Galleon Gold (PNCKF) 20-F/A 2010 FY Annual report (foreign) (amended)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F/A

Amendment No. 1

[  ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 30, 2010

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _________________ to ___________________

OR

[  ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:Not Applicable

Commission file number:000-25489

Pure Nickel Inc.
(Exact name of Registrant as specified in its charter)

Canada
(Jurisdiction of incorporation or organization)

Suite 900 – 95 Wellington St. West, Toronto, Ontario Canada, M5J 2N7
(Address of principal executive offices)

Jeffrey D. Sherman, 416.644.0066, Chief Financial Officer, info@purenickel.com,
Suite 900 – 95Wellington St. West, Toronto, Ontario Canada, M5J 2N7
(Name, Telephone, E-mail and/ or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:None

Securities registered or to be registered pursuant to Section 12(g) of the Act:Common Shares, without par value

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None

Number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:67,832,226

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ]  No  [X]

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

Yes [  ]  No [X]

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]  No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one): 

Large accelerated filer [  ] Accelerated filer [  ]  Non-accelerated filer [X]

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP [  ] International Financial Reporting Standards [  ] Other  [X]

Indicate by check mark which financial statement item the registrant has elected to follow

Item 17 [X]            Item 18 [  ]

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]  No [X]

EXPLANATORY NOTE

This Amendment No. 1 to our Annual Report on Form 20-F for the year ended November 30, 2010, or Amendment No. 1, amends our Annual Report on Form 20-F for the year ended November 30, 2010 initially filed with the United States Securities and Exchange Commission, on February 17, 2011, or the Originally Filed 20-F. Amendment No. 1 is being filed for the sole purpose of including the Financial Statements referred to in Item 17, which were inadvertently not included in the Originally Filed 20-F.

Other than the foregoing items, no part of the Originally Filed 20-F is being amended. Amendment No. 1 does not reflect events occurring after the filing of the Originally Filed 20-F and does not modify or update the disclosures therein in any way other than as required to reflect the amendments described above.
 

1

TABLE OF CONTENTS

SPECIAL INFORMATION		3
NOTE REGARDING FORWARD-LOOKING STATEMENTS		8
PART I		9
ITEM 1.	Identity of Directors, Senior Management and Advisors	9
ITEM 2.	Offer Statistics and Expected Timetable	9
ITEM 3.	Key Information	9
ITEM 4.	Information on the Company	17
ITEM 4A.	Unresolved Staff Comments	31
ITEM 5.	Operating and Financial Review and Prospects	32
ITEM 6.	Directors, Senior Management and Employees	37
ITEM 7.	Major Shareholders and Related Party Transactions	50
ITEM 8.	Financial Information	51
ITEM 9.	Offer and Listing Details	52
ITEM 10.	Additional Information	53
ITEM 11.	Quantitative and Qualitative Disclosures about Market Risk	61
ITEM 12.	Description of Securities other than Equity Securities	62
PART II		62
ITEM 13.	Defaults, Dividend Arrearages and Delinquencies	62
ITEM 14.	Material Modifications to the Rights of Securities Holders and Use of Proceeds	62
ITEM 15T.	Controls and Procedures	62
ITEM 16A.	Audit Committee Financial Expert	63
ITEM 16B.	Code of Ethics	63
ITEM 16C.	Principal Accountant Fees and Services	64
ITEM 16D.	Exemptions from the Listing Standards for Audit Committees	64
ITEM 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	64
ITEM 16F.	Change in Registrant’s Certifying Accountant	64
ITEM 16G.	Corporate Governance	64
PART III		64
ITEM 17.	Financial Statements	64
ITEM 18.	Financial Statements	64
ITEM 19.	Exhibits	65

2

SPECIAL INFORMATION

Glossary of Technical Terms

AeroTEM	Helicopter-borne Time Domain Electromagnetic System: a helicopter-borne electromagnetic system used to identify potential deposits based upon conductive properties.
BHEM	Bore Hole Electro Magnetic: an imaging system that involves placing a transmitter and receiver in a borehole, and the underlying geological structure is viewed by a process similar to medical tomographic imaging. This creates an image of the structure from a series of flat cross-sectional images.
breccia	A rock in which angular fragments are surrounded by a mass of finer-grained material.
chalcopyrite	A sulphide mineral of copper and iron; the most common ore mineral of copper.
concentrate	A fine, powdery product of the milling process containing a high percentage of valuable metal.
diamond drill(ing)	A rotary type of rock drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water or other fluid is pumped to the cutting face as a lubricant. The drill cuts a core of rock that is recovered in long cylindrical sections, two centimeters or more in diameter.
disseminated	Ore carrying small particles of valuable minerals spread more or less uniformly through the host rock.
exploration stage	The search for mineral deposits which are not in either the development or production stage.
fault	A break in the Earth’s crust caused by tectonic forces which have moved the rock on one side with respect to the other. Faults may extend many kilometers, or be only a few centimeters in length. Similarly, the movement or displacement along the fault may vary widely.
fracture	A break in the rock, the opening of which affords the opportunity for entry of mineral-bearing solution. A ‘cross fracture’ is a minor break extending at more- or-less right angles to the direction of the principal fracture.
form 43-101	Technical report issued pursuant to Canadian security rules, the objective of which is to provide a summary of scientific and technical information concerning mineral exploration, development and production activities on a mineral property that is material to an issuer. The Form 43-101F1 is prepared in accordance with the National Instrument 43-101 Standards of Disclosure for Mineral Projects. The 43-101 form sets out specific requirements for the preparation and contents of a technical report.
feasibility study	An economic study assessing whether a mineral deposit can be mined profitably, by estimating costs of a mine and the potential revenues from production.
grade	The metal content of rock with precious metals. Grade can be expressed as troy ounces or grams per tonne of rock.
hectare	A metric unit of area measurement equivalent to 10,000m²
hydrothermal	Relating to hot fluids circulating in the earth’s crust.
igneous	A type of rock which has been formed from magma, a molten substance from the earth’s core.
intrusion	A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded upon the surface.
mafic	Igneous rock composed mostly of dark, iron and magnesium-rich minerals.
metasedimentary	Originally sedimentary rocks which have been subsequently affected by the process of metamorphism
metamorphic	A type of rock which, through heat and pressure, has been changed from igneous or sedimentary rock.

3

mineral reserve National Instrument 43-101Standards of Disclosure for Mineral Projectsof the Canadian Securities Administrators, adopting the definition of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), defines a ‘mineral reserve’ as the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study (a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method has been established and an effective method of mineral processing has been determined and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, economic, social, and environmental factors and the evaluation of other relevant factors which are sufficient for a Qualified Person (an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and the technical report; and is a member or licensee in good standing of a professional association), acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve). 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 Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve. (1)Probable Mineral Reserve.A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, 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. (2)Proven Mineral Reserve.A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

4

mineral resource	National Instrument 43-101Standards of Disclosure for Mineral Projectsof the Canadian Securities Administrators, adopting the definition of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), defines a ‘Mineral Resource’ as 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. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource. (1)Inferred Mineral Resource.An ‘Inferred Mineral Resource’ is 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. (2)Indicated Mineral Resource.An ‘Indicated Mineral Resource’ is 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. (3)Measured Mineral Resource.A ‘Measured Mineral Resource’ is 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.
Net Smelter Royalty (NSR)	A Net Smelter Returns Royalty has been generically described as follows: “A royalty calculated on the net smelter return is essentially calculated on the amount received by the mine or mill owner from the sale of the mineral product to the treatment plant that converts the output of the mill to marketable metal. From the gross proceeds received there may be deductions for costs incurred by the owner after the product leaves the mine property and before sale, such as the costs of: transportation, insurance or security, penalties, sampling and assaying, refining and smelting, and marketing. No deductions are made for the operating costs of the mine-mill complex.” (B.J. Barton,Canadian Law of Mining (Calgary: Institute of Resources Law, 1993) at 461.)
ore	A mixture of minerals and host rock from which at least one metal can be extracted at a profit.
open pit	A mining method whereby the mineral reserves are accessed from surface by the successive removal of layers of material usually creating a large pit at the surface of the earth.
patent	The ultimate stage of holding a mineral claim, after which no more assessment work is necessary because all mineral rights have been earned.

5

pegmatite	A coarse-grained, igneous rock, generally coarse, but irregular in texture, and similar to granite in composition; usually occurs in dykes or veins and sometimes contains valuable minerals.
pentlandite	Nickel iron sulphide, the most common nickel ore.
petrology	A field of geology which focuses on the study of rocks and the conditions by which they form. There are three branches of petrology, corresponding to the three types of rocks: igneous, metamorphic, and sedimentary.
PGE	Platinum Group Elements include platinum, palladium, rhodium, iridium, osmium, and ruthenium. They commonly occur together in nature and are among the most scarce of the metallic elements.
pre-feasibility study	A comprehensive study of the viability of mineral project that has advanced to a stage where the mining methods, in the case of underground mining, or the pit configurations, in the case of an open pit, has been established, where effective methods of mineral processing have been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, and economic factors and evaluation of other relevant factors which are sufficient or a Qualified Person acting reasonably, to determine if all or part of the Mineral Resources may be classified as a Mineral Reserve.
probable reserve	Valuable mineralization not sampled enough to be termed “proven”.
prospect	(noun) The possibility of future success for economic minerals based on geological, geophysical, geochemical and other criteria. or (verb) To search for or explore (a region) for mineral deposits or oil.
production stage	All companies engaged in the exploitation of a mineral deposit (reserve).
qualified person	An individual who is an engineer or geoscientist with at least five years experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and the Technical Report; and is a member or licensee in good standing of a professional association.
reserve	A known resource that can be exploited for profit with available technology under existing political and economic conditions.
royalty	An amount of money paid at regular intervals, or based on production, by the lessee or operator of an exploration or mining property to the current or former owner of the mineral interests. Generally based on a certain amount per unit weight or a percentage of the total production, revenues or profits. A ‘net smelter royalty’ is a type of royalty based on a percentage of the proceeds, net of smelting, refining and transportation cost and penalties, from the sale of the metals extracted from products by the smelter or refinery.
sedimentary	A type of rock which has been created by the deposition of solids from a liquid.
serpentine	A greenish, metamorphic mineral consisting of magnesium silicate.
shear	The deformation of rocks by lateral movement along innumerable parallel planes, generally resulting from pressure and producing such metamorphic structures as cleavage and schistosity.
strike	The direction, or bearing, from true north of a vein or rock formation measured on a horizontal surface.
sulphide	A compound of sulphur and some other element; most base-metal ore minerals are sulphides.
tonne	Metric ton, equal to 2,205 pounds.
ultramafic	A term used to describe igneous rock or magmas that are rich in iron and magnesium and very poor in silica.
vein	A tabular body of rock typically of narrow thickness and mineralized occupying a fault, shear, fissure or fracture crosscutting another pre-existing rock.
VTEM	The VTEM (Versatile Time-Domain Electromagnetic) survey is the leading airborne geophysical system in use today and is particularly suited to the identification of copper-zinc massive sulphide deposits.

