President’s Letter to Shareholders

With the recent completion of a Preliminary Assessment (PA) of the Horsetrail Deposit, prepared by AMEC Americas Limited (AMEC), one of the top three international mine engineering design firms, your Company achieved a critical milestone in the development of its' core asset, the Turnagain Project. The PA involves an engineering assessment at the scoping level and includes a financial analysis of the deposit. The full report is available at www.hardcreeknickel.com.

The study supports our belief in the Turnagain project. A 50,000 tonne per day milling operation is modeled with a 17 year mine life that would produce a total of 833 million pounds of nickel, 57 million pounds of cobalt and 85 million pounds of copper over the life of the mine. Current pricing for equipment, steel, cement, energy, labour and other inputs were used in the model, while nickel is priced at historical levels. With the base case cut-off grade of 0.095% sulfide nickel, the measured and indicated resource is estimated at 184 million tonnes grading 0.17% sulfide nickel. An additional inferred resource is estimated at 286 million tonnes grading 0.16% sulfide nickel. Depreciated net present value (NPV) is the metric most commonly used to value future cash flow streams. The discount rate is usually chosen to reflect risk, so a higher discount rate is used to evaluate deposits located in politically risky countries, while a lower rate is selected if the deposit is in a safer jurisdiction. The concept is similar to bond investors being happy with a lower rate of interest for Canadian bonds but demanding a higher rate of interest for, say, Venezuelan bonds. What does this table mean for shareholders? It means that your shares are undervalued and remarkably leveraged to the price of nickel. The Horsetrail Nickel deposit, as it currently stands, would not be attractive to develop if nickel was at its 15 year trailing average price of $4.45 per pound. At a five year trailing average price of $5.32 per pound, the project becomes positive and at a three year average of $6.60 per pound, well, just look at those numbers. Looking at a base case 10% discount rate, which is conservative for a Canadian asset, the Horsetrail deposit has a negative value with nickel at $4.45, has a value of $109 million with nickel at $5.32, and is valued at $595 million at a nickel price of $6.60. Today the price of nickel is in excess of $10.00 per pound. With our current stock price of Cdn.$0.70 and total market capitalization of approximately Cdn.$30 million, I can't think of any financial instrument more geared to the price of nickel than shares of our Company. Hard Creek Nickel Corporation There is room for improvement on two fronts. One is to refine the engineering of the Horsetrail deposit. For example, AMEC assumed a two year mine construction schedule. If that schedule could be compressed so that negative cash flow turns to positive cash flow sooner, that would have an impact on both NPV and Rate of Return. Grade control optimization could also be further improved. The other front is exploration. The Horsetrail deposit occupies about 10 -15% of the area considered prospective for sulphide nickel mineralization within the Turnagain ultramafic intrusive. Most of the mineralized body remains undrilled.

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