Item 4            Information on our Company

A.           History and Development of our Company

We were originally incorporated in British Columbia Canada under the Company Act (British Columbia) on January 17, 1983, under the name “Bren-Mar Resources Limited”, with an authorized capital of 50,000,000 Common Shares without par value. On March 15, 2000, we changed our name to “Bren-Mar Minerals Ltd.” to reflect our change in business to strictly exploration mining and consolidated our then issued and outstanding common shares on the basis of 1 post-consolidation common share for 5 pre-consolidation common shares, and we increased our post-consolidation authorized capital to 50,000,000 common shares. There were no changes in our directors or management. On November 22, 2000, we changed our name to “Canadian Metals Exploration Ltd.” to reflect the Company’s focus on mineral exploration in Canada, there were no changes in directors or management.

The Business Corporations Act (British Columbia) came into force on March 29, 2004, repealing the Company Act (British Columbia.) Our company now operates under the Business Corporations Act (British Columbia). On June 25, 2004, we changed our name to “Hard Creek Nickel Corporation” to reflect the primary type of mineral exploration the Company is engaged in, altered our authorized capital to comprise an unlimited number of common shares and an unlimited number of Class A preferred shares, and adopted our current Articles of Incorporation, which are attached as an exhibit to this form. The previous directors and management were replaced by Mark Jarvis as President and Director , Brian Fiddler as CFO, Leslie Young as Corporate Secretary, George Sookochoff as Director, Tom Milner as Director and Lyle Davis as Director.

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We have our head office and principal place of business at Suite 1060 – 1090 West Georgia Street, Vancouver, British Columbia V6E 3V7 Canada (Telephone: 604.681.2300) . We do not have an agent in the United States.

Our common shares are listed on the TSX Exchange under the symbol “HNC”.

Since inception, we have been engaged in natural resource exploration and development primarily in British Columbia and, since 1996, have focused on the Turnagain Property in the Liard Mining Division of northern British Columbia. We first acquired the mineral claims on the Turnagain Property in 1996 under an option agreement with John Schussler and Ernie Hatzl. The original option agreement gave us the right to earn a 100% interest in the mineral claims on the Turnagain Property in exchange for the issuance of 200,000 of our common shares and the expenditure of CAN$1,000,000 on exploration of the property within 5 years of acquisition. We have now earned the 100% interest and it is subject to a 4% net smelter royalty on possible future production. We have the right to pay out the net smelter royalty for CAN$1,000,000 for each 1% of the royalty. So, to pay out all 4% of the royalty, we would be required to pay CAN$4,000,000.

On April 25, 2001, we entered into an agreement with Northwest Petroleum Inc. of Bakersfield, California to acquire rights to two separate oil and gas projects located in the state of California, consisting of the Buttonwillow Oil and Gas Leases in Kern County, California and the Moffat Ranch Gas Field in Madera County, California. We subsequently determined in March of 2002 that the Buttonwillow oil and gas leases and the Moffat Ranch Gas Field gas project were not feasible. Accordingly, the agreement with Northwest Petroleum Inc. was terminated on March 21, 2002 and our investment of $143,717 was written off.

On November 28, 2002, we entered into an agreement with John Schussler and Ernie Hatzl to acquire an additional 34 mineral claims, adjacent to the Turnagain Property, Laird Mining Division, British Columbia, in exchange for an aggregate total of 100,000 common shares.

Between November, 2003 and March, 2005 we staked additional claims, enlarging the Turnagain property from 3,700 hectares to approximately 27,500 hectares. With claim conversions in April 2005 and November 2007, and additional staking in 2009 the Turnagain property now covers 33,220 hectares.

In April, 2004, we staked three claim blocks in northern British Columbia. The staked properties varied in size from 1,500 to 5,500 hectares and totaled 9,000 hectares and were located in northern British Columbia, between 20km west and 100km northwest of the Turnagain property. After preliminary site investigations it was decided that all of these properties did not warrant further work and subsequently these claims were allowed to lapse. They are no longer owned by the company.

In January and February, 2005 we acquired, by staking on-line, four additional claim blocks in central and northern British Columbia for a total area of approximately 27,140 hectares. Some reconnaissance prospecting was completed on the claims with no further work warranted. All of the claims were allowed to lapse and are no longer owned by the company.

In September, 2005 we acquired by staking on-line, one additional claim block of approximately 1,906 hectares located approximately 50km north of the Turnagain property. Some reconnaissance prospecting was completed on the claim with no further work warranted. The claim block was allowed to lapse and is no longer owned by the company.

