016** |   | **Year  ended****December  31,  2015** |
|--------------------------------------|----------------------------------------|--------|----------------------------------------|
| Audit fees(1)  Audit-related fees(2) | $ 614,935  33,753                      |   | $ 492,158  17,500                      |
| Tax fees(3)                          | 54,670                                 |   | 57,781                                 |
| All other fees(4)                    | --                                     |   | 10,000                                 |
| Total                                | $  703,358                             |   | $ 577,439                              |

| (1) | Audit fees include fees related to the audit of the year-end financial statements, audit of the internal control over financial reporting, review of the interim financial statements, and services that are normally provided by the Auditors in connection with statutory and regulatory filings or engagements for such year. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Audit-related fees consist of fees for assurance and related services by the Auditors that are reasonably related to the performance of the audit or review of the financial statements and are not reported above as Audit Fees. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Tax fees for 2016 and 2015 are for tax advice in connection with proposed transaction and general matters, all in accordance with the pre-approval policies of the Audit Committee. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Other fees were billed by the Auditors in 2015 for general advisory services relating to due diligence. |
|-----|---------------------------------------------------------------------------------------------------------|

| Legal Proceedings |
|-------------------|

**Araya, Alemayo, Negash and Tsegay Actions**

A lawsuitwas filed in the Supreme Court of British Columbia against the Company (the"Araya Action") on November 20, 2014, by three plaintiffs who claimedto have once worked with a local sub-contractor at the Bisha Mine. Theplaintiffs have claimed that the Company is legally responsible for breaches ofcustomary international law and British Columbia law for conduct allegedlyengaged in by the local sub-contractor and the Eritrean military.  Theplaintiffs have also claimed the right to bring the action in a representativecapacity on behalf of certain persons who they allege were forced to work atthe Bisha Mine (the “Group Members”).  The plaintiffs have claimed general,aggravated and punitive damages for themselves and for the Group Members. Notrial date has been set.

OnOctober 6, 2016 the British Columbia Supreme Court released a decision onNevsun’s preliminary legal challenges to the Araya Action.  The judge refusedto permit the Araya Action against Nevsun to proceed as a representativeaction, a form of common law class action.  The judge dismissed the Company’sapplications to stay or dismiss the Araya Action on jurisdictional and othergrounds. The decision makes no findings with respect to the plaintiffs’allegations, including whether any of them were in fact at the Bisha Mine. Thejudge emphasized that the case raises novel and complex legal questions,including on international law, which have never before been considered inCanada.

TheCompany has appealed and the plaintiffs have cross-appealed from the dismissalof the representative action.  The appeal is expected to be heard in Q4 of 2017.

OnOctober 19, 2016 a second lawsuit was filed in the Supreme Court of BritishColumbia against the Company (the "Alemayo Action") by one plaintiffwho made similar allegations to those described in the Araya Action and seekssimilar relief. 

| 62 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

OnNovember 23, 2016 a third lawsuit was filed in the Supreme Court of BritishColumbia against the Company (the "Negash Action") by twenty-sevenplaintiffs who make similar allegations to those advanced in the Araya andAlemayo actions and seek similar relief.

OnFebruary 16, 2017 a fourth lawsuit was filed in the Supreme Court of BritishColumbia (the “Tsegay Action”) by eighteen plaintiffs who make similarallegations to those advanced in the above-noted actions and seek similarrelief.

**ContractualDispute with Canaccord**

  Canaccord Genuity Corp. (“Canaccord”) was an advisor  to Reservoir in connection with the transaction described in Note 6 to the  consolidated financial statements of Nevsun for the year ended December 31,  2016.

 On March 18, 2016 Canaccord and Reservoir entered  into an advisory agreement to evaluate third party funding arrangements which  related to the potential exercise by Reservoir of a ROFO under its joint  venture agreement with Freeport. Canaccord was paid a fee of $1 million for  providing financial advisory services in connection with Reservoir’s exercise  of the ROFO. 

  On April 6, 2016 Canaccord and Reservoir met to  discuss a new mandate for Canaccord in relation to a transaction whereby a  third party would acquire control of Reservoir. On April 18, 2016, Canaccord  and Reservoir entered into a new advisory agreement (the “April Advisory  Agreement”). This relates to advisory services provided by Canaccord in  connection with the acquisition of Reservoir by the Company by way of a plan  of arrangement (the “Transaction”) which was completed on June 23, 2016. 

 Canaccord has demanded an advisory fee  of CAD$11,658,000 (the “Transaction Fee”) under what they have asserted are  the terms of the April Advisory Agreement and has filed a Notice of Claim in  the British Columbia Supreme Court. Canaccord has upwardly revised their  estimate of the fee owed to CAD$14,670,000. This fee would represent  approximately 3% of the overall transaction value of approximately CAD$482  million based on the closing price of the Company’s shares (CAD$4.70) on  April 21, 2016, the last trading day prior to the date of announcement of the  Transaction. 

On September 12, 2016 Reservoir filed a Reply to the Notice of Claim to dispute the Transaction Fee demanded by Canaccord on the basis that, among other things, it is not determined in accordance with the terms of the April Advisory Agreement. Reservoir has paid to Canaccord the sum of CAD$6,047,000 (which includes a transaction fee of CAD$5,617,000 and a second fairness opinion fee of $100,000 taxes and expenses). Reservoir believes that this constitutes payment in full of all fees that Canaccord is entitled to receive under the April Advisory Agreement.

  No provision has been recorded in the Company’s  consolidated financial statements as the outcome of this claim is not  determinable. 

| Interest of Management and Others in Material Transactions |
|------------------------------------------------------------|

No director, officer or other insider of the Company, norany 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 |
|--------------------------------|

NRL’s registrar and transfer agent is ComputershareInvestor Services Inc., located in Vancouver, British Columbia.

| Material Contracts |
|--------------------|

There were no material contracts entered into by the Company during 2016 in respect of any regulatory actions by a court or by a regulatory authority relating to securities legislation. 

| 63 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Names and Interests of Experts |
|--------------------------------|

Unless otherwise stated, the relevant technical andscientific information included in this AIF concerning Bisha Property arederived from the 2013 Technical Report prepared by Paul Gribble, C.Eng., FIMMM,Jay Melnyk, and P.Eng., AGP; and Peter Munro, BAppSc. Mineralurgy Pty.****Ltd.,effective December 31, 2013.  These authors are QPs within the meaning of NI43-101. **  **This report is available for review on SEDAR (www.sedar.com) and EDGAR (http://www.sec.gov/edgar.shtml). 