6

Metric Conversion Table

The following table sets forth certain factors for converting metric measurements into imperial equivalents. To convert from metric to imperial units, divide the metric unit by its corresponding value in the middle column. To convert from imperial to metric units, multiply the imperial unit by its corresponding value in the middle column.

Metric Units	Conversion Factor	Imperial Units
Description and abbreviation		Description and abbreviations
Length		Length
Millimeters – mm	25.400	Inches – in
Meters – m	0.3048	Feet – ft
Meters – m	0.9144	Yards – yd
Kilometers – km	1.609	Miles – mile
Area		Area
Square centimeters - cm²	6.4516	Square inches - in²
Square meters - m²	0.0929	Square feet - ft²
Hectares - ha	0.40469	Acres – acre
Square Kilometers - km²	2.5900	Square miles – sq miles
Weight		Weight
Tonne (1,000 kg) - t	0.907185	Short ton (2,000 lbs) - st

Currency

Unless otherwise indicated, all references in this Annual Report to “dollars” or “$” are to Canadian dollars.

Other Information

Pure Nickel Inc. (formerly “Nevada Star Resource Corp.”) was incorporated under the laws of British Columbia, Canada, on April 29, 1987, and was continued under theCanada Business Corporations Act on April 7, 2009. In this document, the terms “we,” “our,” “us,” and “the Company” refer to Pure Nickel Inc. and its subsidiaries. Our consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), are reconciled to the United States generally accepted accounting principles (“GAAP” or “U.S. GAAP”), and are presented in Canadian dollars except where indicated in conversions of convenience. We file reports and other information with the Securities and Exchange Commission (“SEC”) located at 100 F Street, N.E., Washington, D.C. 20549.

Copies of our filings with the SEC may be obtained by accessing the SEC’s website located atwww.sec.gov. Further, we also file reports under Canadian regulatory requirements on the System for Electronic Document Analysis and Retrieval, which is a filing system that provides access to most public securities documents and information filed by public companies and investment funds with the Canadian Securities Administrators (“SEDAR”). Copies of our reports filed on SEDAR can be obtained by accessing SEDAR’s website atwww.sedar.com.

Our principal executive office is located at Suite 900 – 95 Wellington St. West, Toronto, Ontario Canada, M5J 2N7, Telephone: 416.644.0066, Fax: 416.644.0069, email addressinfo@purenickel.comand websitehttp://www.purenickel.com. Unless explicitly referred to herein, the information contained on our internet site is not incorporated by reference in this report and it should not be considered part of this report.

Except as noted, the information set forth in this Annual Report is as of November 30, 2010, and all information included in this document should only be considered accurate as of that date. Our business, financial condition or results of operations may have changed since that date.

7

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document and the documents incorporated by reference herein contain forward-looking statements. In addition to this Annual Report on Form 20-F, our management may make forward-looking statements orally or in writing to investors, analysts, the media and others. Forward-looking statements express our expectations or beliefs regarding future events or results. They are not guarantees and are subject to many risks and uncertainties. There are a number of factors that could cause actual events or results to be significantly different from those described in the forward-looking statements. Our forward-looking statements may include, but are not limited to, the following:

• requirements for additional capital and anticipated financing activities;

• anticipated strategic alliances or arrangements with partners;

• projected development, production and exploration timelines;

• results of production and exploration activities;

• the estimation or realization of mineral reserves and resources;

• forecasts of the prices of minerals relevant to our exploration effort and general economic performance;

• forecasts of ore grade or recovery rates;

• discussions regarding the failure rates of plant, equipment or processes to operate as anticipated;

• labor relations;

• timing regarding governmental approvals and permits;

• descriptions of plans or objectives of management for future operations;

• the timing and amount of capital expenditures, costs and timing of the development of new deposits; and

• descriptions or assumptions underlying or relating to any of the above items.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts or events. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “opportunity,” “plan,” “potential,” “believe,” or words of similar meaning. They may also use words such as “will,” “would,” “should,” “could,” or “may.”

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such statements. We intend that the forward-looking statements contained herein will be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We do not intend to update any of the forward-looking statements after the date of this report to conform such statements to actual results except as required by law. Given these uncertainties, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. You should carefully consider all available information about us before you make an investment decision. You should review carefully the risks and uncertainties identified in this Annual Report on Form 20-F.

8

PART 1

ITEM 1.           Identity of Directors, Senior Management and Advisors

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

ITEM 2.           Offer Statistics and Expected Timetable

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

ITEM 3.           Key Information

Selected Financial Data

Following is selected financial data expressed in Canadian dollars for the fiscal years ended November 30, 2010, 2009, 2008 and 2007 and for the period from May 18, 2006 to November 30, 2006 (the date of the acquisition discussed below), which were prepared in accordance with Canadian GAAP, which differs substantially from United States generally accepted accounting principles (“GAAP” or “U.S. GAAP”). Reference is made to Note 20 to the audited financial statements for the years ended November 30, 2010 and 2009 and Note 19 to the audited financial statements for the years ended November 30, 2009 and 2008 in “Item 17.Financial Statements” for a description of the differences between Canadian GAAP and U.S. GAAP.

The selected financial data was derived from financial statements that were audited by SF Partnership LLP as indicated in the reports included elsewhere in this Annual Report. This selected financial data should be read in conjunction with the financial statements and other financial information include elsewhere in this Annual Report.

We completed the acquisition of (old) Pure Nickel Inc., a private company incorporated on May 18, 2006, on March 30, 2007. From a Canadian legal and accounting perspective, the transaction was deemed to be a reverse takeover. Our financial statements reflect the combined results of (old) Pure Nickel Inc. and Nevada Star Resource for the fiscal years ended November 30, 2010, 2009, 2008 and 2007 and the period from incorporation on May 18, 2006 to November 30, 2006.

The selected financial data is set out below.

	12 months		12 months		12 months		12 months		May 18,
	ended		ended		ended		ended		2006 to
	Nov. 30,		Nov. 30,		Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008		2007		2006
	$		$		$		$		$
Revenues	Nil		Nil		Nil		Nil		Nil
Operating expenses	1,481,601		1,269,173		1,972,406		4,946,798		103,441
Loss from operations	(1,481,601	)	(1,269,173	)	(1,972,406	)	(4,946,798	)	(103,441	)
Other expenses, net	(827,165	)	(142,015	)	(459,634	)	(2,778,777	)	(35,082	)
Net loss	(2,308,766	)	(1,411,188	)	(2,432,040	)	(7,725,575	)	(138,523	)
Total assets	42,899,214		44,773,605		46,210,759		48,410,479		2,945,022
Shareholders’ equity	42,460,757		44,448,587		45,754,932		47,933,403		2,945,022
Outstanding common shares	67,832,226		67,765,559		67,765,559		67,765,559		24,100,001
Dividends per common share	Nil		Nil		Nil		Nil		Nil
Net income (loss) per share, fully diluted	(0.03	)	(0.02	)	(0.04	)	(0.18	)	(0.02	)

9

Under Canadian GAAP, the Company capitalizes all costs related to the acquisition, exploration and development of non-producing mineral properties. Under U.S. GAAP, acquisition costs of mineral rights are capitalized, but exploration and development costs are expensed as incurred, until the establishment of commercially mineable reserves is complete, at which time any further exploration costs are capitalized. Under Canadian GAAP, enterprises in the development stage are encouraged to disclose cumulative information from the inception of the development stage. Under U.S. GAAP, this disclosure is required. Cumulative net losses since inception aggregate $14,016,092. The differences in accounting for mineral properties under Canadian and U.S. GAAP had the following effects on the Company’s financial statements.

(i) Net Loss and Loss per Share

	12 months		12 months		12 months
	ended		ended		ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Net loss under Canadian GAAP	(2,308,766	)	(1,411,188	)	(2,432,040	)
Capitalized expenditures on unproven mineral properties	785,160		(635,126	)	(3,581,188	)
Net loss under U.S. GAAP	(1,523,606	)	(2,046,314	)	(6,013,228	)
Loss per share under U.S. GAAP – basic and diluted	(0.02	)	(0.03	)	(0.09	)

(ii) Mineral Properties

	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Mineral properties under Canadian GAAP	38,555,291		39,071,469		38,365,557
Capitalized expenditures on unproven mineral properties	(18,801,891	)	(19,587,051	)	(18,951,925	)
Reclassification to investment in joint venture	(69,024	)	−		−
Mineral properties under U.S. GAAP	19,684,376		19,484,418		19,413,632

(iii) Investment in Joint Venture

	Nov. 30,	Nov. 30,	Nov. 30,
	2010	2009	2008
	$	$	$
Investment in joint venture under Canadian GAAP	−	−	−
Reclassification from mineral properties	69,024	−	−
Investment in joint venture under U.S. GAAP	69,024	−	−

(iv) Deficit

	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Deficit under Canadian GAAP	(14,016,092	)	(11,707,326	)	(10,296,138	)
Capitalized expenditures on unproven mineral properties	(18,801,891	)	(19,587,051	)	(18,951,925	)
Deficit under U.S. GAAP	(32,817,983	)	(31,294,377	)	(29,248,063	)

10

For Canadian GAAP, cash flows relating to mineral property exploration are reported as investing activities. For U.S. GAAP, these costs would be characterized as operating activities.

Since June 1, 1970, the Government of Canada has permitted a floating exchange rate to determine the value of the Canadian dollar as compared to the U.S. dollar. On February 11, 2011, the exchange rate in effect for Canadian dollars exchanged for U.S. dollars, expressed in terms of Canadian dollars, was $0.9903. This exchange rate is based on the average noon buying rates of the Bank of Canada, as obtained from the websitewww.bankofcanada.ca.

For the fiscal years ended November 30, 2010, 2009 and 2008 and for the six month period between August 1, 2010, and January 31, 2011, the following exchange rates were in effect for Canadian dollars exchanged for U.S. dollars, calculated in the same manner as above:

Period		Average
Period from May 16, 2006 to November 30, 2006	$	1.1228
Year ended November 30, 2007	$	1.0867
Year ended November 30, 2008	$	1.0478
Year ended November 30, 2009	$	1.1565
Year ended November 30, 2010	$	1.0340

The following table sets forth the high and low exchange rate for the six month period between August 1, 2010 and January 31, 2011:

U.S. Dollar/Canadian Dollar Exchange Rates
Month	High	Low
August 2010	1.0674	1.0108
September 2010	1.0604	1.0216
October 2010	1.0374	0.9986
November 2010	1.0286	0.9980
December 2010	1.0216	0.9931
January 2011	1.0060	0.9848

B. Capitalization and Indebtedness

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

C. Reasons for the Offer and Use of Proceeds

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

D. Risk Factors

Any investment in our common shares involves a high degree of risk. In addition to the other information presented in this Annual Report, you should consider the following risk factors carefully in evaluating the Company, its business and the mineral exploration and mining industry. If any of these risks or uncertainties occurs, our business, financial condition or operating results could be materially harmed. In that case the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we may face. For further information you are encouraged to review our filings with the SEC on EDGAR, as well as those appearing on the Canadian site SEDAR atwww.sedar.com.