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In March, 2006 we acquired by staking on-line, one additional claim block of approximately 4,489 hectares located approximately 130km southeast of the Turnagain property. Some reconnaissance prospecting was completed in the summer of 2006. It was determined that no further work was warranted and the claims were allowed to lapse in 2008. They are no longer owned by the company.

In May, 2006 we acquired by staking on-line, two additional claim blocks which are known as the Lime 1 and Lime 2 properties. They consist of approximately 1,133 hectares and are located approximately 15km and 35km west of the Turnagain property. Some reconnaissance prospecting was completed in the summer of 2006 with additional follow up work completed in 2008. Work was filed on the properties with the expiry date of the properties extended until September 30, 2010.

In July, 2006 we acquired by staking on-line, one additional claim block consisting of approximately 18,050 hectares located on the west side of Vancouver Island approximately 130km west of Campbell River, B.C. Some reconnaissance prospecting was completed in late 2006. It was determined that no further work was warranted and the claims were allowed to lapse in 2008. They are no longer owned by the company.

On October 11, 2006 we acquired by legal action, one additional claim block which is known as the Bobner property. It consists of approximately 150 hectares and is located approximately 8km west of the Turnagain property. Some reconnaissance prospecting was completed in the summer of 2008. An additional area of 305 hectares contiguous to the existing claim area was added by map staking in August 2008. Work was filed on the property with the expiry date of the properties extended until July 5, 2012.

On April 16, 2007 we acquired by staking on-line, one additional claim block consisting of approximately 1,971hectares located on the west side of Vancouver Island approximately 45km southwest of Gold River, B.C. Some reconnaissance prospecting was completed on the claim in 2008 with no further work warranted. The claim block was allowed to lapse and is no longer owned by the company.

On August 25, 2008 we acquired by staking on-line, a claim block known as the Dease Lime property located approximately 48km west of the Turnagain property. Additional on-line staking on July 13, 2009 was completed to increase the claim size to approximately 1069 hectares. Some reconnaissance prospecting was completed in the summer of 2009. Work was filed on the property with the expiry date of a portion of the property to March 1, 2012.

On November 20, 2009 we acquired by staking on-line, an additional claim block known as the Wheaton Lime property. It is located approximately 20km southwest of the Turnagain property and covers approximately 1360 hectares. Some reconnaissance prospecting is planned for the summer of 2010.

Present Operations of Our Company

Turnagain Property Project

Our current mineral exploration activities on the Turnagain Property include core drilling, geological mapping, geochemical surveying, downhole geophysical surveying , baseline environmental and engineering studies, and metallurgical testing. From 2001 to December 31, 2008, we have drilled 273 core holes for a total depth of 76,367m (250,548 feet). Approximate total exploration expenditure during this period was CAN$28,300,000.

As of December 31, 2009, we had approximately $1,900,000 in working capital, which is not sufficient to cover our operating costs for the next twelve months at $92,000 per month plus our anticipated 2010 exploration program of approximately $1,800,000. The anticipated shortfall of $1,000,000 was covered by the private placement announced in March 2010 which saw the Company issue 4,000,000 units at $0.25 per unit for gross proceeds of $1,000,000 as well as the May 2010 exercise of 2,109,461 share purchase warrants for proceeds of $632,838.

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B.            Business Overview

Nature of Operations and Principal Activities

We are in the mineral resource business. This business generally consists of three stages: exploration, development and production. We are a mineral resource company in the exploration stage because we have not yet found mineral resources in commercially exploitable quantities, and are engaged in exploring land in an effort to discover them. Mineral resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage.

Mineral resource exploration can consist of several stages. The earliest stage usually consists of the identification of a potential prospect through either the discovery of a mineralized showing on that property or as the result of a property being in proximity to another property on which exploitable resources have been identified, whether or not they are or have in the past been extracted.

After the identification of a property as a potential prospect, the next stage would usually be the acquisition of a right to explore the area for mineral resources. This can consist of the outright acquisition of the land or the acquisition of specific, but limited, rights to the land (e.g., a license, lease or concession). After acquisition, exploration would probably begin with a surface examination by a prospector or professional geologist with the aim of identifying areas of potential mineralization, followed by detailed geological sampling and mapping of this showing with possible geophysical and geochemical grid surveys to establish whether a known trend of mineralization continues underground, possibly trenching in these covered areas to allow sampling of the underlying rock. Exploration also commonly includes systematic regularly spaced drilling in order to determine the extent and grade of the mineralized system at depth and over a given area, as well as gaining underground access by ramping or shafting in order to obtain bulk samples that would allow one to determine the ability to recover various commodities from the rock. If minerals are found, exploration might culminate in a feasibility study to ascertain if the mining of the minerals would be economic. A feasibility study is a study that reaches a conclusion with respect to the economics of bringing a mineral resource to the production stage.