Other relevant technical and scientific informationincluded in this AIF concerning the Bisha Property that is not derived from the2013 Technical Report is derived from the updated mineral resource estimateeffective December 31, 2015, which was prepared by Phil Jankowski, MAusIMM(CP), (BMSC)   and Anoush Ebrahimi, P.Eng., PhD. (SRK Consulting Canada Inc.).

Unless otherwise stated, the relevant technical andscientific information included in this AIF concerning Timok Project arederived from the Preliminary Economic Assessment of the Cukaru Peki Upper ZoneDeposit, Serbia, prepared by Martin Pittuck, CEng, FGS, MIMMM, and TimothyMcGurk, CEng, FIMMM (both of SRK Consulting (UK) Limited), effective March 31,2016.  These authors are QPs within the meaning of NI 43-101. **  **Thisreport is available for review on SEDAR (www.sedar.com).

To the best of the knowledge of the Company, AGP MiningConsultants Inc., Mineralurgy Pty. Ltd, SRK Consulting Canada Inc. and the“designated professionals” (as such term is defined in Form 51-102F2) thereofhold less than a 1% interest in the outstanding securities of NRL.

KPMG is the auditor for the Company and has audited theannual financial statements of the Company for the year ended December 31, 2016. KPMG have confirmed that they are independent with respect to the Companywithin the meaning of the relevant rules and related interpretations prescribed bythe relevant professional bodies in Canada, and under all relevant USprofessional and regulatory standards, including PCAOB Rule 3520.

| Additional Information |
|------------------------|

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

Additionalinformation including directors' and officers' remuneration and indebtedness,principal holders of NRL's securities and options to purchase securities iscontained in NRL's information circular for its most recent annual meeting ofshareholders that involves the election of directors. 

Additionalfinancial information is also provided in the Company's audited consolidatedfinancial statements and MD&A for its most recently completed financialyear, copies of which may be found on SEDAR or EDGAR, or be obtained bycontacting the Company at:

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

| 64 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016 

| Schedule “A” – Audit Committee Charter |
|----------------------------------------------------------|

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

****AUDIT COMMITTEE CHARTER****

The Audit Committeeis 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. |
|--------|-----|---------------------------------------------------------------------------------------------------------------|

**Composition**

TheAudit Committee shall consist of at least three members of the Board ofDirectors.  Each member of the Audit Committee shall be “independent” of theCompany within the meaning of all applicable legal and regulatory requirements, and each such member must not have participated in thepreparation of the Company’s financial statements, or that of the Company’ssubsidiaries, at any time during the three years prior to becoming a member ofthe Audit Committee (except in the circumstances, and only to the extent,permitted by all applicable legal and regulatory requirements).  Each member ofthe Audit Committee shall also be “financially literate”, which means that heor she must have the ability to read and understand a set of financialstatements that present a breadth and level of complexity of accounting issuesthat are generally comparable to the breadth and complexity of the issues thatcan reasonably be expected to be raised by the Company’s financial statements. In addition, at least one member of the Audit Committee shall be a “financialexpert” within the meaning of the rules and forms adopted by the US Securitiesand Exchange Commission and shall be financial sophisticated,in that he or she has past employment experience in finance or accounting,requisite professional certification in accounting or any other comparableexperience or background which results in the individual’s financialsophistication, including but not limited to being or having been a chiefexecutive officer, chief financial officer, or other senior officer withfinancial oversight responsibilities (except in the circumstances, and onlyto the extent, permitted by all applicable legal and regulatory requirements).

**Responsibilities**

The overallresponsibilities of the Audit Committee are to:

| 1. | assist the Board of Directors and Management with 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 the external auditor of the Company, (ii) the oversight of the work of the of the Company’s external auditor, (iii) the retention of the Company’s external auditor, and (iv) fixing the compensation of the external auditor of the Company, subject to the grant by the shareholders of the authority to do so, if required; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | ensure that at all times there are direct communication channels between the Audit Committee and the Company’s external auditor; |
|----|----------------------------------------------------------------------------------------------------------------------------------------|

| 4. | ensure the independence of the Company’s external auditor, including ensuring receipt from the external auditor of a formal written statement delineating all relationships between the external auditor and the Company and actively engaging in dialogue with the external auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the external auditor; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | periodically review and report to the Board of Directors whether Management has designed and implemented an effective system of internal controls over financial reporting for reviewing and reporting on the Company’s financial statements; |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 65 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| 6. | review and report to the Board of Directors on all financial statements (including interim financial statements) prepared by the Company and enhance the credibility and objectivity of all financial reports; and |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | otherwise review the Company’s compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and disclosure of related material facts. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Duties**

Forthe purposes of fulfilling its responsibilities, the Audit Committee will:

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

| 2. | afford an opportunity periodically to the external auditor and to senior Management to meet separately with the Audit Committee, and when required,   meet independently of the external auditor and Management; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | keep minutes of all meetings of the Audit Committee; |
|----|------------------------------------------------------|

| 4. | periodically report the results of the reviews undertaken and any associated recommendations to the Board of Directors; |
|----|-------------------------------------------------------------------------------------------------------------------------|

| 5. | select an external auditor to be proposed by Management to the shareholders for election by the shareholders as the external auditor for the Company, review and approve the terms of the external auditor's engagement and determine the appropriateness and reasonableness of the proposed audit fees and any unpaid fees; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6. | review and evaluate the qualifications, performance and independence of the lead partner of the external auditor, discuss with Management the timing and process for implementing the rotation of the lead audit partner and the reviewing partners of the external auditor, and other issues related to a change of the external auditor and the planned steps for an orderly transition; |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | obtain confirmation from the external auditor that it will report directly to the Audit Committee; |
|----|----------------------------------------------------------------------------------------------------|