11

We have a limited operating history and as a result there is no assurance we can operate profitably or with a positive cash flow.

We have a limited operating history and are an exploration stage company. Our operations are subject to all the risks inherent in the establishment of an exploration stage enterprise and the uncertainties arising from the absence of a significant operating history. Investors should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that the Corporation plans to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The amounts disbursed by us in the exploration of the mineral claims may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations of rock or land and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of future exploration programs do not reveal viable commercial mineralization, we may decide to abandon our claims, and in fact have abandoned some already.

If we do not obtain additional financing, our business will fail and investors could lose their investment.

We had cash and equivalents of $1,799,715 and working capital was $3,843,307 at November 30, 2010. We do not currently generate revenues or cash flows from operations (except for interest income and payments that are credited to mineral resources on the balance sheet rather than being identified as revenues in our statement of operations). Our business plan calls for substantial investment and costs in connection with the exploration of our mineral properties. In order to maintain certain of our property claims, we must incur certain minimum exploration expenditures on an ongoing basis. There can be no assurance that we will have the funds required to make such expenditures or that those expenditures will result in positive cash flow. There are no arrangements in place for additional financing and there is no assurance that we will be able to find such financing on acceptable terms, or at all, if required.

We are an exploration company with an accumulated deficit of $14,016,092 as at November 30, 2010. With ongoing cash requirements for exploration, development and new operating activities, it will be necessary to raise substantial funds from external sources. If we do not raise these funds, we will be unable to pursue our business activities, and our investors could lose all of their investment. If we are able to raise funds, investors could experience a dilution of their interests that would negatively affect the market value of the shares.

There are no known reserves of minerals on our mineral claims and there is no assurance that we will find any commercial quantities of minerals.

We have not found any mineral reserves on our claims and there can be no assurance that any of the mineral claims under exploration contain commercial quantities of any minerals. Even if commercial quantities of minerals are identified, there can be no assurance that we will be able to exploit the reserves or, if we are able to exploit them, that it will be profitable. Substantial expenditures will be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site, and substantial additional financing may be required. It is impossible to ensure that the exploration or development programs planned by us will result in a profitable commercial mining operation. The decision as to whether a particular property contains a commercial mineral deposit and should be brought into production will depend on the results of exploration programs and/or feasibility studies, and the recommendations of duly qualified engineers and geologists. Several significant factors will be considered, including, but not limited to: (i) the particular attributes of the deposit, such as size, grade and proximity to infrastructure; (ii) metal prices, which are highly volatile; (iii) government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection; (iv) ongoing costs of production; and (v) availability and cost of additional funding. The effect of these factors cannot be accurately predicted, but the combination of these factors may result in us receiving no return or an inadequate return on invested capital.

Because of the speculative nature of the exploration of natural resource properties, there is substantial risk that our business will fail.

While the discovery of a commercially viable ore body may result in substantial rewards, few mineral properties which are explored are ultimately developed into producing mines. There is no assurance that any of the claims that we will explore or acquire will contain commercially exploitable reserves of minerals. Exploration for natural resources is a speculative venture involving substantial risk. Even a combination of careful evaluation, experience and knowledge may not eliminate such risk. Hazards such as unusual or unexpected geological formations, formation pressures, fires, power outages, labour disruptions, flooding, cave-ins, landslides, and the inability of us to obtain suitable machinery, equipment or labour are all risks involved with the conduct of exploration programs and the operation of mines.

12

Development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our operations, financial condition and results of operations.

Because there is no assurance that we will generate revenues, we face a high risk of business failure.

We have not earned any revenues to date and have never had positive cash flow. Before being able to generate revenues, we will incur substantial operating and exploration expenditures without receiving any revenues. Therefore we expect to incur significant losses into the foreseeable future. If we are unable to generate significant revenues from our activities, we will not be able to earn profits or continue operations. Based upon current plans, we expect to incur significant operating losses in the future. We cannot guarantee that we will be successful in raising capital to fund these operating losses or generate revenues in the future. There is no assurance that we will ever generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business may fail and our investors could lose some or all of their investment.

The current credit and financial market conditions may exacerbate certain risks affecting our business.Increased concerns about credit markets, consumer confidence, economic conditions, volatile corporate profits and reduced capital spending could negatively impact us. The recent tightening of credit in financial markets may adversely affect the ability of our business partners to obtain financing, which could result in a decrease in, or deferrals or cancellations of, their payment obligations to fund our exploratory activities. If global economic and market conditions, or economic conditions in the United States or Canada, remain uncertain or persist, we may experience a material adverse effect on our business and financial condition. Unstable economic, political and social conditions may make it difficult for our partners to accurately forecast and plan future business activities. If such conditions persist, our business and financial condition could suffer.

The failure of any banking institution in which we deposit our funds or the failure of such banking institution to provide services in the current economic environment could have a material adverse effect on our results of operations or financial condition.

The capital and credit markets have been experiencing volatility and disruption. In some cases, the markets have exerted downward pressure on stock prices and credit capacity for certain issuers, as well as pressured the solvency of some financial institutions. Some of these financial institutions, including banks, have had difficulty performing regular services and in some cases have failed or otherwise been largely taken over by governments. If we are unable to access some or all of our cash on deposit, either temporarily or permanently, it could have a negative impact on our operations or our financial position, or both.

We are subject to uninsurable risks, which could reduce or eliminate any future profitability.

In the course of exploration, development and production of mineral properties, risks including but not limited to unexpected or unusual geological or operating conditions, may occur. It is not always possible to insure against such risks, and we may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise they could reduce or eliminate any future profitability and result in an increase in costs and a decline in value of our shares. We are not insured against environmental risks. Insurance against environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) has not been generally available to companies within our industry. Therefore, if we were to become subject to environmental liabilities, the payment of such liabilities would reduce or eliminate our available funds or could exceed our funds and result in business failure and possibly bankruptcy.

We are subject to market factors and volatility of commodity prices beyond our control.

The marketability of mineralized material that we may acquire or discover will be affected by many factors beyond our control. These factors include market fluctuations in the prices of minerals sought which are highly volatile, the proximity and capacity of natural resource markets and processing equipment, and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The effect of these factors cannot be predicted, but may result in receiving a very low or negative return on invested capital. Prices of certain minerals have fluctuated widely, particularly in recent years, and are affected by numerous factors beyond our control. Future mineral prices cannot be accurately predicted. A severe decline in the price of a mineral being produced or expected to be produced by us would have a material adverse effect on us, and could result in the suspension of our exploration programs or mining operations.

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Our stock price is volatile.

Market prices of securities of many public companies have experienced significant fluctuations in price that have not been related to the operating performance, underlying asset values or prospects of such companies. The market price of our common shares has been and is likely to remain volatile. Results of exploration activities, the price of nickel, future operating results, changes in estimates of our performance by securities analysts, market conditions for natural resource companies in general, and other factors beyond our control could cause a significant decline of the market price of our common shares.

If we do not make certain payments or fulfill other contractual obligations, we may lose our option rights and interests in our joint ventures.

We may, in the future, be unable to meet our share of costs incurred under option or joint venture agreements to which we are a party and we may have our interest in the properties subject to such agreements reduced as a result. Furthermore, if other parties to such agreements do not meet their share of such costs, we may be unable to finance the cost required to complete exploration programs. The loss of any option rights or interest in joint ventures would have a material, adverse effect on us.

We may not have good title to our mining claims, potentially impairing our value.

Our mineral property interests may be subject to prior unregistered agreements of transfers or native land claims, and title may be affected by undetected defects. There can be no assurance that we will be able to obtain good title without unreasonable expense in the event we are faced with defects of title for any of our mineral projects.

If key employees or consultants leave the company, we will be harmed since we are heavily dependent upon them for all aspects of our activities.

We are dependent upon key employees and contractors, the loss of any of whom could have a negative impact on our ability to operate the business and could cause a decline in the value of, or cash flows from, our properties or additional costs resulting from a delay in development or exploration of properties.

If we do not comply with all applicable regulations, we may be forced to halt our business activities and/or incur significant expense.

We are subject to government and environmental regulations. Permits from a variety of regulatory authorities are required for many aspects of exploration, mining operations and reclamation. We cannot predict the extent to which future legislation and regulation could cause additional expense, capital expenditures, restrictions, and delays in the development of our Canadian and/or U.S. properties, including those with respect to unpatented mining claims.

Failure to comply with applicable environmental laws, regulations and permitting requirements may result in enforcement actions including orders issued by regulatory or judicial authorities that may result in operations ceasing or being curtailed; and may include corrective measures requiring capital expenditures, installation of additional equipment, or other expensive and/or time-consuming remedial actions. Parties engaged in the exploration or development of exploration properties may be required to compensate those suffering loss or damage by reason of such parties’ activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Our activities are not only subject to extensive federal, provincial, state and local regulations controlling the exploration and mining of mineral properties, but also the possible effects of such activities upon the environment as well as costs, cancellations and delays resulting from lobbying activities of environmental groups. Future legislation and regulations could cause additional disbursements, capital expenditures, restrictions and delays in the development of our properties, the extent of which cannot be predicted. Also, as noted above, permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation. In the context of environmental permitting, including the approval of reclamation plans, we must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays, depending on the nature of the activity to be permitted and how stringently the regulations are implemented by the permitting authority. If we become more active on our properties, compliance with environmental regulations may increase our costs. Such compliance may include feasibility studies on the surface impact of proposed operations; costs associated with minimizing surface impact, water treatment and protection, reclamation activities including rehabilitation of sites, ongoing efforts at alleviating the mining impact on wildlife, and permits or bonds as may be required to ensure our compliance with applicable regulations. The costs and delays associated with such compliance may result in us deciding not to proceed with exploration, development or mining operations on any mineral properties.

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Exercise of outstanding warrants, options, and other future issuances of securities will result in dilution of our common shares.

As of November 30, 2010, there were 67,832,226 common shares issued and outstanding as well as options, as set out in Note 8 – Share Capital in our attached financial statements. The holders of the options are given an opportunity to profit from a rise in the market price of the common shares with a resulting dilution in the interest of the other shareholders. Our ability to obtain additional financing during the period such rights are outstanding may be adversely affected and the existence of the rights may have an adverse effect on the price of the common shares. The holders of options may exercise such securities at a time when we would otherwise be able to obtain any needed capital by a new offering of securities on terms more favourable than those provided by those outstanding rights. Any increase in the number of common shares issued and outstanding as a result of the exercise of options or from the sales of such shares may depress the market price of our common shares and will dilute the proportionate interests and votes of existing shareholders.