Our primary natural resource property is the Turnagain Property, located in the Liard Mining Division of northern British Columbia. We also own four very early stage, mineral properties in British Columbia. We have not identified the existence of any commercially viable mineral deposits at any of our mineral properties. We intend to conduct prospecting and sampling on the Wheaton Lime property in 2010.

It is unlikely that a commercially viable mineral deposit exists on any of our properties, and further exploration is required before we can evaluate whether any exist and, if so, whether it would be economically and legally feasible to develop or exploit those resources. Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit will constitute a reserve (a reserve is a commercially viable mineral deposit). Please refer to the section entitled “Risk Factors”, beginning on page 9 of this annual report, for additional information about the risks of mineral exploration.

Revenues

To date we have not generated any revenues from any of our properties.

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Principal Market

We do not currently have any market, as we have not yet identified any mineral resource on any of our properties that is of a commercially exploitable quantity. If we succeed in identifying a mineral resource in commercially exploitable quantities, our principal markets should consist of metals refineries and base metal traders and dealers.

Seasonality of our Business

Our mineral exploration activities are subject to seasonal variation due to the winter season in northern British Columbia. Field work is best carried out between mid-May and late-November when day time temperatures average 10 to 15 degrees Celsius. Our other operations, such as metallurgical review and analysis of geochemical survey results, can be carried out all year round.

Sources and Availability of Raw Materials

Other than a paved highway and the small community of Dease Lake, located 70km west of the Turnagain property, there is no infrastructure close to the Turnagain property. A small amount of hydroelectric power is generated near Dease Lake, to supply the town, but there is little excess capacity. The closest suitable source of hydroelectric power for mine development is the transmission line at Meziadin Junction, 300km south along the highway. If a mineral resource is found on our Turnagain property, power generation would be required.

Patents and Licenses; Industrial, Commercial and Financial Contracts; and New Manufacturing Processes

In conducting our business operations, we are not dependent on any patented or license processes, technology, industrial, commercial or financial contract or new manufacturing processes.

Competitive Conditions

We compete with other mining companies, some of which have greater financial resources and technical facilities, for the acquisition of mineral interests, as well as for the recruitment and retention of qualified employees. Exploration in British Columbia has experienced a dramatic revival in the past two years and increased activity is forecast for the future. We compete for qualified employees with Vancouver based companies, including Hunter Dickenson Inc., Equity Engineering and Ivanhoe Mines, and international mining companies, including Billiton-BHP, Rio Tinto and Anglo American.

Governmental Regulations

Mining operations are subject to a wide range of national and provincial government regulations such as restrictions on production, price controls, tax increases, expropriation of property, environmental protection, and protection of agricultural territory or changes in conditions under which minerals may be marketed. Mining operations may also be affected by claims of native peoples, any of which could have the effect of reducing or preventing us from exploiting any of our properties.

Mineral claims in British Columbia are of two types. Cell mineral claims are established by electronically selecting the desired land on government claim maps, where the available land is displayed as a grid pattern of open cells, each of approximately 450-500 hectares. Payment of the required recording fees is also conducted electronically. This process for claim staking has been in effect since January, 2005, and is now the only way to stake claims in British Columbia. Prior to January, 2005, legacy claims were staked by walking the perimeter of the desired ground and erecting and marking posts at prescribed intervals. Legacy claims, staked before January, 2005, remain valid and may be converted into cell claims.

Cell mineral claims may be kept in good standing by incurring assessment work or by paying cash-in-lieu of assessment work in the amount of CAN$4.00 per hectare per year during the first 3 years following the location of the mineral claims. This amount is increased to CAN$8.00 per hectare in the fourth and succeeding years.

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Legacy mineral claims in British Columbia may be kept in good standing by incurring assessment work or by paying cash-in-lieu of assessment work in the amount of $100 per mineral claim unit per year during the first three years following the location of the mineral claim. This amount increases to $200 per mineral claim unit in the fourth and succeeding years.

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the Province of British Columbia and in Canada generally. Under these laws, prior to production, we have the right to explore the property. We are required to file a “Notice of Work and Reclamation” with the British Columbia Ministry of Energy and Mines to conduct exploration works on mineral properties in British Columbia. To obtain a work permit, a company may be required to post a bond. In addition, the production of minerals in the Province of British Columbia requires prior regulatory approval.