| 8. | obtain confirmation from the external auditor that it will report in a timely matter to the Audit Committee all critical accounting policies and practices to be used, all alternative accounting policies and practices, the ramifications of each of such accounting policy and practice and the accounting policy and practice preferred by the external auditor, for the financial information of the Company within applicable generally accepted accounting principles (GAAP), which have been discussed with Management; |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | obtain confirmation from the external auditor that it will provide a copy of all material written communications between the external auditor and Management including, without limitation, any Management letter or schedule of unadjusted differences; |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | obtain confirmation from the external auditor that it will ensure that all reports filed under the United States Securities Exchange Act of 1934, as amended, which contain financial statements required to be prepared in accordance with GAAP and reflect all material correcting adjustments identified by the external auditor of the Company; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and any former external auditor of the Company; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | review all reportable events, including disagreements, unresolved issues and consultations, as defined in National Instrument 51-102 of the Canadian Securities Administrators, on a routine basis; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | review and pre-approve any and all engagements for non-audit services to be provided to the Company or to any of its subsidiaries by the Company’s external auditor or any affiliates of the external auditor, together with estimated fees, and review and approve the audit plan with the external auditor and with Management; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | review with Management and with the external auditor any  proposed changes in major accounting policies, the presentation and impact of significant financial risks and uncertainties and key estimates and judgments of Management that may be material to financial reporting and the steps Management has taken to minimize such risks to the Company; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 66 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| 15. | assist in the preparation of any internal control report by Management, which provides that Management is responsible for establishing and maintaining an adequate control structure and procedures for financial reporting by the Company, assessing the effectiveness of such control structure and procedures and ensuring that the external auditor of the Company, if required by governing legislation or regulation, attest to and report on the assessment of such control structure and procedures by Management; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16. | assist the Chief Executive Officer and the Chief Financial Officer of the Company in their assessment of the effectiveness of the Company’s internal control over financial reporting and in determining whether there has been any material change in the Company’s internal control over financial reporting which has materially affected or could materially affect such internal control subsequent to the date of the evaluation; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17. | assist the Chief Executive Officer and the Chief Financial Officer of the Company in identifying and addressing any significant deficiencies or material weaknesses in the design or operation of the Company’s internal control over financial information and any fraud, whether or not material, that involves Management or other employees who have a significant role in the Company’s internal control over financial reporting; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18. | question Management and the external auditor regarding significant financial reporting issues discussed during the fiscal period and the method of resolution; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19. | review any problems experienced by the external auditor in performing the audit, including any restrictions imposed by Management or significant  accounting issues to which there was a disagreement with Management; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20. | review audited annual financial statements, in conjunction with the report of the external auditor, and obtain an explanation from Management of all significant variances between comparative reporting periods; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21. | review the post-audit or Management letter, containing the recommendations of the external auditor and Management’s response and subsequent follow up to any identified weaknesses; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22. | review all interim unaudited financial statements before release to the public; |
|-----|---------------------------------------------------------------------------------|

| 23. | review all public disclosure documents containing audited or unaudited financial information before release, including any prospectus, the annual report, the AIF and Management’s discussion and analysis; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24. | ensure that the Company discloses in the periodic reports of the Company, as appropriate, whether at least one member of the Audit Committee is a “financial expert” within the meaning of the rules and forms adopted by the US Securities and Exchange Commission; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25. | ensure that all non-audit services provided by the external auditor are approved by or on behalf of the Audit Committee and are disclosed in the periodic reports of the Company; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 26. | ensure that each annual report and, to the extent required by any applicable legal or regulatory requirement, any quarterly report of the Company includes disclosure with respect to all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities which may have a current or future effect on the Company in accordance with all applicable legal and regulatory requirements; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 27. | ensure that all financial statements and other financial information, including pro forma financial information, included in any report filed by the Company with any regulatory authority or contained in any public disclosure or press release of the Company is presented in a manner which does not contain a material misstatement or omission and reconciles the pro forma information contained therein to GAAP, and which otherwise complies with all applicable legal and regulatory requirements; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 28. | review the evaluation of internal control by the external auditor, together with Management’s responses; |
|-----|----------------------------------------------------------------------------------------------------------------|

| 29. | to assist Management with its annual risk assessment and reporting strategy to manage the process of the identification, evaluation and mitigation of the Company’s principal enterprise risks; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 67 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| 30. | review the appointments of the chief financial officer and any key financial executives involved in the financial reporting process; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| 31. | establish procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32. | annually assess the adequacy of the Audit Committee Charter; and |
|-----|------------------------------------------------------------------|

| 33. | annually evaluate the Audit Committee’s performance. |
|-----|------------------------------------------------------------|

**Independent Advice& Funding**

TheAudit Committee shall have the authority to determine the appropriate fundingfor the ordinary administrative expenses of the Audit Committee.  In addition,the Audit Committee may, in its sole discretion, retain, at the expense of theCompany, and determine the compensation to be received by, such legal,financial or other advisors or consultants as it may deem necessary oradvisable in order to properly and fully perform its duties andresponsibilities hereunder. 

| 68 | Nevsun Resources Ltd. |
|----------------------------|

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ANNUAL  INFORMATION FORM – December 31, 2016

| Schedule “B” – Risk Factors |
|-----------------------------------------------|

| **Approach to Risk Management** |
|---------------------------------|

****The  Company’s approach to identifying and managing risk has been a critical  component of how management runs and the Board oversees management of the  business.  The Company’s enterprise risk management process is currently  coordinated by the Chief Development Officer, managed by the senior  management team with direct oversight by the Chief Executive Officer and the  Board of Directors.  The Company conducts a top down review of key  strategic, operational and financial risks at least quarterly.  The  Company maintains a risk register, which is updated on a regular basis by the  appropriate business owner of the risk.  The risk register contains a  list of actions to ensure risks are mitigated to the agreed upon level of  risk tolerance.  The results of the Enterprise Risk Management process  are reviewed on a regular basis by the Board of Directors. 

  The business and operations of the Company  are highly speculative 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.  The Company’s business is subject to strategic, financial and  operating risks.  The risks below, some of which are summarized elsewhere in  this Report, are not the only ones faced by the Company. Additional risks not  currently known to the Company, or that the Company currently deems  immaterial, may also arise in the future and impair the Company’s operations.  If any of the following risks actually occur, the Company’s business,  financial condition and operating results could be adversely affected.  

| **Strategic Risk Factors** |
|----------------------------|

**Foreign operation and political risks. **The Company  conducts business in Serbia and Eritrea through its foreign subsidiaries with  financial assets in Barbados, Serbia and Eritrea, and substantially all of  its assets are held in such entities.  While the Company believes that the  political climate of these countries and strong government support in Serbia  and Eritrea provide a stable environment for its operations, there is no  guarantee against any future political, or economic instability in these countriesor neighboring countries that might adversely affect the Company.  