Proposed legislation affecting the mining industry could have an adverse effect on us.

During the past several years, the United States Congress considered a number of proposed amendments to the General Mining Law of 1872, which governs mining claims and related activities on federal lands. In 1992, a federal holding fee of $100 per claim was imposed upon unpatented mining claims located on federal lands. This fee was increased to $125 per claim in 2005 ($133.50 total with the accompanying County fees included). Beginning in October 1994, a moratorium on processing of new patent applications was approved. In addition, a variety of legislation over the years has been proposed by the United States Congress to further amend the General Mining Law. There has not been material progress on any of these proposed reformations as of the date of this report. For example, the U.S. House of Representatives considered H.R. 699, the Hardrock Mining and Reclamation Act of 2009, which did not pass. That proposal would have placed a royalty on hardrock mining on federal lands, permitted state of local governments or Indian tribes to petition for withdrawal of lands from the operation of the mining laws, and expanded the ability of the Secretary of the Interior to limit mining on federal lands. The extent of any future congressional action is difficult to predict. If enacted, the legislation could adversely affect the economics of developing and operating mines because many of our properties consist of unpatented mining claims on federal lands. Our financial performance could therefore be materially and adversely affected by passage of legislation, which could force us to curtail or cease our business operations in the United States.

Directors and management may be subject to conflicts of interest.

Certain directors and officers are directors and/or officers of other mineral exploration companies and as such may have a conflict of interest requiring them to abstain from certain decisions. Conflicts of interest that arise will be subject to and governed by procedures prescribed by our governing corporate law statute which requires a director of a corporation who is a party to, or is a director or an officer of, or has some material interest in any person who is a party to, a material contract or proposed material contract with the Company to disclose his or her interest and, in the case of directors, to refrain from voting on any matter in respect of such contract unless otherwise permitted under such legislation.

Wemay be adversely affected by exchange rate fluctuations.

Exchange rate fluctuations between the Canadian dollar and the United States dollar may adversely affect our financial position and results. United States-based shareholders need to consider the risk of an investment that reports its results in Canadian funds. Our results are reported in Canadian dollars, but since we operate in the United States, some of our financial instruments and transactions are denominated in United States funds. Fluctuation in the exchange rates between the United States dollar and the Canadian dollar could have a material effect on our business, financial condition and results of operations. At November 30, 2010, we had net monetary assets denominated in United States funds of $586,671 (US$571,470). Based upon the year-end balance, an increase of 15% in the Canada to U.S. dollar exchange would result in an increase in the net loss and comprehensive loss of $88,000, and a reduction of 15% would result in a reduction in the net loss and comprehensive loss of $107,000. We believe that it is possible that the exchange rate could fluctuate by more than 15% within the next 12 months.

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The trading market for our shares is not always liquid.

Although our shares trade on the Toronto Stock Exchange and the Over the Counter Bulletin Board, the volume of shares traded at any one time can be limited, and, as a result, there may not be a liquid trading market for our shares.

Our stock is a “penny stock” which imposes significant restrictions on broker-dealers recommending the stock for purchase.

SEC regulations define “penny stock” to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. These regulations include the following requirements: broker-dealers must deliver, prior to the transaction, a disclosure schedule prepared by the SEC relating to the penny stock market; broker-dealers must disclose the commissions payable to the broker-dealer and its registered representative; broker-dealers must disclose current quotations for the securities; if a broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed control over the market; and a broker-dealer must furnish its customers with monthly statements disclosing recent price information for all penny stocks held in the customer’s account and information on the limited market in penny stocks. Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to sale. While our shares are subject to these penny stock rules these disclosure requirements may have the effect of reducing the level of trading activity. Accordingly, this may result in a lack of liquidity in the shares and investors may be unable to sell their shares at prices considered reasonable by them.

As a foreign private issuer, our shareholders may have less complete and timely data than they would with a typical U.S. public company.

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) in Form 6-K may result in shareholders having less complete and timely information in connection with shareholder actions. The exemption from Section 16 of the Exchange Act and the rules promulgated thereunder regarding reports of beneficial ownership and purchases and sales of common shares by insiders and restrictions on insider trading in our securities may result in shareholders having less data and there being fewer restrictions on insiders’ activities in our securities.

We do not plan to pay any dividends in the foreseeable future.

We have never paid a dividend and it is unlikely that we will declare or pay a dividend unless and until warranted based on the factors outlined below. The declaration, amount and date of distribution of any dividends in the future will be decided by the board of directors, based upon, and subject to, our earnings, financial requirements and other conditions prevailing at the time. Investors cannot expect to receive a dividend on their investment in the foreseeable future, or at all.

United States stockholders may be subject to unexpected or unwanted tax consequences as a result of acquiring, holding, or disposing of our shares.

As discussed in detail below under “Item 10.E (iv). United States Federal Income Tax Considerations,” the tax implications of an investment in us are difficult to determine, can be different for different individuals and entities, and generally require that an investor consult his or her investment and taxation professionals. Under certain circumstances, the acquisition, holding or disposition of our shares may generate unwanted tax consequences for a holder or investor in our shares.

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Our management may not be subject to United States legal process making it more difficult for U.S. investors to sue them.

Investors may have a difficult time enforcing civil judgements against us because all of our officers and most of our directors are neither citizens nor residents of the United States. U.S. shareholders may not be able to effect service of process within the United States upon such persons. U.S. shareholders may not be able to enforce, in United States courts, judgments against such persons obtained in such courts predicated upon the civil liability provisions of United States federal or state securities laws. Appropriate courts outside the United States may not be able to enforce judgments of United States courts obtained in actions against such persons predicated upon the civil liability provisions of the federal securities laws. The appropriate courts outside the United States may not be able to enforce, in original actions, liabilities against such persons predicated solely upon the United States federal securities laws. However, U.S. laws would generally be enforced by a Canadian court provided that those laws are not contrary to Canadian public policy, are not foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and provided that they are in compliance with applicable Canadian legislation regarding the limitation of actions. As we are incorporated pursuant to the laws of Canada, duties of our directors and officers, and the ability of shareholders to initiate a lawsuit on our behalf, are governed by the

Canada Business Corporations Act.

ITEM 4.           Information on the Company

A. History and Development of the Company

We are principally engaged in the acquisition, development, and operation of mineral properties and exploration for, in particular, nickel, PGEs, copper, gold, silver and associated base and precious metals. At present, operations are located in Canada and the United States. Operations in Canada are conducted through the parent corporation, Pure Nickel Inc. Operations in the United States are carried out through our wholly-owned subsidiary Nevada Star Resource Corp. (U.S.) (a Nevada corporation). We also seek joint venture or option agreements where appropriate to enhance shareholder value, on certain of our mineral properties and the surrounding areas. Our MAN Alaska property is held through MAN Alaska LLC, a Delaware limited liability company, in which we have a 70% interest.

We were incorporated under the laws of British Columbia, Canada, on April 29, 1987, and were continued under theCanada Business Corporations Act on April 7, 2009. We prepare our financial statements in Canadian dollars and in accordance with Canadian GAAP. Unless otherwise indicated herein, all dollar amounts in this Annual Report are stated in Canadian dollars.

The address and telephone number of our principal executive office and information on the Company generally can be found above under “Special Information: Other Information.” The registered agent in the United States for our United States subsidiaries is CT Wolters Kluwer, 111 Eighth Avenue, New York, NY 10011.

On March 30, 2007, we (then known as Nevada Star Resource Corp., (“Nevada Star”), completed the acquisition of all of the shares of (old) Pure Nickel Inc. (“old PNi”), a private company incorporated on May 18, 2006. From a Canadian legal and accounting perspective, the transaction was deemed to be a reverse takeover. Old PNi, the new subsidiary of Nevada Star, was deemed to be the acquirer and its financial statements are the basis of the continuing financial statements of Nevada Star, which simultaneously changed its name to Pure Nickel Inc. As a result, our financial statements reflect the combined results of old PNi and Nevada Star for the period from May 18, 2006 to November 30, 2006, and the fiscal years ended November 30, 2007, 2008, 2009 and 2010.

At the same time as the reverse takeover, we consolidated our common shares on a one-for-five basis, and they continued to be traded on the Toronto Stock Exchange Venture Exchange (TSX-V) and in the United States on the Over the Counter Bulletin Board. Our share listings have now graduated to the senior Canadian exchange, and since August 14, 2007 have been listed on the Toronto Stock Exchange.

During the second quarter of 2007, we completed a financing of $9,000,000 by the sale of 10,000,000 units for $0.90 each. Each unit consisted of one common share and one-half of one warrant. Each whole warrant is exercisable into one common share at $1.20 for a term of 18 months. The agent for this financing received a cash commission of 7% of the gross proceeds and advisory warrants equal to 5% of the gross number of securities sold in the offering. Each advisory warrant was exercisable into one common share at $0.90 each for a period of 18 months. These warrants have since expired.

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During the third quarter, 2007, we completed a financing of $27,500,000 by the sale of 22,000,000 units for $1.25 each. This financing contained a U.S. private placement portion, which was conducted pursuant to the rules promulgated under Section 4(2) of the Securities Act of 1933, as amended. Each unit consisted of one common share and one half of one warrant, each whole warrant being exercisable for a period of 18 months into a common share of the Company for $1.75 per share. These warrants have since expired.

Prior to February 2007, we had three properties in different stages of exploration: (i) the MAN Property located in Alaska, United States; (ii) the Salt Chuck Alaska PGE Property located in Alaska, United States; and (iii) the Milford Utah Copper Property located in Beaver County, Utah. Prior to February 2007, old PNi had two exploration properties: (i) Fond du Lac, located in Saskatchewan, Canada and (ii) Fox River, located in Manitoba, Canada. The Fond du Lac property was originally under option from Red Dragon Resources Corp. and, on May 8, 2007, we acquired 100% interest in the property from Red Dragon Resources Corp. for $100,000 and the issuance of 1,000,000 shares of our common stock. On November 6, 2007, we announced we had elected not to renew the option for the Fox River property.

On May 15, 2007, we completed a major acquisition comprising the purchase of the Xstrata property portfolio for $15,250,000 in cash and the issuance of 4,000,000 warrants to purchase common shares with an exercise price of $2.00 per share for a period of three years from the issuance of the warrants. These warrants have since expired. Properties included in the acquisition were:

• William Lake and Manibridge in Manitoba;
• POV, Nuvilik, SR1, HPM, East Hudson (joint venture with Soquem Inc.) and Forgues in Quebec;
• Harp Lake and Florence Lake in Newfoundland; and
• Rainbow in Nunavut.