Our mineral claims entitle our company to continue exploration activities on our properties, subject to our compliance with various Canadian federal and provincial laws governing land use, the protection of the environment and related matters.

If we locate a commercially viable mineral resource on any of our properties, we would be required to conduct extensive community consultations in northern British Columbia with both Aboriginal and non- Aboriginal groups, environmental surveys both on the property and along transportation corridors. We also would be required to develop a mining plan and a mine closure plan. These surveys and plans would be combined into a comprehensive Environmental Impact Statement and submitted to the British Columbia government for review and approval. Any development or exploitation of such a mineral resource would be subject to Canadian federal and provincial laws governing land use, protection of the environment, occupational health, waste disposal, toxic substances, mine safety and other matters. We had no material costs related to compliance and/or permits in recent years, and anticipate no material costs in the next year.

We will have to sustain the cost of reclamation and environmental mediation for all exploration work undertaken. The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the recommended work programs. The Company has posted $187,900 in total reclamation bonds towards the reclamation of existing exploration drill sites and access roads on the Turnagain property. Permits and regulations will control all aspects of any production program if the project continues to that stage because of the potential impact on the environment.

Our operations are subject to environmental regulations promulgated by various levels of governments and their agencies. Existing 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 from disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. Prior to conducting exploration involving surface disturbance in British Columbia, we are required to obtain a Work Permit from the Ministry of Energy, Mines and Petroleum Resources. So far, we have obtained the permits we needed to conduct our exploration program but if we are unable to obtain the permits that we require in the future, we will have to cease the exploration activity in question. Ceasing such exploration activities could reduce our chances of ever discovering mineral resources on our properties.

Where significant surface disturbance through road building and drill site preparation is planned, the Ministry of Energy, Mines and Petroleum Resources require a Reclamation Bond to cover the estimated reclamation costs if we fail to complete the reclamation. From 1996 to present, we have posted $187,900 in total reclamation bonds with the Ministry of Energy, Mines and Petroleum Resources.

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We are not aware of any existing environmental liability associated with any of our exploration properties but if such liability should arise, we may have to pay a lot of money to fix it or pay compensation, which would reduce the amount of money we have to spend on exploration and could possibly cause us to go out of business. Our potential exposure to liability for environmental damage is very high and we have no reserves established to pay for such liability. If we are found to be liable for a large amount of environmental damage, we will likely have to cease operations.

C.           Organizational Structure

We have one wholly-owned subsidiary, Canadian Metals Exploration Ltd., incorporated under the Canada Business Corporation Act (Canada) on July 14, 2004. This wholly-owned subsidiary is currently inactive. The Company is currently looking at other property acquisitions in Canada but outside the Province of British Columbia. Hard Creek Nickel Corporation is incorporated in the Province of British Columbia only and is not registered to do business outside this province. Canadian Metals Exploration Ltd. is incorporated nationally across Canada and is registered to do business in each province. If the Company were to acquire exploration properties outside British Columbia but still in Canada, these properties would be registered in the subsidiary Canadian Metals Exploration Ltd.

D.           Property, Plant and Equipment

This section summarizes the assets of the company including its executive office in Vancouver, B.C., sample storage warehouse near Vancouver and its most important assets, mineral exploration properties.

The company has 100% interest in a number of mineral exploration properties located in British Columbia, of which the Turnagain is presently considered the most significant and is described below. The Bobner, Dease Lime, Lime, Lime 2 and Wheaton Lime are believed to contain favorable geology. We intend to conduct some prospecting and sampling on the Turnagain and the Wheaton Lime properties in 2010.

Our executive office is located at 1060 – 1090 West Georgia Street, Vancouver, British Columbia V6E 3V7, Canada. The Company leases the 2,500 square feet of space for $48,880 per year and the lease expires on September 30, 2011. This space accommodates all of our executive and administrative offices. We believe that this existing space is adequate for our current needs. Should we require additional space, we believe that such space can be secured on commercially reasonable terms.

The company has recently rented a warehouse near Vancouver in which to store drill core samples and to prepare composite samples for metallurgical testwork. We have also installed a walk-in freezer in this space and are storing samples presently within the freezer to limit the possible oxidation of select samples which may be used in future metallurgical testwork. This facility rents for $1,800 per month on a six-month renewable lease. The cost to run the freezer is $95 per month. Additional warehouse space was added to the original rented space in 2007 and more space is still available if required. We own office, vehicle, and exploration equipment with a cost of approximately $139,000 located at our Vancouver Office and the Turnagain camp. We lease a photocopier at the rate of $700 per three months. Satellite internet and telephone service at our Turnagain camp costs $150 per month.