  Political unrest in Egypt, Libya, Syria,  Yemen, Saudi Arabia, Somalia, South Sudan, Sudan and other countries in the  region has had an impact on investor confidence with companies operating in  northern Africa, including Eritrea, even though no direct effect is evident  or anticipated in the operations at Bisha or communications with the Eritrean  government.  New government regulations in Canada, the United States or other  countries in which the Company operates could adversely affect the Company’s  future business and operations.  In addition, intervention by the  international community through organizations such as the United Nations  could affect the political risk of operating in Eritrea. In December 2009 the  United Nations Security Council (UNSC) imposed sanctions on Eritrea related  to an arms embargo, which in itself has had no direct impact to the Bisha  Mine, except to cause some uncertainty as to how UN member states may  continue to deal with the country. In December 2011 the UNSC provided  additional sanctions guidance to member states.  Effects of the sanctions  could impact the Company’s ability to operate efficiently.  There are also  unresolved tensions between Ethiopia and Eritrea and the possibility of  future armed conflicts between Ethiopia and Eritrea by rebel groups or  otherwise which could affect or interfere with continued operations at Bisha.

Other risks the Company may face in  operating in foreign jurisdictions include unforeseen government actions, acts  of god, terrorism, hostage taking, military repression, extreme fluctuations  in currency exchange rates, high rates of inflation, labour unrest, the risks  of war or civil unrest, expropriation and nationalization, renegotiation or  nullification of existing concessions, licenses, permits and contracts,  illegal mining, changes in taxation policies, restrictions on foreign  exchange and repatriation, and changing political conditions, currency  controls, export controls, and governmental regulations that favour or  require the awarding of contracts to local contractors or require foreign  contractors to employ citizens of, or purchase supplies from, a particular  jurisdiction or other events.

All or any of these factors, limitations,  or the perception thereof could impede the Company’s activities, result in  the impairment 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. 

| 69 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

**Governmental regulatory risks.**  The Company’s  mineral exploration, development and production activities are subject 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 can be provided  that the Company will be successful in its efforts to comply with all  existing rules and regulations, that new rules and regulations will not be  enacted, or that existing rules and regulations will not be modified in a  manner that could limit or curtail production or development of the Company’s  properties.  All such rules and regulations governing the operations and  activities of the Company could have a material adverse effect on the Company’s  business, financial condition and results of operations. 

**Key executive risk.**  The Company is to  a large degree dependent on the services of key executives and senior  personnel.  The loss of one or more of these persons or the Company’s  inability to attract and retain executives and personnel with the  qualifications necessary to successfully operate the business may adversely  affect the Company’s business and future operations.  The Company competes  with numerous other companies for the recruitment and retention of qualified  executives and employees and thus there is a risk that from time to time one  or more key executives or personnel move to a competitor. 

**Expatriate and nationals’ skills risk.**  The Company’s  operations in Eritrea and exploration and development programs in Serbia and  elsewhere rely on attracting and retaining expatriate and nationals with  mining experience to staff key operations and administration management  positions.  The Company’s inability to attract and retain personnel with the  skills and experience to manage the operation and train and develop staff,  due to the intense international competition for such individuals, may  adversely affect its business, future operations and financial condition. 

**Competition risks.**  The mining  industry is intensely competitive in all of its phases and the Company  competes with many companies possessing greater financial and technical  resources than itself.  There is intense competition in the mining industry  for mineral rich properties that can be developed and produced economically,  the technical expertise to find, develop, and operate such properties, the  labour to operate the properties, and the capital for the purpose of funding  such properties.  Many competitors not only explore for minerals, but conduct  refining and marketing operations on a global basis.  Such current and future  competition may frustrate the Company’s ability to acquire desired  properties.    The Company is also subject to risks associated with a hostile  takeover of the common shares of the Company or other unsolicited attempts to  acquire control of the Company. 

**Litigation risk.**  The Company is  subject to litigation risks.  The mining industry is subject to legal risks  and claims.  Such legal claims can relate to various matters including,  without limitations, mining laws, environmental laws, labour laws and  anti-corruption and anti-bribery laws in the jurisdictions in which the  Company operates. Defense and settlement costs associated with legal claims  can be substantial, even with respect to claims that are frivolous or have no  merit.  Due to the inherent uncertainty of the litigation process, the  resolution of any particular legal proceeding to which the Company is or may  become subject could have a material adverse impact on its financial  performance, cash flow and results of operations, including the Araya Action,  Alemayo Action, Negash Action, Tsegay Action and Canaccord Dispute described  under the heading “Legal Proceedings”. 

**Share price risk.** The market price of a publicly traded stock is affected by many variables not directly related to the success of the Company, including the market for all resource sector shares, the breadth of the public market for the stock, and the attractiveness of alternative investments.  The effect of these and other factors on the market price of the common shares of the Company on the exchanges on which the common shares are listed suggests that the share price will be volatile.  In the previous eight quarters, between January 1, 2015 and December 31, 2016 the Company’s shares traded in a range between CAD$3.27 and $5.35.

**Dividend policy risks.** The Company has established a dividend policy that has considered the long-term sustainability of cash flows and will be reviewed on a periodic basis and assessed in relation to the historical and anticipated growth of the Company’s operating cash flows. The Company began paying dividends in July 2011.  The Company has increased its annual dividend every year since that time.  During 2016 the Company paid quarterly dividends of $0.04 per share.  Payment of any future dividends will be at the discretion of the Board after taking into account many factors, including the Company’s operating results, future capital requirements, financial condition, comparability of the dividend yield to peer mining companies and current and anticipated demands on the Company’s cash levels.  There can be no assurance that the Company will continue to pay dividends at the current rate or at all.

| 70 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

**Conflicts of interest.**  Certain of the  directors and officers of the Company also serve as directors and/or officers  of other companies involved in natural resource exploration and development  and consequently there exists the possibility for such directors and officers  to be in a position of conflict. Any decision made by any of such directors  and officers involving the Company will be made in accordance with their  duties and obligations to deal fairly and in good faith with a view to the  best interests of the Company and its shareholders. In addition, each of the  directors is required to declare and refrain from voting on any matter in  which such directors may have a conflict of interest in accordance with the  procedures set forth in the Business Corporations Act (British Columbia) and  other applicable laws.  