In addition, Xstrata was granted:

• a net smelter royalty of 2% on each property with us having the right to reacquire 1% by payment of $1,000,000 with respect to a particular property at any time up to twelve months after commercial production has been achieved on that property;
• off-take and marketing rights for all concentrate or product produced from the properties; and
• the right to retain one back-in right to 50% for any one (only) of any mining project with an economic threshold of 15,000,000 tons of resources.

On September 18, 2007, we entered into an option agreement with Exploration Syndicate Inc., a private company, for the option to earn up to 100% interest in 160,000 hectares of prospective property in central Manitoba. In March 2008, we drilled two conductors identified from a November VTEM airborne survey. Drill success was limited and in June 2008 we announced our intent to end the option agreement.

On November 6, 2007, we granted an option to Manicouagan Minerals Inc. under which they may earn up to a 70% interest in 39 mining claims comprising the Forgues and HPM project in Québec. In November 2009 Manicouagan Minerals had made the required option payments and exploration expenditures to earn a 50% interest in the property. Manicouagan has elected not to exercise its option to earn an additional 20% in the property; a formal 50-50 joint venture agreement is currently in process. As referenced above, on November 6, 2007, we announced that we would not renew our option for the Fox River project in Manitoba. We also announced that we had allowed our claims on the Florence Lake project in Newfoundland and Labrador to lapse.

On November 15, 2007, we announced a 50/50 joint venture agreement with Crowflight Minerals Ltd. (“Crowflight”) to explore the past producing Manibridge Mine area. Each party contributed properties and mineral rights to the joint venture and made an initial contribution of $3 million over a three year period to fund preliminary exploration activities within the joint venture area and to perform further detailed technical studies as necessary to evaluate the potential for development and mining on the properties. Crowflight is the operator of the joint venture. In addition, we have an option to earn a 50% interest from Crowflight in an area surrounding the joint venture area by spending an additional $1.5 million over a three year period. Properties contributed by us to the joint venture contain the claims and tailings disposal area of the past producing Manibridge Mine and are subject to rights held by Xstrata pursuant to an exploration property purchase agreement entered into between Xstrata and the Company on August 2, 2007. Specifically, Xstrata will, among other things (i) retain an off-take option to purchase all or any portion of concentrates and other mineral products produced from the affected properties; and (ii) be entitled to a 2% net smelter return (NSR) royalty with respect to the our claims.

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On November 20, 2007, we filed on SEDAR, and furnished on a 6-K through EDGAR, an Independent Technical Report on our 100% owned William Lake property in the Thompson Nickel Belt, Manitoba. We commissioned the NI 43-101 report from Scott Wilson Roscoe Postle Associates Inc. to summarize previous work, and in particular the exploration activity undertaken by Xstrata through its predecessor company, Falconbridge Limited. The technical report highlighted the significant nickel mineralization outlined by 13 years of previous exploration activity that commenced in 1989. This technical report conforms to NI 43-101 Standards of Disclosure for Mineral Projects and its recommendations form the basis for our future exploration programs to develop a resource estimate.

On December 19, 2007, Jay Jaski, our CEO and Chairman, unexpectedly passed away. David McPherson was appointed interim President and CEO and Robert Angrisano was appointed as interim Chairman of the Board. On April 3, 2008 these appointments were confirmed by the Board on a non-interim basis.

On February 21, 2008, we announced that we had entered into an option agreement with Rockcliff Resources Inc. whereby Rockcliff may earn up to a 70% interest in the Tower VMS property. This property is comprised of 35 mining claims located at the north end of our William Lake Property. The agreement requires Rockcliff to drill 2,000 meters in the first year as well as the granting to us of warrants to purchase 1,250,000 shares of Rockcliff at $1.50 per share with a term of 2 years. These warrants expired in February 2010. In February 2010, this agreement was amended to extend the time for performance of work on the Tower Property and as consideration, Rockcliff granted us 1,250,000 common share purchase warrants exercisable at $1.50 per share with a term of two years.

On May 15, 2008, we relinquished our rights to the East Hudson properties in Quebec.

On June 5, 2008, we granted Minergy Ltd., a private company, an option to earn up to 70% interest in 393 mining claims comprising the Nuvilik and POV properties located in the Raglan district in Quebec.

On October 31, 2008, we granted ITOCHU Corporation, a Japanese conglomerate, an option to earn up to a 75% interest in the MAN, Alaska property. Pursuant to the agreement, ITOCHU reimbursed us for expenditures incurred in 2008 and funded exploration activity for 2009 at MAN to a combined maximum of USD$6.5 million for 2008 and 2009. Under the agreement, exploration activity may be funded through 2014 to a total of $40 million subject to ITOCHU exercising its option to continue at the end of 2009 and 2013. Under the terms of the agreement at that time, ITOCHU could earn a 60% interest in MAN by incurring an aggregate of $30 million of exploration expenditures over the first six years of the option period. Once ITOCHU had earned a 60% interest, it had the option to earn-in an additional 15% interest in the MAN property by incurring an additional $10 million of exploration expenditures during the seventh year of the agreement. The agreement provided for the acceleration of the earn-in timetable, and we earn a 10% management fee and remain as operator.

In May 2009, we were informed by the Quebec Ministry of Natural Resources that the 148 claims that comprise the POV property were no longer open for exploration work. The claims fell within a boundary for a proposed provincial park and certain exploration milestones needed to be reached in order to extend the development of the park. Pure Nickel and its option partner Minergy Ltd. were aware of the proposed park since the property came to the company through the Xstrata property purchase in August 2007 and we relinquished the claims in May 2009.

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In June 2009, we filed an action for declaratory relief against Western Utah Copper Company (WUCC) in the United States District Court, Utah requesting for interpretation of and the status and rights under an agreement regarding certain royalties we are entitled to receive from production at WUCC property.

On July 20, 2009, WUCC filed an answer and counterclaim, and on August 31, 2009 we filed a response to the counterclaim. We believe that the counterclaim is without merit.

On November 18, 2009 our Option partner Manicouagan Minerals made the required option payment and exploration expenditures to earn a 50% interest in the HPM/Forgues property.

On March 5, 2010 we extended the time for our option partner, Rockcliff Resources Inc. to perform the exploration work required under the agreement with us for our Tower property. In consideration for extending the time, Rockcliff granted us 1,250,000 common share purchase warrants exercisable at $1.50 per share and an expiry of the earlier of February 21, 2013 or two years after Rockcliff is able to commence exploration of the Tower property,

On March 23, 2010 we announced that we did not renew the Harp Lake, Labrador claims. The decision was based on the low potential of the Harp Lake property in relation to our other property claims.

On March 25, 2010 ITOCHU Corporation, our partner on the MAN Alaska property, vested its interest in the property. ITOCHU had expended the required funds on exploration to vest a 20% interest however in consideration of increasing the 2010 exploration budget and compressing the time period for the second tranche of the option earn-in, we granted ITOCHU the right to vest a 30% interest in 2010. A new company was created called MAN Alaska LLC to hold the MAN property claims. MAN Alaska LLC is jointly owned (70% by our subsidiary Nevada Star Resource Corp (U.S) and 30% by ITC Mineral Resources Development (U.S.A) Inc, a wholly owned subsidiary of ITOCHU Corporation.

On April 30, 2010, R. David Russell was appointed Chair of the Board.

In May 2010 we expanded our Rainbow, Nunavut property by 19 claims which amounts to an eight fold increase of contiguous holdings, bringing the Rainbow property to 19,850 hectares.

On May 18, 2010, Western Utah Copper Company (WUCC) and its parent Copper King Mining Corporation filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. On August 27, 2010 WUCC filed an action in bankruptcy court in Utah, U.S.A, against Nevada Star Resource Corp and Pure Nickel. This action is very similar to the counterclaims made in response to the original lawsuit in 2009. We believe that this new action is without merit.

On July 7, 2010, we announced that our option agreement with Minergy Ltd. on the Nuvilik property in Quebec was terminated.

In November 2010, we decided not to renew the mining claims on the SR1 portion of the Raglan, Quebec property.

B. Business Overview

General

We are in the business of acquiring, exploring and developing mineral properties, primarily those containing nickel, platinum group elements, copper, gold, silver and associated base and precious metals. We have a practice of taking grassroots or undeveloped properties with the expectation of developing them to a level where an ore body is indicated or likely. If an ore body is indicated or likely, then we have a policy of looking to develop a joint venture or purchase option with a larger mining company to further develop the property and, if justified, to take the property into production. In all cases, we retain a percentage of ownership. In the case of a partnership, we receive a percentage of royalty from the production of product resulting from a mining operation. The market prices for minerals have been and will likely continue to be very volatile.

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Most aspects of our business require specialized skills and knowledge. Such skills and knowledge include the areas of geology, geophysics, mine development, mining, metals marketing, finance and accounting. We compete with other mineral exploration companies for the acquisition of mining claims and leases and for qualified personnel to develop and explore the Company’s property portfolio. There is significant competition for the limited number of precious metal acquisition and exploration opportunities that are economic under current and foreseeable metals prices.

The Company’s fixed assets and mineral properties by geographic distribution are as follows:

November 30, 2010		Canada		United States		Total
Fixed assets	$	12,409	$	–	$	12,409
Mineral properties		25,380,731		13,174,560		38,555,291
	$	25,393,140	$	13,174,560	$	38,567,700
November 30, 2009		Canada		United States		Total
Fixed assets	$	14,808	$	–	$	14,808
Mineral properties		25,870,239		13,201,230		39,071,469
	$	25,885,047	$	13,201,230	$	39,086,277
November 30, 2008		Canada		United States		Total
Fixed assets	$	17,269	$	–	$	17,269
Mineral properties		25,580,982		12,784,575		38,365,557
	$	25,598,251	$	12,784,575	$	38,382,826

C. Organizational Structure

The diagram below sets out our organizational structure as at November 30, 2010 and February 11, 2011, and the jurisdictions in which we were incorporated or continued. Nevada Star Resource Corp. (U.S.) is a wholly-owned subsidiary of Pure Nickel Inc and it has a 70% ownership of MAN Alaska LLC, a company that holds the assets of the MAN Alaska project.

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The previous corporate holding structure was simplified as follows on November 30, 2010: We amalgamated our Canadian subsidiary, PNI Corp, with Pure Nickel Inc. The surviving entity is called Pure Nickel Inc. We also merged our Washington subsidiary, Nevada Star Resource Corp., with our Nevada subsidiary: the surviving entity is the Nevada company, Nevada Star Resource Corp. (U.S.). The chart above shows our corporate organizational structure after giving effect to these changes.

D. Property, Plant and Equipment

In most cases, we use third party contractors to carry out our exploration activities, so we own very little property, plant and equipment in the field.

Mineral Projects

We have mineral rights to several properties in various stages of exploration in North America. A summary of the properties is presented in the table below and detailed descriptions follow.