Our main mineral property the Turnagain is described more fully below:

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The Turnagain Property

This section provides a summary of the geology and exploration activities on the Turnagain Property. The technical information regarding the Turnagain Property included in this section is based, in large part, on four technical reports:

1) Report on the 2003 Exploration Program, Turnagain Nickel Property, dated April 21, 2004, prepared by N. C. Carter Ph.D., P.Eng, in compliance with the requirements of National Instrument 43-101 and Form 43-101F1.

2) Preliminary Assessment on the Turnagain Property dated September 25, 2007 prepared by Tony Lipiec, P.Eng., Gerrit Vos, P. Eng. and Greg Kulla, P. Geo. of AMEC Americas Limited in conjunction with Ronald Simpson, P.Geo, in compliance with the requirements of National Instrument 43-101 and Form 43-101F1 as adopted by the British Columbia Securities Commission.

3) Technical Report and Mineral Resource Estimate prepared by Ronald G. Simpson, P.Geo, dated March 29, 2007, and prepared in compliance with the requirements of National Instrument 43-101 and Form 43-101F1 as adopted by the British Columbia Securities Commission.

4) Preliminary Assessment on the Turnagain Property dated April 7, 2010 prepared by Karla Mills, P.Eng., Andre de Ruijter, P.Eng., Peter Wells, SAIMM, Guy Impey, P.Eng.,of Wardrop, a Tetra tech Company in conjunction with Alan Lathwood, Pr.Eng., Robert Fong, P.Eng., Ronald Simpson, P.Geo., Daniel Friedman, P.Eng., Neil Brazier, P.Eng., John Reid, AusIMM, and David Dreisinger, Ph.D., P.Eng. in compliance with the requirements of National Instrument 43-101 and Form 43-101F1 as adopted by the British Columbia Securities

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The Technical Reports were used as supporting documentation and were filed with the British Columbia Securities Commission, the United States Securities and Exchange Commission and the TSX Venture Exchange. Dr. Carter, Tony Lipiec, Gerrit Vos, Greg Kulla, Ronald Simpson, Karla Mills, Andre de Ruijter, Peter Wells, Guy Impey, Alan Lathwood, Robert Fong, Daniel Friedman, Neil Brazier, John Reid, and Dr. Dreisinger are “qualified persons” as the term is defined under National Instrument 43-101.

Exploration data collected during the 2003 to 2009 exploration programs was done under the supervision of Neil Froc, P. Eng., and Tony Hitchins, M.Sc., all employees of Hard Creek Nickel Corporation.

Location and Accessibility

The Turnagain Property consists of 65 neighboring mineral claims situated in the Liard Mining Division of northern British Columbia, 70 km east of Dease Lake and 1350 km north-northwest of Vancouver. Please see the above map to see where the property is located in the province of British Columbia, Canada. The mineral claims collectively cover an area of 33,220 hectares. The Turnagain Property is situated in the Stikine Ranges of the Cassiar Mountains. Elevations range from about 1,000 meters above sea level along the Turnagain River, in the central claim area, to 2,200 meters at an unnamed summit in the north central property area.

The Turnagain Property straddles the Turnagain River near where it joins Hard Creek. The community of Dease Lake, on Highway #37 some 400 km north of the port of Stewart, is 70 km west of the property. Helicopter access from Dease Lake involves a 20 minute flight. A secondary road extending easterly from Dease Lake has been used by large, articulated 4-wheel drive vehicles to convey large jade boulders from the Kutcho Creek area and to supply placer gold operations at Wheaton Creek over the past number of years. A branch of this road network extends into the Turnagain Property with road distance to Dease Lake of about 100 km.

A dirt airstrip, measuring approximately 930 meters long, constructed in the 1960s, and upgraded in early 2007, is situated within the claims on the northwest side of the Turnagain River and can accommodate small fixed wing aircraft. This airstrip is immediately adjacent to our current camp facility and core storage. Previous exploration programs have made use of camp facilities at Wheaton Creek (Boulder), which is about 15 km by road west of the Turnagain Property.

Three times a week, Dease Lake has scheduled airline service and offers some supplies and services. The communities of Terrace and Smithers, both several hundred km south, offer a range of services and supplies which can be trucked to Dease Lake via Highway #37.