| **Financial Risk Factors** |
|----------------------------|

**Commodity price risk.**  Revenue and  profitability of the Company’s operations will be dependent upon the market  price of mineral and materials commodities.  Prices of metals are key  performance drivers for the Company and fluctuations in the prices of these  commodities can have a significant impact on the Company’s operations and  financial performance.  The Company does not enter into any commodity hedging  and accordingly is fully exposed to price risk.  The price of copper, zinc, gold,  and other metals can and has experienced volatile and significant price  movements over short periods of time, and is affected by numerous factors  beyond the control of the Company, including international economic and  political trends, expectations of inflation or deflation, currency exchange  fluctuations (specifically, the US dollar and Serbian dinar relative to other  currencies), interest rates, global or regional consumption patterns, speculative  activities and increased production due to improved mining and production  methods.  The supply of and demand for copper, zinc, gold and other metals  are affected by various factors, including political events, economic  conditions, competition, production costs, and governmental policies.  If the  market price of copper, zinc, gold or silver falls significantly from its  current level, the production and ongoing mine development at Bisha or any  other project of the Company may be rendered uneconomic and the production or  development at Bisha or any other project may be suspended or delayed.  In  addition, if the market price of copper, zinc, gold or silver were to  decrease significantly and remain at lower levels for a significant period of  time, profitability of the Company and cash flow would be negativelyaffected. 

Mineral reserve calculations and life-of-mine plans using significantly lower metal prices could result in material write-downs of the Company’s investment in mining properties and increased amortization, reclamation and closure charges.  In addition to adversely affecting the Company’s Mineral Reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until such time as the reassessment can be completed.

The Bisha Mine’s power generation plant and mobile equipment fleet are fueled by diesel petroleum.  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 operating costs and adversely affect profitability. Energy prices can be affected by numerous factors beyond the Company’s control, including global and regional supply and demand, political and economic conditions and applicable governmental policies.

**Funding risks.** The exploration, development, operations, acquisitions or other activities may require substantial additional debt and equity capital financing.  Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration, development, operations, acquisitions or other activities of the Company including a loss of property interest.  Historically, the Company has financed its activities through the sale of equity capital and through cash flow from operations.  The sale of metals from Bisha currently provides and is expected to continue to provide revenue from operations but will not be sufficient to fund all of its future financial needs for the operations and to fund exploration and development of the Timok Project and other projects.  The Company will require additional financial resources for operations and for further exploration and development of its projects and will be dependent upon the Company’s ability to obtain financing through debt or equity financing or other means. Factors which may impact cash flows include changes in metal prices, taxes, operating costs, marketability of metals from operations, capital expenditures or other unexpected occurrences such as unanticipated costs, delays, downtimes, slowdown or stoppage of operations.  Failure to obtain sufficient financing to continue operations or to fund ongoing exploration and development of the Company’s projects when such needs arise may adversely affect the Company’s business and financial position. When the Company requires additional funding for exploration, development, operations, acquisitions or other activities, there is no assurance that sources of financing will be available on acceptable terms or at all.

| 71 | Nevsun Resources Ltd. |
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ANNUAL  INFORMATION FORM – December 31, 2016

**Insurance risks.**  Although the  Company believes it maintains adequate insurance coverage to protect against  certain risks at levels it considers reasonable, its insurance will not cover  all the potential risks associated with a mining company’s operations. Nevsun  may also be unable to maintain insurance to cover these risks at economically  feasible premiums. In addition, insurance coverage may not continue to be  available in the future or may not be adequate to cover any resulting  liability. 

**Write-downs and impairments risk.**  Mining and  mineral interests are the most significant assets of the Company and  represent capitalized expenditures related to the development of mining properties and related plant and equipment.

The Company reviews and evaluates its mining interests for impairment at each reporting period or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable, which evidences greater risk levels due to changes in the global economic conditions that exist currently.  An impairment is considered to exist if the total estimated future undiscounted cash flows are less than the carrying amount of the assets.  An impairment loss is measured and recorded based on discounted estimated future cash flows.  Future cash flows are estimated based on expected future production, commodity prices, operating costs and capital costs.  There are numerous uncertainties inherent in estimating Mineral Reserves and Mineral Resources.  Differences between management’s assumptions and market conditions could have a material effect in the future on the Company’s financial position and results of operation.

 The assumptions used in the valuation of long-term  stockpiles and work-in-process inventories by the Company include estimates  of metals contained in the ore stockpiles, crushed ore piles, processing  plant circuits, and an assumption of the metal prices expected to be realized  when the copper, zinc, gold and silver are recovered.  If these estimates or  assumptions prove to be inaccurate, the Company could be required to  write-down the recorded value of its long-term stockpiles or work-in-process  inventories, which would reduce the Company’s earnings and working capital.

**Derivatives risk.**  In the future the  Company may use certain derivatives products to manage the risks associated  with changes in metal prices, interest rates, foreign currency exchange rates  and fuel prices.  The use of derivative instruments involves certain inherent  risks including, among other things: (i) credit risk – the risk of default on  amounts owed to the Company by financial counterparties; (ii) market  liquidity risk – the risk that the Company has entered into a derivative  position that cannot be closed out quickly, by either liquidating such  derivative instrument or by establishing an offsetting position; and (iii)  unrealized mark-to-market risk – the risk that, in respect of certain  derivative products, an adverse change in market prices for commodities,  currencies or interest rates will result in the Company incurring an  unrealized mark-to-market loss in respect of such derivative products. 

**Counterparty risks.**  The Company is  exposed to various counterparty risks including, but not limited to: (i)  financial institutions that hold the Company’s cash and cash equivalents; and  (ii) amounts owing to the Company by copper and zinc concentrate customers.   As a result, the Company may become exposed to credit-related losses in the  event of non-performance by such counterparties. 