Property	Location	Claims	Comments
		area
		(approx.)
MAN	Alaska (400 km NE of Anchorage, 265 km SE of Fairbanks)	40,380 hectares	The property is currently in the early exploration stage. We regard MAN as one of our more important properties and are operating under an option agreement with Itochu Corporation., under which, as amended, Itochu has acquired a 30% participating interest in the property, and funded the 2010 exploration program.
WilliamLake	Manitoba (70 km from Grand Rapids)	30,553 hectares	We consider William Lake to be one of our premier properties. An extensive exploration program was conducted during 2008.
TowerProperty	Manitoba (part of William Lake)	7,627 hectares	On February 21, 2008, we granted an option to Rockcliff Resources Inc. under which they may earn up to a 70% interest in the Tower claims, which are located within the northern portion of the William Lake claim block. Rockcliff commenced exploration in October 2010

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Property	Location	Claims	Comments
		area
		(approx.)
Salt Chuck	Alaska, Prince of Wales Island	1,082 hectares	The property is currently in the early exploration stage.
Fond du Lac	Saskatchewan (20 km NW of Stony Rapids)	19,713 hectares	The property is currently in the early exploration stage. We consider Fond du Lac to be one of our more promising properties, as results from two exploration programs have yielded encouraging results.
Manibridge	Manitoba (128 km SW of Thompson )	274 hectares	We have a 50-50 joint venture agreement with Crowflight Minerals Inc. to explore for deposits. Each of us contributes properties and funds for preliminary exploration activities. We also have an option to earn a 50% interest from Crowflight in an area surrounding the joint venture area by spending $1.5 million over a three year period.
Forgues andHaut PlateauEast	Quebec (180 km NW of Sept Isles)	1,168 hectares	Manicouagan Minerals Inc. has earned a 50% interest in the property by making the required options and exploration expenditures.
RaglanSR1, Nuvilik	Quebec	45,680 hectares	The properties are currently in the early exploration stage. In November 2010 we decided not to renew the mining claims on the SR1 portion of the Raglan property.
Rainbow	Nunavut (380 km NW of Churchill, and 612 km N of Thompson)	19,850 hectares	The property is currently in the early exploration stage. In 2010 a soil geochemical survey was completed.
CopperKing,Milford	Utah	2,830 hectares	The properties are operated by Western Utah Copper Company and its parent company Copper King Mining Corporation. Our agreement is to receive 1% of net proceeds from the first 10 million pounds of copper produced, 1.5% of net proceeds on all copper produced thereafter and 2% of net smelter proceeds on all other minerals produced. Total royalties are capped at US$10 million ($10.3 million) and may be subject to a Net Profits Interest on copper production from certain claims (held by a group of private investors, which includes a current director of the Corporation) which will not exceed US$1.2 million ($1.2 million) in the aggregate, and a 2% net smelter return royalty on certain claims, held by another party. In June, 2009 we filed an action for declaratory relief against WUCC in the United States District Court, Utah, requesting interpretation of and the status and rights under the agreement. On July 20, 2009, WUCC filed an answer and counterclaim, and on August 10, 2009 we filed a response to the counter claim, which we believe is without merit. In May 2010 WUCC and its parent Copper King Mining Corporation filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. On August 27, 2010 WUCC filed an action in bankruptcy court in Utah, U.S.A, against Nevada Star Resource Corp and Pure Nickel. This action is very similar to the counterclaims made in response to the original lawsuit in 2009. We believe that this new action is without merit.

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MAN Alaska Project, Alaska

Location - The MAN project is located approximately 265 kilometres southeast of Fairbanks and 400 kilometres northeast of Anchorage along the southern flank of the Alaska Range. The nearest community is the hamlet of Paxson, which is situated at the junction of the Denali and Richardson highways.

Access - The Richardson and Denali highways traverse the southeast portion and southern perimeter respectively of the project area. Helicopters offer the best means of accessing remote parts of the project area.

Property Status - The MAN project is comprised of State and Federal mining claims and prospecting sites encompassing an area of 40,380 hectares. The project property falls within the Fairbanks, Chitina and Talkeetna recording districts. All claims are 100% owned by MAN Alaska LLC, in which Nevada Star Resource Corp. (U.S.), our wholly-owned subsidiary, has a 70% participating interest.

Geology - The Mount Hayes Quadrangle, in which the MAN Project is located, is dominated by the geology of the central Alaska Range and foothills on its southern flank. The Denali Fault bisects the eastern Alaska Range, and splays to the north and west in the central Alaska Range just north of the project area.

Exploration - Since Alaska has no assessment reporting system in place, new companies must rely on the generosity of previous property owners to supply their work records. The MAN project has greatly benefited from well-documented work programs by ACNC (American Copper and Nickel Company), Fort Knox and MAN Resources starting in 1991.

From July 17, 2007 to October 3, 2007, 14 drill holes were completed, of which two were abandoned, on the Alpha Complex. A total of 3,359 meters of the proposed 4,000 meters program was completed. Most of the drill holes encountered extensive zones of disseminated Ni-Cu-PGE sulphides. The best disseminated intersections appear to be associated with areas defined to have anomalous conductivity as defined by the VTEM survey.

The 2008 exploration program focused on diamond drilling which targeted geophysical anomalies, particularly VTEM conductors, in the Beta Complex. Drilling in 2008 was limited to three completed holes (one abandoned) due to poor drilling conditions. The drilling did intercept wide zones of disseminated sulphides, including 0.50 metre grading 1.39% Ni and 1.27% Cu.

The 2009 exploration program completed 4,200 metres of drilling in seven holes, a new ZTEM airborne survey (Z axis Tipper Electromagnetic system), extensive geological mapping and proprietary fluxgate time domain ground EM surveys (full waveform streaming multi sensor fluxgate array). We were pleased with the results of the 2009 geophysical programs (ground fluxgate TEM, ZTEM, and BHEM), and these were used in planning for our 2010 exploration program.

Three drill holes were completed in the 30km long Alpha Complex and four holes were completed in the southern Beta Complex. Newly completed 2D modeling of 2009 ZTEM data and previous 3D inversions of aeromagnetic data, as well as several widely spaced deep drill holes show a consistent presence of abnormally thick ultramafic bodies with localized deep feeders. The results add to the evidence that the MAN property is the main intrusive centre for Triassic magmatism that generate the extensive nickel, copper and PGE (platinum group elements) bearing ultramafic intrusions and coeval lavas within the Alaska, Yukon and BC segments of the Wrangelia terrain.

With our project partner, Itochu Corporation, we agreed on a US$7.5 million ($7.7 million) exploration program for the MAN project in Alaska this year. This represented a 70% increase over the 2009 budget. Under the amended agreement, Itochu could earn up to 75% by incurring $40 million of exploration expenditures on the MAN property by 2013. Itochu has earned a 30% interest in the property by funding US $14 million of exploration costs since 2008, and by exercising its option in March 2010.

The objectives of the 2010 program were surpassed by the discovery of stratiform Platinum Group Element (PGE) horizons and the intersections of narrow, high grade nickel-copper massive sulphide.

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Analysis of over 3,400 assay core samples revealed stratigraphic horizons in the Alpha and Beta Complexes that have elevated platinum and palladium values strongly suggesting that stratiform PGE mineralization (platinum and palladium) is present, similar to that found in other stratiform PGE bearing complexes elsewhere in the world. Laterally extensive platinum and palladium cyclicity patterns have been recognized over a distance greater than 2.7 kilometres in the Alpha complex. In addition narrow intersections of high grade semi-massive sulphide lenses were discovered returning grades of 3.42% nickel and 4.27% copper.

During the 2010 exploration program we completed approximately 6700 metres of drilling, in a total of nine holes; six holes on the 30 km long Alpha Complex and three holes on the southern Beta complex.

Highlights from the 2010 drill program include:

1.	Two discrete PGE-enriched horizons have been identified on the Alpha Complex.
2.	The shallowest and thinnest PGE horizon (~ 12 m) was intersected at approximately 100-130m below surface and can be correlated in drill holes PNI-10-028,033,035 and 036 over a strike length of 2.67 km.
3.	A thick (> 20 meters) disseminated sulphide horizon averaging 2.47% sulphide in drill hole PNI- 10-036 is also observed in hole PNI-10-028 at least 2.67 km apart. The relatively high Pt + Pd concentrations in rocks with such low sulphide content, and the associated well developed metal cyclicity recorded in these rocks is a characteristic feature of low-sulphide PGE-enriched environments that host reef type PGE mineralization.
4.	Drill hole PNI-10-036 returned combined Pt + Pd assays of 318ppb over greater than 20m. In previous year’s (2003) drill hole FL-009 (located 1.2 km east of PNI-10-036) returned assays of 1175 ppb Pt and 1022 ppb Pd (returning a combined Pt + Pd of 2.197 gms/ton) over 2.7 meters in rock with an average sulphide content of 2.97 %. This suggests that a favourable magmatic environment was operative to develop Platinum Group Element enriched horizons in the central portion of the Alpha Complex.
5.	Hole PNI-10-036 returned a combined Pt and Pd value of 252.8 ppb over 165.9 metres. Typical background value of combined Pt and Pd in a peridotite ranges from 2.8 ppb to 29 ppb (Crocket J. H., 2002, Platinum-Group Element Geochemistry of Mafic and Ultramafic Rocks. CIM Special Volume 54, p. 177-210).
6.	Several thin (7-11cm) semi-massive nickel and copper sulphide zones were intersected in drill holes PNI-10-028 and 10-035 on the Alpha Complex, returned a maximum of 3.42% Ni and 4.27% Cu.
7.	Several drill holes (PNI-01-028, 029, 030, 033, 035, 036) encountered multiple disseminated sulphides zones ranging from 14.9 m to 139.75 m in thickness of disseminated nickel mineralization returning grades greater than 0.23% Ni.

A map of the MAN property is shown below.

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William Lake, Manitoba

Location - The William Lake property surrounds William Lake in west-central Manitoba. William Lake is approximately 30 km northwest of Lake Winnipeg and the property claims lie approximately 70 kilometres north of the town of Grand Rapids.

Access - The William Lake property is accessible by Highway 6, which dissects the eastern-most property claims north of Little Limestone Lake. A network of unpaved logging and drill roads, including all-season roads, leading from Highway 6 provides access to other parts of the property. Lakes within the William Lake property are accessible by float or ski equipped fixed-wing planes; and all claims and licenses are accessible by helicopter.

Property Status – The property is 100% Company owned and is comprised of 107 claims and 1 mineral exploration license covering 30,553 hectares.

Geology– Work by Xstrata and the Manitoba geological survey concluded the metasedimentary rocks in the area belong to the Thompson Nickel belt and are part of the same nickel bearing Ospawagan group that hosts all of the Thompson nickel mines. Paleozoic cover on the property typically ranges from 70-200 m in thickness and consists of flat-lying limestone and dolomite underlain by a thin package of sandstones and shale’s belonging to the Winnipeg Formation.