The area between Dease Lake and the Turnagain Property features maturely dissected mountains rising to elevations of between 2,000 and 2,425 meters above sea level and separated by wide, drift-filled valleys in which elevations average 1,000 meters. Forest cover, present in valley areas, is replaced by typical alpine flora above 1500 meters. Bedrock is reasonably well exposed in the areas above tree line and along drainages.

Description of Claims

Our Turnagain Property consists of 65 neighboring mineral claims. Hard Creek Nickel Corporation owns a 100% interest in all of these mineral claims subject to a 4% net smelter royalty on possible future production on one mineral claim (Tenure No. 511330 formerly the “Cub” claim). We retain the right to purchase all or part of the net smelter royalty for CAN $1,000,000 per 1%. The following table summarizes the claim name, size, and expiry date for the 65 claims in the Turnagain property as of June 28, 2010.

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The following table shows details relating to Hard Creek Nickel Corporation’s Turnagain claims and the expiry dates of those claims:

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The four cell claims from Tenure 570454 to 570457 in the list with an issue date of November 22, 2007 indicates a group of claims once held in trust by the Supreme Court of British Columbia. In February 2004, we filed an action in the Supreme Court of British Columbia against Mr. Wolf Wiese, a former consultant to our company. The action sought the transfer to our company of claims neighboring the Turnagain property, which were staked in the name of Mr. Wiese. We believed that these claims should have been staked in the name of the Company. On July 10, 2006 the Supreme Court of British Columbia ordered that the claims be transferred to our company. The transfer of ownership was completed on October 11, 2006. Mr. Wiese has subsequently filed a Notice of Appeal of the Order. The appeal was heard and dismissed on April 30, 2007 in the British Columbia Court of Appeals with costs payable to the Company.

The following figure shows the claims for the Turnagain property listed above.

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Exploration History

Nickel and copper sulphides were discovered within the current Turnagain property area in a bedrock exposure along the Turnagain River in 1956. Mineral claims covering the area where these sulphides were found as well as other traces of sulphides were acquired by Falconbridge Nickel Mines Limited in 1966.

Falconbridge Nickel Mines Limited also completed work over the following seven years, including surface and airborne geophysical surveys, geological mapping, geochemical surveys and 2895 meters of conventional and packsack diamond drilling in 40 widely spaced drill holes.

Our Turnagain Property represents a unique style of sulphide mineralization associated with a zoned, ultramafic complex (a suite of rocks high in iron and magnesium but low in silica.) Iron and nickel sulphides are widespread in dunite (ultramafic rock comprising more than 90% olivine) and wehrlite (ultramafic rock comprising less than 90% olivine and >10% pyroxene) near dunite-wehrlite contacts. Exploration on the Turnagain Property between 1967 and 2002 was sporadic and was concentrated in the Horsetrail area or near other small exposures of net-textured sulphides. We acquired the property in 1996.

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Work Completed by the Registrant

We acquired the Turnagain River property in 1996 and our exploration work that year included 400 line km of airborne magnetic surveys and 795.5 meters of diamond drilling in 5 holes. Additional diamond drilling completed by our company in 1997 and 1998 amounted to 3,123 meters in 14 holes. Related work included 18 line km of surface magnetic surveys covering two areas of the property, bore hole pulse-electromagnetic surveys in four of the 1997-1998 drill holes and preliminary metallurgical test work on drill core composites.

In 2002, we performed ground magnetic and Induced Polarization geophysical surveys over part of the claim area and completed 1,687 meters of diamond drilling in 7 holes. Exploratory work in 2003 included geological mapping and prospecting with bedrock, stream sediment and limited soil sampling and 8,669 meters of diamond drilling in 22 holes, including the deepening of one hole started in 2002. Preliminary metallurgical test work was conducted on composite 2002-2003 core samples.

In 2004, we conducted a comprehensive exploration program that included a helicopter borne magnetic and electromagnetic survey covering 1,866 line km, 14 km of ground magnetic and electromagnetic surveys, 1:20,000 scale aerial photography of the entire property, the collection of more than 3,000 geochemical soil samples, geological mapping, and 7522 meters of diamond drilling in 49 holes. We analyzed the approximately 4,000 core samples for 30 elements including nickel, copper, cobalt, sulphur and often platinum and palladium. Extensive metallurgical test work has been completed on 2003-2004 composite core samples and is in progress on 2005-2006 composite core samples.

Our 2005 exploration program consisted of geological mapping, bedrock and soil sampling, and 7,143 meters of diamond drilling in 37 holes. We also undertook various mineralogical, environmental baseline surveys, engineering, metallurgical and analytical studies on the property.