**Currency risks.**  At present all of  the Company’s operations other than head office corporate functions are  carried on outside of Canada and are subject to risks associated with  fluctuations of the rate of exchange of foreign currencies.  The United  States dollar (“USD”) is the Company’s functional currency, exposing the  Company to risk on any fluctuations of the USD with other currencies to which  the Company is exposed, which are primarily the Canadian dollar, Serbian  dinar (“RSD”), South African rand (“ZAR”), the Eritrea Nakfa (“ERN”), and the  Euro.  While only a small portion of the Bisha Mine’s operating expenses are  denominated in ERN, a re-valuation or de-pegging of this currency to the USD  could expose the Company to additional currency risk. It is anticipated that  significant future development costs will be incurred in Serbian dinars. Fluctuations  in currency exchange rates could significantly affect the Company’s business,  financial condition, results of operations and liquidity. 

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ANNUAL  INFORMATION FORM – December 31, 2016

**Information  technology security risk.**  Nevsun maintains information technology  infrastructure, applications and communications networks to support its  business activities.  These systems could be subject to security breaches  resulting in theft, disclosure or corruption of information, including  information relating to acquisitions and divestments, strategic  decision-making, investment market communications or commercially sensitive  information relating to major contracts. Security breaches could also result  in misappropriation of funds or disruptions to business operations.  

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**Mineral  Reserve  and  Mineral Resource  estimate risk.** The tabulated data for Mineral Reserves and Mineral Resources presented in figures in this document and contained in the Company’s continuous disclosure 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 that the anticipated tonnages and grades will be achieved or, in the case of reserves, that the indicated level of metallurgical recovery will be realized.  Actual Reserves may not conform to geological, metallurgical or other expectations, and the volume and grade of ore recovered may be below the estimated levels.  Market fluctuations in the price of mineral commodities or increases in the costs to recover minerals may render the mining of ore reserves uneconomical and require the Company to take a write-down of the asset or to discontinue development or production.  Moreover, short-term operating factors relating to the reserves, such as the need for orderly development of the ore body or the processing of new or different ore grades or ore mineralogies, may cause a mining operation to be unprofitable in any particular accounting period. Furthermore, Mineral Reserve and Mineral Resource estimates on the Bisha Property do not take into account recent drilling and other work. This additional drilling and work may result in a material change to the estimated mineral resources and reserves.  An updated Mineral Resource and Mineral Reserve estimate and associated technical report on the Bisha Property and a prefeasibility study on the Timok Project are expected in June 2017 and September 2017, respectively.  These studies may or may not contain material scientific or technical information that differs from what is contained in the Bisha Technical Reports and the Timok PEA.

  There are numerous uncertainties inherent in  estimating quantities of Mineral Resources and Mineral  Reserves, including many factors that are beyond the Company’s control.  The  estimates prepared by the Company are based on various assumptions relating  to metal prices and exchange rates during the expected life of production,  mineralization and mineralogy of the area and material to be mined, the  projected cost of mining including costs of fuel and other critical operating  consumables, and the results of additional planned development work.  Actual  future production rates and amounts, revenues, taxes, operating expenses,  environmental and regulatory compliance expenditures, development  expenditures and recovery rates may vary substantially from those assumed in  the estimates.  Any significant change in these assumptions, including  changes that result from variances between projected and actual results or  any assumptions in the historical resource estimates that turn out to be  incorrect, incomplete or flawed in any respect or the methodologies and  models used to prepare the resource and reserve estimates either  underestimate or overestimate the resources or reserves due to hidden or  unknown conditions, could result in material downward or upward revision of  current estimates. 

**Exploration, development and operating  risks.**   Mining operations generally involve a high degree of risk. The Company’s  operating mine in Eritrea is subject to all the hazards and risks normally  associated with mineral production, including damage to or destruction of  plant and equipment, unexpected geologic formations, pit collapse, injury or  life endangerment, environmental damage, fire, equipment failure or  structural failures, such as retaining walls or tailings dams and other  equipment, potentially resulting in personal injury, property damage, environmental  pollution and consequent liability.  The Company may at times experience some  difficulty in managing the sulphide rich reactive ground[1] which may affect blasting  and continuous ore supply and give rise to unplanned detonations resulting  from reactive ground, or a failure of drilling, processing and mining  equipment or unanticipated costs and downtimes due to optimizing the zinc and  copper flotation plants and its operating facilities.   These costs,  downturns and other risks can have a material adverse effect on the Company’soperating costs and results of operations and financial position. 

________________________________

[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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ANNUAL  INFORMATION FORM – December 31, 2016

The exploration for and development of  mineral deposits involves significant risks, which even a combination of  careful evaluation, experience and knowledge may not eliminate entirely.  While the discovery of an ore body may result in substantial rewards, few  properties that are explored are ultimately developed into producing mines.  There is no certainty that expenditures made by the Company towards the  search and evaluation of mineral deposits will result in discoveries or  future development.  Whether a mineral deposit will be commercially viable  depends on a number of factors, which include, among other things, the  interpretation of geological data obtained from drill holes and other  sampling techniques, feasibility studies (which include estimates of cash  operating costs based upon anticipated tonnage and grades of ore to be mined  and processed), the particular attributes of the deposit such as size, grade  and metallurgy, expected recovery rates of metals from the ore, proximity to  infrastructure and labour, the cost of water and power, anticipated climatic  conditions, cyclical metal prices, fluctuations in inflation 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, and environmental  protection.

 Major expenses may be required to locate  and establish additional mineral reserves.  It is impossible to ensure that  the exploration or development programs planned by Nevsun will result in  additional profitable commercial mining operations. The exact effect of these  factors cannot be accurately predicted, but the combination of these factors  may result in Nevsun not receiving an adequate return on invested capital.  In  this regard the Company relies to a significant degree on the analysis  performed by its Qualified Persons to estimate resources and reserves, and  such estimates may be subject to material risks and uncertainties. 