Exploration- Xstrata through its precursor entity, Falconbridge, carried out a successful nickel exploration program during the period of 1989 to 2002 which included airborne and ground geophysical surveys and 260 diamond drill holes. Their biggest success was the discovery of the William Lake trend (WLT) extending 18 kilometers in a northwest –southeast axis located on the southwest and east side of William Lake Xstrata’s exploration outlined 7 prospects (W55, W56N, W21, W56, W22, W42 and Lime) of nickel mineralization within the WLT.

Our exploration started at the end of October, 2007 a followed up on mineralized intersections on prospect W56. In view of the wide spaced drilling (up to 250 meters apart) the main objective of the program was to establish the continuity of the known mineralization to provide the confidence to work towards a mineral estimation for a 43-101 compliant resource on one or more sections. The program included an ongoing ground PEM and BHEM surveys and 1,159 line kilometers of a VTEM airborne survey was flown over the entire WLT properties. Results have identified multiple, weak to highly enhanced conductivity zones, some with previous drilling indicating the presence of ore grade nickel mineralization and others with very little or no drilling.

Between November 2007 and April 2008, a drill program comprising 7,525 meters in 15 holes was completed on budget. The drilling was completed on five zones within the 15 km William Lake trend. The program was testing nickel bearing horizons identified by the historical drilling. Testing for the continuity of mineralization included drilling above, below and on strike of the known zones at 50 to 100 m step outs.

Drilling focused on new zones identified by the VTEM survey, as well as previously identified nickel bearing horizons with little previous drilling and/or poor understanding of the mineralization, were also explored. Drilling on zones 56 N and W 21 at William Lake discovered a significant new nickel-enriched sulphidic iron formation adjacent to an ultramafic intrusion that hosts numerous thick disseminated Ni-sulphide intervals. This association and the high Ni/Cu ratios is described by Bleeker (1990) at Inco's Pipe II and Thompson ore deposit located in the northern portion of the Thompson Nickel Belt (TBN). Our discovery is the first find of ore-grade and near ore grade Ni-enriched intersections of sulphidic iron formation in the southern extension of the Thompson Nickel Belt. As seen at the Thompson and Pipe II deposits these type of sulphidic iron formations when Ni-enriched can constitute ore and form as much as 50% of the total tonnage of the deposit. Although most macroscopic characteristics of the Ni-enriched iron formations are similar to those of their low nickel counterparts, Ni grades can range anywhere from slightly above those in the barren sulphides to the maximum grades observed in adjacent massive magmatic sulphides (e.g. 3% Ni at Pipe II and 10-12% Ni at Thompson).

A small TEM ground geophysical survey was conducted in March 2010 over the W22 area. The survey was successful in identifying a strong conductor underlying a weaker conductor that had been detected earlier by VTEM and by Falconbridge surveys. Future exploration would suggest an initial drill target would be this strong conductor. Then, following more extensive TEM surveying, further drilling would target portions of the known zones expected to be better defined by the TEM as to depth, size and configuration.

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Reviewing the current exploration status of all the projects in our portfolio, the William Lake Project is the most advanced property based on the exploration activity (primarily drilling) and results (potentially economic grade and width). The William Lake project has consistently returned economic grade/width intersections with the previous drilling programs.

Tower Property, Manitoba

Location - The Tower property is comprised of 35 claims contiguous with the northeastern portion of the William Lake Property. In 2000, Xstrata discovered the Tower Copper-Gold Zone during routine drill testing of geophysical targets along the Thompson Nickel Belt (TNB). The name “Tower” was given to the discovery because of close proximity to one of the towers supporting the major north-south electrical power transmission line which passes through the property. A more detailed description of the property location is given in the William Lake section above.

Access – See the William Lake property section above.

Property Status – The property covers 7,627 hectares. Rockcliff Resources Inc. has an option on the Tower property to earn a 70% interest. Under the terms of the option, Rockcliff must pay us $150,000 in incremental payments over four years and is required to incur aggregate exploration expenditures totaling $4,000,000 over four years; $2,000,000 over two years to earn a 50% working interest and a further $2,000,000 to earn a further 20% working interest.

Geology– A detailed description of the regional geology is presented in the William Lake geology section above. The Tower property mineralization consists of polymetallic base and precious metal sulphides of possible VMS (volcanic massive sulphide) origin. The current target of drilling, the Tower Copper-Gold Zone, is a multi-zoned system rich in copper, gold, zinc and silver. Nine widely spaced (200m drill centers) drill holes were completed by Xstrata in years 2000 and 2001, including the hole which discovered the Tower Copper-Gold Zone. These holes and the downhole geophysics outlined an extensive steeply dipping sheet of sulphides with a minimum strike length of 700m and a minimum vertical depth of 700m.

Exploration- In 2000 Xstrata discovered the Tower Zone during routine drill testing of TNB geophysical anomalies interpreted to reflect sulphide nickel deposits.

In 2010, Rockcliff completed the first phase of a diamond drill and borehole program on the Tower Property, focusing on the VMS (copper-gold) style mineralized horizon known as the Tower Zone. Multiple VMS systems and a high grade gold vein were identified.

Salt Chuck Property, Alaska

Location- The project area is located in Southeast Alaska on Prince of Wales Island, approximately 70 kilometres northwest of Ketchikan, Alaska. The property is situated at latitude 55º 38’ N, longitude 132º 33’ 30” W.

Property Status – The property is comprised of federal claims occupying and area of 1,082 hectares.

Access – The property is accessed by ferry from Ketchikan to Hollis on the eastern part of Prince of Wales Island, then by 80 kilometres of paved road to the Salt Chuck turnoff (6 kilometres southwest of Thorne Bay), then 9.5 kilometres to the Salt Chuck property via improved gravel roads maintained by the U.S. Forest Service and the local lumber industry.

Geology - The project area is underlain by a mafic-ultramafic complex which hosts palladium bearing copper sulfide mineralization.

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Exploration - A recent airborne geophysical survey released by the State of Alaska indicates that the Salt Chuck property covers prospective ground within the mafic-ultramafic complex. On the property lies the historic Salt Chuck mine. The Salt Chuck mine was active between 1919 and 1941 and had reported production of 300,000 tons of copper sulfide ore grading 0.95% Copper, 2.0 g/t Palladium, 1.1 g/t Gold, and 5.7 g/t Silver (these results preceded the implementation of national instrument 43-101 standards and therefore cannot be verified by modern standards). A site visit to the property was made in September 2007, and the logistic for a 2500 metres drill program was laid out.

Fond du Lac Project, Saskatchewan

Location - The Fond du Lac property is located in northern Saskatchewan, Canada, east of Lake Athabasca and immediately north of the Fond du Lac River. The centre of the property is located just 20 km northwest of Stony Rapids, Saskatchewan at latitude 59° 22.1’ North and Longitude 104° 0.7’ West.

Access - Access to the property is via float or ski-equipped fixed-wing aircraft, readily available for charter from Yellowknife, Northwest Territories or Stony Rapids and Points North, Saskatchewan. Helicopter chartering is also available. There is an old winter road that traverses to the centre of the property. Stony Rapids has year round road access and offers a wide range of supply and transportation services to the mining and exploration industry. There are daily direct flights connecting Stony Rapids to Saskatoon and Regina.

Property Status - The Fond du Lac Project claim area consists of permits totaling approximately 19,713 hectares of prospective ground. The Company is the registered claim holder, and owns 100% of the property.

Geology - Mineralization on the property is associated with magmatic nickel-copper sulphides. Mineralization has been transported along a prominent fault conduit formed in an extensional rift environment within the Snowbird Tectonic Zone.

Exploration – The area was first discovered in the 1930s and was explored by several different companies until 1991. The Fond du Lac property was staked in January of 2005. A Geotech airborne survey was flown in March-April of 2005 and additional staking was undertaken to cover airborne responses lying outside of the original block. In June of 2005, an organic soil-sampling program was conducted contemporaneously with a cursory mapping and exploration program to look at the geology on the property. A drill program in 2006 intersected mineralization in all 7 drill holes completed including one intersection of a half meter length grading 1.86% nickel. Drilling was cut short due to a large forest fire forcing early evacuation and an end to the drill program.

During the second quarter of 2007, we completed a drill program of 19 diamond drill holes totaling 3,127 meters. Drilling tested a focused area of known mineralization on the Rea Lake mineralized horizon, a strong magnetic feature 600 meters to the south, and a possible extension to the Axis Lake East Zone horizon. The program confirmed extensive zones of nickel mineralization.

In 2009, a ZTEM or Z-Axis Tipper Electromagentic system airborne EM survey was conducted by Geotech Ltd. The purpose of the survey was to test ZTEM capability in identifying potential along strike and deep extension of the known Ni-Cu mineralization below 500 feet. From the survey we were able to identify a new anomaly northwest of the known Axis Lake Ni-Cu mineralized horizon and south of Currie Lake.

Manibridge Property, Manitoba

Property Description- The property is located 128 km southwest of Thompson and 32 km southwest of the town of Wabowden (NTS 63J10). The Manibridge properties consist of two claims, Ore 5 and Ore 6, each of which is approximately135 hectares.

Exploration -On November 15, 2007, we entered into a 50-50 joint venture agreement with Crowflight to explore and develop nickel deposits on properties controlled by both parties proximal to the past producing Manibridge Nickel Mine. This transaction will enable the Company to expand the potential at Manibridge by exploring not only the areas surrounding the mine but the historical mineralization along strike that are evident in exploratory drill holes from the 1960s and 1970s. Properties contributed by the Company to the joint venture contain the claims and tailings disposal area of the past-producing Manibridge Mine. Crowflight is in the process of bringing its Bucko Lake project into production and is motivated to find additional mill feed for the recently fully funded mill to be built there. In 2007 Crowflight conducted a VTEM geophysical survey over the Manibridge property and shared mine data with PNI on the deposit. In 2008 Crowflight conducted a 2,496 metre drill program completing six holes. Drilling resulted in the discovery of two nickel zones located within 400 metres of past production and confirmed an extension to the Manibridge deposit itself.

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HPM (also referred to as HPE) and Forgues, Quebec

Property Description - The HPM and Forgues properties are located approximately 290 kilometres north of Baie-Comeau, Quebec and 180 kilometres north-northwest of Sept-Iles, Quebec. The properties can be accessed by Route 389, an all weather road connecting Baie-Comeau to Fermont to Labrador City. It is paved up to Hydro Québec Manic 5 power plant. A gravel road maintained by Hydro-Québec to access their Hart Jaune power station intersects to the east route 389 at kilometre 390. The HPM property consists of 14 map-staked claims, covering an area of 748.37 hectares. The Forgues property consists of 25 ground-staked claims covering an area of 400 hectares. The properties lie in the Manicouagan Metamorphic Complex.