Our 2006 exploration program was completed by early November and included 19,111 meters of diamond drilling in 68 holes, surface mapping and sampling in several areas and continuation of fish habitat surveys and water sampling. Metallurgical testwork on composite samples from our 2005 and 2006 drill core was also completed during 2007.

Our 2007 exploration program was completed by early November and included 24,325 meters of diamond drilling in 72 holes, surface mapping and sampling in several areas and continuation of fish habitat surveys and water sampling. Metallurgical testwork was directed towards further definition of the reagent scheme and nickel flotation kinetics for future pilot plant testing.

Our 2008 exploration program was completed by early September and included 4,105 meters of diamond drilling in 15 holes, surface mapping and sampling in several areas and continuation of fish habitat surveys and water sampling. Metallurgical testwork continued towards further definition of the reagent scheme and nickel flotation kinetics for future pilot plant testing.

In 2009 we developed an extensive electronic relational drill hole database, initiated metal leaching tests on site, and continued with baseline water sampling. Metallurgical testwork continued towards further definition of the reagent scheme and nickel flotation kinetics for future pilot plant testing. A small pilot plant test was conducted and a range of concentrates collected to develop potential hydrometallurgical refining processes. These concentrates were used for completion of amenability testing of the Activox® process in Perth Australia and the Outotec Nickel Chloride Leach in Pori Finland.

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Present Condition of the Property

No mining operations have taken place on the property. Diamond drill casings have been left in place and the locations of the bore holes marked with labeled fence posts. There are approximately 32 km of unpaved roads and trails on the property, constructed from the late 1960s to the present. Reclamation work has been and will be performed on disused roads.

A camp, consisting of 17 wall tents, 3 trailers and drill core storage facilities, capable of accommodating approximately 30 people, has been constructed. A 930 meter unpaved air strip is adjacent to the camp. Power is provided by an on-site diesel generator.

The property is without known reserves and our proposed work program is exploratory in nature.

Mineralization

A number of mineral showings, located during early exploration on the Turnagain property, consist of scattered to semi-massive (15-30%) magmatic pyrrhotite (a common iron sulphide mineral) with minor pentlandite (an iron and nickel sulphide mineral) in altered ultramafic rock, which is rock rich in iron and magnesium, low in silica and modified by hot, water-rich fluids. Extensive drilling in the Horsetrail Zone on the Turnagain property during the 2002-2008 period has outlined broad zones of disseminated to intercumulus (between silicate grains) sulphide mineralization near the gradual transition from dunite to wehrlite. Textures observed in surface exposures and drill core samples suggest that both the sulphide and silicate minerals settled, under the influence of gravity, from a hot, liquid magma, originally located several miles beneath the earth’s surface.

Within the broad zone of disseminated intercumulus mineralization, which cmprises sulphide grains located between silicate minerals in the Horsetrail area, the sulphide grains range in size from 0.5mm to 5mm with curved contacts against oval olivine grains. Pyrrhotite is the most abundant sulphide, but usually encloses conspicuous pentlandite crystals (nickel-iron-sulphur mineral), especially in the higher grade intervals. Chalcopyrite (copper-iron sulphide), when present, is often along the margins of the pyrrhotite and has on been found during our exploration of the property] as minute streaks extending away from the sulphide grain. We have also identified trace to minor quantities of bornite (another copper-iron sulphide), native copper, valleriite, mackinawite, smythite (complex iron-nickel-cobalt-copper sulphide minerals), and several unnamed Ni-Fe-Cu-Co sulphides in metallurgical concentrates in our exploration of the property.

The Horsetrail Zone is the most significant zone of nickel sulphide mineralization on the property. The exploration drilling that we conducted between 2002 and the end of 2008 has expanded the area of mineralization from the original surface showing of weathering sulphides, to encompass an area 1.8km long by 0.8km wide. The mineralization in the Horsetrail Zone is made up of several northwest to west-northwest striking zones averaging greater than 0.25% sulphide nickel separated by intervals of lower grade nickel sulphide mineralization. Because of the results of our exploration on the property, we believe that mineralization in the Horsetrail Zone dips steeply to the north. We have intersected the mineralization 300m below the surface.

Our exploration drilling has intersected nickel sulphide mineralization in several other areas, located within a kilometre of the Horsetrail Zone. Additional drilling is necessary to determine extent and significance of these mineralized areas. However, since the mineralization and host rocks in the Horsetrail and at least one of the other areas are very similar in appearance and composition, we believe that additional drilling will establish that the Horsetrail nickel sulphide mineralization is connected to the nickel sulphide mineralization in at least one of the other areas (the Hatzl Zone).