**Production risk.**  As is typically  the case with the mining industry, no assurances can be given that future  mineral production estimates will be achieved. Estimates of future production  for the Company’s mining operations are derived from the Company’s mining  plans. These estimates and plans are subject to change, including changes  based on actual mining results at various phases of the mining operations. The estimated mining results from the  Timok Property are based on the Timok PEA which is a preliminary economic  assessment. The Company expects to have a pre-feasibility study on the Timok  Property completed in September 2017 and the results from such study might  differ materially from the results in this AIF. The Company cannot  give any assurance that it will achieve its production estimates.  The  Company may not be able to effectively manage potential deleterious elements  contained within the ore to ensure continued salability of concentrates  produced at projected costs. The Company may not be able to effectively  manage the combination of oxidation of ore stocks coupled with in pit water inflow  that may adversely affect flotation and quality of concentrates produced.  There is a further risk that the potential reactive nature of the ore and  waste with high pyrite (sulphides) content and its reactivity with ammonium  nitrate contained in explosives will have a negative impact on ore and waste  blasting efficiencies and result in increased costs.  An additional risk  includes the true understanding of the full extent and mineralogical  properties including metalions in solution of the transition zone between the  supergene and primary ore bodies and within the ore body itself and the  subsequent potential disruptive impact on processing this zone, even if  campaigned in discrete periods, on the quality and future salability of the  concentrates produced. Any process plant adjustments or modifications to  further optimize and improve operating efficiencies could result in  significant capital expenditures and have an impact on process plant  productivity or result in a temporary shutdown to rectify the issues.  Failure  to effectively manage these and other matters and to achieve its production  estimates could have a material and adverse effect on the Company’s future  cash flows, results of operations, production cost, financial condition and  prospects. The plans are developed based on, among other things, mining  experience, reserve estimates, assumptions regarding ground conditions,  hydrologic conditions and physical characteristics of ores (such as hardness  and presence or absence of certain metallurgical or mineralogical  characteristics) and estimated rates and costs of production, and include  assumptions derived by geological block models developed by the Qualified  Person(s) in consultation with Company personnel.  Actual production may vary  from such estimates for a variety of reasons, including risks and hazards of  the types discussed above, and as set out below, including but not limited to: 

-     greater    mining dilution than expected affecting geological grades and material    movement;

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ANNUAL  INFORMATION FORM – December 31, 2016

-  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,  tellurium, graphite, marcasite, or secondary copper    ions impacting subsequent concentrate quality;
-  higher    than expected oxidation of in-pit ore stocks adversely impacting flotation    characteristics and subsequent concentrate quality;
-  unexpected    mineralogical properties of the supergene to primary transition zone and    within the primary ore body itself and impact on 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 optimization    of the process plant and operation facilities; and
-  existing    and new regulatory restrictions imposed by government agencies. 

  Such occurrences could, in addition to  stopping or delaying mineral production or impacting quality and salability  of metal concentrates, result in damage to mineral properties, injury or  death to persons, damage to the Company’s property or the property of others,  monetary losses and legal liabilities.  These factors may also cause a  mineral deposit that has been mined profitably in the past to become  unprofitable in the future. Estimates of production from properties not yet  in production or from operations that are to be expanded are based on similar  factors (including, in some instances, feasibility studies prepared by the  Company’s personnel and outside consultants) but it is possible that actual  operating costs and economic returns will differ significantly from those  currently estimated.

Need for additional Mineral Reserves risk. Given that mines have limited lives based on Proven and Probable Mineral Reserves, the Company must continually review, replace and expand the reserves at its mines.  The life-of-mine estimates included in the Company’s continuous disclosure documents filed on SEDAR and EDGAR are subject to continual adjustment. The Company’s ability to maintain or increase its annual production of gold, copper, zinc and other commodities will be dependent in significant part on its ability to bring new mines into production and to expand reserves at existing mines. Based on the current reserves, Bisha Mine has an estimated 9.5-year mine life remaining as at December 31, 2015.  There is no assurance that Nevsun will be able to maintain or increase its annual production, bring new mines into production or maintain or expand the Mineral Reserves and Mineral Resources at its existing mine.

**Permitting risk.** The Company’s operations and future exploration and development activities are subject to receiving and maintaining permits from appropriate governmental authorities and the granting of new exploration and other licenses and permits.  There is no assurance that delays will not occur in connection with obtaining all necessary renewals of existing permits for current operations or exploration tenements, or for additional permits for any possible future changes to operations or applications for new exploration tenements, or additional permits associated with regulations and legislation or that such renewals or additional permits will be granted. Prior to any development on any of its properties, the Company must receive permits from appropriate governmental authorities. There can be no assurance that the Company will obtain or continue to hold all permits necessary to develop or continue operating at any particular property site.  Any failure to obtain or maintain the requisite permits could have a material adverse effect on the Company and its future production levels.

**Environmental risk.**  Production at the  Company’s mine involves the use of toxic materials. Should toxic materials  leak or otherwise be discharged from the containment system then the Company  may become subject to liability for cleanup work that may not be insured  against. While the Company intends to prevent discharges of pollutants into  the ground water and the environment, it may be unsuccessful in such efforts  and as a result may become subject to liability for hazards that it may not  be insured against. Losses from these events may cause the Company to incur  significant costs that could have a material adverse effect upon its  financial performance and results of operations.

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ANNUAL  INFORMATION FORM – December 31, 2016

 The Company’s operations and exploration  and development activities are subject to environmental regulations  promulgated by the government of Eritrea, Serbia and in other jurisdictions  that it carries on these activities. Environmental legislation provides for  restrictions and prohibitions on spills, releases or emissions of various  substances produced in association with certain mining industry operations,  such as seepage from tailings disposal areas that could result in  environmental pollution.  A breach of such legislation may result in the  imposition of fines and penalties.  Environmental legislation is evolving in  general in a manner that means standards and enforcement, fines and penalties  for non-compliance are becoming more stringent over time. Environmental  assessments for projects carry a heightened degree of responsibility for  companies, directors, officers and employees.  The cost of compliance with  changes in government regulations has the potential to reduce the  profitability of operations and its ability to conduct its exploration and  development activities.  The Company devotes significant time and resources  toward meeting its goal of complete compliance with all environmental  regulations in the countries in which the Company has operations and  exploration and development activities and seeks to comply with prudent  international standards. 

  Environmental hazards may also exist on the  properties on which the Company holds interests that are unknown to the  Company at present and that may have been caused before the Company received title to the properties.

 Failure to comply with applicable laws,  regulations and permitting requirements may result in enforcement actions,  including orders issued by regulatory or judicial authorities causing operations  or exploration and development activities to cease or be substantially curtailed,  and may include corrective measures requiring significant capital  expenditures, installation of additional equipment, or remedial actions. In  addition, parties that engage in mining operations or exploration and  development activities, including the Company, may be required to compensate  those suffering loss or damage by reason of the such activities and may face civil  or criminal fines or penalties for violations of applicable laws or  regulations.

 Amendments to current laws, regulations and  permits governing operations and activities of mining companies, or more  stringent implementation thereof, could have a material adverse impact on the  Company and cause increases in exploration expenses, capital expenditures or  production costs, reduction in levels of production at producing properties,  or abandonment or delays in development of new mining properties. 

**Labour risk.**  The Company is  dependent on its workforce to extract and process minerals, and is therefore  sensitive to its ability to source skilled labour in country and the  potential for a labour disruption that impacts the Company's mining  activities or changes to laws. The Company endeavours to maintain good  relations with its contractors and workforce in order to minimize the  possibility of strikes, lockouts and other stoppages at its work sites.   Relations between the Company and its employees may be impacted by changes in  legislation or labour relations that may be introduced by, among other  things, employee groups, unions, and the relevant governmental authorities in  those jurisdictions where the Company operates and may have a material adverse  effect on the Company’s business results of operations and financial  conditions. 

**Risks related to the construction, plant  expansion, zinc phase at Bisha, optimization of current process plant, and  start-up of new mining operations or mining phases.**  The success of  construction projects, plant expansions and their optimization, the  transition to primary production at Bisha or the start-up of new mines by the  Company is subject to a number of factors including the availability and  performance of qualified engineering and construction contractors, mining  contractors, suppliers and consultants, the receipt of required governmental  approvals and permits in connection with the construction of mining  facilities and the conduct of mining operations, including environmental  permits, price escalation on all components of construction, plant expansion,  transition to primary production or start-up of new mines, the underlying  characteristics, quality and unpredictability of the exact nature of  mineralogy and metallurgy of a deposit and the consequent accurate  understanding of doré or concentrate production, the successful completion  and operation of conveyors to move ore and other operational elements. Any  delay or deterioration in the performance of any one or more of the  contractors, suppliers, consultants or other persons on which the Company is  dependent in connection with its construction, expansion or transition  activities or start-up of new mines, a delay in or failure to receive the  required governmental approvals and permits in a timely manner or on  reasonable terms, or a delay in or failure in connection with the completion  and successful operation of facilities or other operational elements could  delay or prevent the successful transition to primary production at Bisha as  planned, or the start-up of new mines. There can be no assurance that current  or future construction projects, plant expansions, the transition to primary  production at Bisha as planned or the start-up of new mines by the Company will be successful.

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ANNUAL  INFORMATION FORM – December 31, 2016

**Infrastructure risk.**  Mining,  processing and development activities depend, to some degree, on adequate  infrastructure. Reliable roads, bridges, power sources and water supply are  important determinants that affect capital and operating costs.  Disruption  or curtailment of access to or maintenance of such infrastructure or supplies  whether it is due to inclement weather, wear and tear, or other reasons,  could have an adverse material impact on the Company’s ability to service and  operate its mines due to higher costs or business interruption. Unusual or  infrequent weather phenomena, sabotage, terrorist activities, government or  other interference in the maintenance or provision of such infrastructure  could adversely affect the Company’s operations and development activities, financialcondition and results of operations. 

**Transportation risk.**  Delivery to the  mine operation of required operating consumables and fuel as well as delivery  to the various smelters of mine-produced concentrates is most often subject  to third party contractors, be it land transport in country or sea freight to  and from the ocean port.  To a large extent there are many factors outside  the control of the Company, which can adversely affect the delivery of these  key commodities and consumables, or the export of these metal concentrates  ranging from elevated transport costs to significant delays or temporary  stoppage in product movement. The Company may be unable to achieve efficient transportation  logistics when seeking to move copper or zinc concentrate from the mine site  to port.  There remains a risk that the contractor will not be able to  transport the required volume of concentrate due to various factors such as  an inadequate number of trucks, poor maintenance of those trucks, or an  inadequate number of trained drivers available to operate the trucks.  In  addition, there may be difficulties in chartering marine bulk carriers into  Massawa in a timely manner to transport concentrate from the port of Massawa  to overseas customers.  There is also an ever-present risk of piracy with  respect to marine transport in and around the Gulf of Aden and the risk that  the port of Massawa could become inaccessible in the event of piracy,  military conflict or political unrest.  Any interruption in the delivery  chain from mine site to customers could both halt mine process plant  production due to limited storage capacity for concentrates (as well as risks  associated with build-up of concentrate stocks exposed to the elements)  leading to business interruption losses which could also breach the terms and  conditions of certain offtake agreements that may specify delivery of required  quantities of concentrate over pre-established time periods. These factors  could have a material impact on the Company’s results of operations and  financial condition.****

**Land title risk.**  The acquisition  of clear title to mineral properties is a very detailed and time-consuming  process. Title to, and the area of, mineral concessions may be disputed.   Although the Company believes that it has taken reasonable measures to ensure  receipt of proper title to its properties, there is no guarantee that title  to any one or more of its properties will not be challenged or impaired.   Third parties may have valid claims underlying portions of the Company’s  interests, including prior unregistered liens, agreements, transfers or  claims, including indigenous land claims, and title may be affected by, among  other things, undetected defects.  In addition, the Company may be unable to  operate its properties as permitted or to enforce its rights with respect toits properties while such title defects or claims are addressed.****

**Other Risks and  Uncertainties. **The  Company is subject to a number of other risks and uncertainties that could adversely  affect the Company’s business, financial condition and operating results and  its beliefs, plans and expectations about the future including, without  limitation, risks  that: (i) the Company becomes involved in any material disputes with any of  its key business partners, suppliers or customers; (ii) the Company is  subject to any adverse ruling in any of the pending litigation to which it is  a party; (iii) the Company incurs unanticipated power interruptions or  failures due to electrical circuit failures or inadequate fuel quality or continued  supply required to effectively operate power generators for the plant or  otherwise, the short supply or high cost of fuel and energy; (iv) fluctuating  trends in the supply and cost of parts or fuel can make planning our business  more difficult; or (v) unexpected costs or repairs to the plant; (vi) thetiming and success of improving the quality of

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ANNUAL  INFORMATION FORM – December 31, 2016

 the copper circuit product by  resolving metallurgical challenges from the variable ore materials being  processed to produce concentrate from the copper circuit; (vii) the  effect on Mineral Resource or Mineral Reserve  estimates due to the possible inability to  resolve the metallurgical challenges on the variable ore materials being  processed on a timely basis or at all; or (viii) the Company  experiences other challenges with copper mineralogy or host pyrite  minerals that impacts metallurgical recoveries and concentrate grades in the  transition zone. 

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