In the Horsetrail Zone, we have found evidence of low-grade nickel near the surface, which could likely be mined using open-pit mining. Also, a number of our drilling samples indicate the possibility that there are higher grade zones farther down (0.4% to 1.0% nickel).

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Platinum and palladium mineralization has been intersected in several drill holes in the D.J. Zone, located on the Turnagain property approximately three km northwest of the Horsetrail Zone. This mineralization is usually found in a light to medium green colored rock composed dominantly of pyroxene (calcium-magnesium silicate) crystals with variable amounts of magnetite and minor sulphide grains.

Textural and analytical data suggest an interpreted location near the roof of the original ultramafic intrusion. Platinum and palladium values in drill holes include 2407 parts per billion over 2 meters in hole 04-59, 1645 parts per billion over 2.15 meters in hole 04-44, 1530 parts per billion over 13 meters in hole 05-88 and 2320 parts per billion over 2 meters in hole 05-101. Preliminary analysis has identified minor arsenic and antimony in association with platinum and palladium, respectively, but it is not clear whether the mineralization is dominantly derived directly from magma or the result of a post-crystallization hydrothermal (involving water rich fluid) event.

Environmental Surveys

Since the timely collection of long lead-time baseline data on the Turnagain property, such as meteorological, hydrological, water quality, and wildlife, is important to the environmental permitting process, we initiated collection of water quality data and wildlife observations in 2003. The program was expanded in 2004 to 2009 period to include hydrological measurements on Hard Creek, Faulkner Creek, Flat Creek and Turnagain River, ground water quality in the Horsetrail Zone and meteorological data (temperature, precipitation, evaporation, wind speed and direction). A preliminary study to determine the presence and species of fish in the Turnagain River and tributaries of Hard Creek was conducted in 2004 and expanded in 2006. A detailed fish habitat study of Hard Creek and Hard Lake was completed in 2007.

Although the primary purpose of a geochemical soil survey that we conducted in 2003 was to locate mineralization, it also provided information on background levels of 38 elements in the soil, over the ultramafic complex, prior to any significant future surface disturbance. Our collection of water quality, hydrological, meteorological, and wildlife data on the Turnagain property will continue throughout the exploration phase, including the next twelve months.

Metallurgical Test Work

Metallurgical test work has been an integral part of our Turnagain property exploration programs; primarily to address the feasibility of producing an acceptable nickel sulphide concentrate from low grade mineralization where much of the nickel was thought to be locked in the olivine crystals and thus unavailable for economic recovery. Between 1998 and 2005 approximately 33 drill core composite samples and subjected them to a series of preliminary metallurgical studies to establish the process response of the nickel and cobalt, mineralization. Mineral process testing included conventional froth flotation and some scoping work for gravity and magnetic separation techniques. The metallurgical studies were conducted by recognized, independent testing laboratories, including Lakefield Research, of Lakefield, Ontario; Process Research Associates Ltd., of Vancouver, British Columbia; Billiton Process Research, in South Africa; and Cominco Engineering Services Ltd. (CESL), in Vancouver. All test work by Hard Creek Nickel Corp. and predecessor companies was supervised by consulting metallurgist and former Company Director, Frank Wright, P. Eng up until October 2007.

Since October 2007 to the present John Hoffert, P.Eng. a consulting metallurgical engineer with Hoffert Processing Services (HPS) has been contracted as the Turnagain Project Manager and is supervising all metallurgical and mill process design work. Completed testwork includes;

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Jim Gulyas, P.Eng. of AMEC Americas Limited of Vancouver, B.C. was contracted in November 2008 to provide an overview of the hydrometallurgical plant options available to the Company to extract nickel and cobalt from the Turnagain concentrate. As a result of the overview the Company entered into an agreement in January 2009 with Norilsk Processing Technology Pty. Ltd. to determine the viability of the Activox® Process on Turnagain concentrate. This work was completed by Western Minerals Technology Pty. Ltd. in Perth Australia in 2009.

A second hydrometallurgical plant option utilizing the Outotec Nickel Chloride Leach process was also identified and tested at Pori, Finland in 2009.

Metallurgical testwork continues towards refining the parameters necessary for projecting actual mill performance suitable for producing a marketable concentrate or a concentrate for hydrometallurgical plant feed. This work is being managed and supervised under the direction of Mr. John Hoffert, P.Eng. (HPS).

The program is directed primarily on refining the process parameters necessary for projecting actual mill performance, determining the viability of producing a marketable concentrate, and establishing solid First Nations relationships.