Exploration- On November 6, 2007, we announced that we had entered into an option agreement with Manicouagan Minerals Inc. Since Mr. Constantine Salamis, a director of the company is a significant shareholder and officer of Manicouagan Minerals, this is reported as a related party transaction under Item 8, Section B - “Related Party Transactions” - below.

Nuvilik Property, Quebec

Property Description - The Nuvilik Property is located in the central part of the Cape Smith Belt approximately 90 kilometers south of the coastal Inuit community of Salluit. A permit covering 7,500 hectares was originally taken in 1995. In December 2002 and July 2003 additional claims were taken and the property now comprises 245 claims covering approximately 9,980 hectares separated into two distinct blocks; all of the claims are 100% owned.

Exploration - Historical drilling includes 15 drill holes by Ekwan River Mines Ltd. and 6 drill holes totalling 1,037m by Falconbirdge Ltd. An AeroTEM airborne EM and Magnetic survey was flown in 2004 and identified several unexplained conductive anomalies. The AeroTEM total field magnetic data highlighted numerous magnetic features, some that are potentially related to previously unrecognized ultramafic units.

SR1 Property, Quebec

Property Description - The SR1 property is located approximately 55 kilometres southwest of the coastal Inuit community of Kangiqsujuaq, and 40 kilometres southeast of the Donaldson airport. Travel to the Property is only by helicopter. The SR1 property is (at the most) 45 kilometres long by 14 kilometres wide, covering a surface of 35,724 hectares. It comprises 864 claims acquired from January to July 2003.

Exploration - Exploration in the southern portion of the Cape Smith Belt (i.e., South Raglan) in Northern Québec was sparked anew in 2003 by the Ni-Cu-PGE sulfide discoveries announced by Canadian Royalties Inc. At that time there was a staking rush and Falconbridge Ltd. took out several claim blocks including SR1 in the South Belt, and initiated a regional exploration project to investigate the potential of the ultramafic rocks. In the summer of 2009, a 1,100 km VTEM survey was completed on the property and geophysical interpretation of the survey has identified several potential targets.

In 2008, Pure Nickel Inc. contracted Geotech Ltd. to conduct an airborne VTEM and magnetometer survey over the SR1 property. Operating out of Wakeham Bay, Québec, a total of 1096 line-kilometres were flown along north-south flight lines that were 300 metres apart. A number of conductive and magnetic anomalies were identified.

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In 2009 a helicopter supported Pure Nickel team field-checked anomalies and anomaly trends identified by the 2008 VTEM survey. Several occurrences of disseminated sulphide mineralization were discovered in and near mafic intrusives and one previously unmapped area of frost heave tentatively interpreted to be ultramafic. Multi-element ICP (inductively-coupled plasma emission spectrometry) analyses by ALS Chemex have been received on the 141 grab samples from sites with either visible sulphides or a rusty appearance. Nickel ranged from 500 to 2000 ppm in 18 of the samples, copper from 1000 to 19300 ppm (1.93%) in 17 samples and cobalt from 75 to 175 ppm in 18 samples. Selected samples, including several from mineralization discovered by Falconbridge (now Xstrata) near the northwest end of the property, returned up to 0.061 ppm platinum and 0.199 ppm palladium.

In November 2010 we made the decision to not renew the mining claims on the SR1 property as they come due over the next several months.

Rainbow, Nunavut

Property Description - The property is located 260 kilometres west of Arviat, 380 kilometres northwest of Churchill, and 612 kilometres north of Thompson. In 2010 we expanded the property by staking an additional 19 mineral claims. The Rainbow Property now consists of 23 mining claims totaling 19,850 hectares. The project area is remotely located, Arviat is the nearest costal access route, and Churchill is the closest railhead. Access to the camp is possible via fixed wing aircraft to Cullaton Lake Airstrip (gravel strip, 4500 feet long, capable of taking HS748 aircraft).

Exploration - The most significant previous work on the property was undertaken by Inco (1952-53, & 1997), and Noranda (1977 & 1992). From August 22 to September 10, 2004, a 1,012 metres diamond drill program in six holes was completed in the vicinity of the Main Zone Showing to test the surface showing (0.38 to 2.23% Ni). Four holes intersected disseminated sulphides with nickel grades less than 0.5% (RB04-01,-03 to -06). One hole (RB04-02) intersected a narrow 0.5 metre internal of semi-massive sulphides which assayed 0.79% Ni and 9.93% sulfur with a low nickel tenor of 2.87% Ni in 100% sulphides. Significantly, one hole, RB-04 intersected 13.10 g/t Au and 4.73% S over 2.14 metres, including 24.20 g/t and 7.88% S over 1.0 metre.

In September 2010, a Mobile Metal Ion (MMI) geochemistry soil sampling program was conducted. The test program, best described as an Orientation Survey, was to determine effectiveness of the MMI soil geochemical method for detecting buried gold and nickel occurrences discovered by Falconbridge drilling in 2004 for nickel deposits in an area of komatiitic volcanics and iron formation. In order to determine the anomalous pattern of elements occurring in association with gold and nickel, all samples were subjected by SGS to their MMI-M package whereby 53 elements are reported.

To test the gold potential, two sets of 33 MMI soil samples were collected along a 625-m north-south line on which Falconbridges’s 2004 drill hole RB04-04 had returned13.15 g/t gold over 2.14m The first set was sampled at a depth of 0 to 15 cm below the organic soil layer and a second set of 33 samples from a depth of 15 to 30 cm in each of the sampling holes. Distance between sample sites varied from 2m to over 20m along the line and above the gold intersection in RB04-04.

Higher MMI Response Ratio values for gold were obtained above and for 90m to the south the RB04-04 intersection of 13.15 g/t gold at a vertical depth of 40m. These results appear to indicate a southward continuation of the drill-intersected gold mineralization which occurs in a quartz carbonate alteration zone between iron formation and a mafic volcanic.

Copper King (Western Utah Copper Corporation), Utah

During 2002, Western Utah Copper Corporation, now called Copper King Mining Corp. (CKMC) exercised its option to acquire 100% of the mining claims located in Beaver County, Utah for royalty payments of up to $10 million. Under the option agreement, CKMC had three years to put the property into production or CKMC could receive a one-year extension by notifying us before that date that the property was being readied for production by the commencement of actual mine and/or plant development expenditures according to a schedule leading to production within twelve months. CKMC has been granted two one-year extensions. The agreement provides for Pure Nickel to receive 1% of net proceeds from the first ten million pounds of copper produced, 1.5% of net proceeds on all copper produced thereafter and 2% of net smelter proceeds on all other minerals produced. Total royalties are capped at USD $10 million. The mineral rights may be subject to a 12% interest in the net profits from copper production of certain claims held by a group of private investors that includes a director of the Company and a 2% net smelter return royalty, on certain claims (held by the property vendor).

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In November 2008, WUCC failed to put our claims into production in accordance with the terms of the agreement, thereby entitling us (through our subsidiary) to exercise our option to reacquire the claims. In June 2009, after repeated attempts to confirm the precise production status of this project, we launched an action asking the Federal Court in Utah to decide the following:

1.	Was WUCC in production in accordance with our agreement?
2.	Did force majeure apply?
3.	If they were not in production and force majeure did not apply, do we have the right to take back our claims under the agreement?

Western Utah Copper Company filed a counterclaim to our original action. We believe the counterclaim is without merit.

On January 28, 2010, we advised WUCC that we were exercising our option to reacquire the claims.

In May 2010, WUCC and its parent company filed for Chapter 11 bankruptcy and appointed a new Chief Executive Officer. The company has significant secured and unsecured debts and today its current assets are likely worth far less than the outstanding loans. New management is attempting to reorganize the business. Our litigation was automatically stayed due to the Chapter 11 filing.

We have requested that the court lift the stay in connection with our litigation as we believe that resolution of our claims is a critical element in the bankruptcy. We await the court’s decision.

On August 27, 2010, a new action was launched against us by WUCC. This action is very similar to the counterclaims made in response to our original lawsuit. Management is of the opinion the court actions and related claims by WUCC are without merit and that the most likely outcome is that management of the property, upon which the operation’s concentrate mill is located, will revert back to us. Failing that, we believe that the actions taken by us will ensure that the agreement under which we filed the claim for declaratory relief remains in place and is confirmed by the court. However, the outcome of litigation is always uncertain.

Property Description - The Copper King Milford Property is located in South Western Utah and is North East of the town of Milford. The mineral rights are 100% owned and occupy approximately 7,000 acres.

Exploration - There was extensive drilling on the claims in 1998 and a feasibility study was commissioned that year. The results of the study were positive. However due to low copper prices at the time, the anticipated plant and production facilities were never constructed and the claims were not put into production.

Harp Lake, Labrador, Newfoundland

Property Description - The Harp Lake Property consists of one claim block staked over anomalous nickel and copper gossans in the Harp Lake Anorthositic Complex. The 19 claims (one licence) occupy 475 hectares. There has been no work performed on the property since 1999. In the first quarter of 2010 we made the decision not to renew the Harp Lake claims. This information on Harp Lake is for historical record only.

ITEM 4A.           Unresolved Staff Comments

Not applicable.

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ITEM 5.          Operating and Financial Review and Prospects

The following is a discussion of our results of operations for the fiscal years ended November 30, 2008, 2009 and 2010.

The following discussion should be read in conjunction with our audited consolidated financial statements, together with the accompanying notes, included elsewhere in this Annual Report. Unless indicated otherwise, all references herein are to Canadian dollars. Please refer to “Item 3:Key Information” for exchange rate information on the Canadian dollar.

On March 30, 2007, we (then known as Nevada Star Resource Corp., (“Nevada Star”)), completed the acquisition of all of the shares of (old) Pure Nickel Inc. (“old PNi”), a private company incorporated on May 18, 2006. From a Canadian legal and accounting perspective, the transaction was deemed to be a reverse takeover. Old PNi, the new subsidiary of Nevada Star, was deemed to be the acquirer and its financial statements are the basis of the continuing financial statements of Nevada Star, which simultaneously changed its name to Pure Nickel Inc. Results of operations reflect the combined results of (old) Pure Nickel Inc. and Nevada Star Resources for the fiscal years ended November 30, 2008, 2009 and 2010.

The financial statements have been prepared in accordance with Canadian GAAP. Reference is made to Note 19 of the audited financial statements for the years ended November 30, 2009 and 2008, and to Note 20 of the audited financial statements for the years ended November 30, 2010 and November 30, 2009, for a discussion of the material differences between Canadian GAAP and U.S. GAAP, and their effect on the Company’s annual audited financial statements. In addition to historical information, the following discussion contains forward-looking statements that involve risk and uncertainties. The Company’s actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors, including those discussed in “Risk Factors” and elsewhere in this Annual Report.

Overview

A.Operating Results

Selected financial information is set out below.

	12 months		12 months		12 months
	ended		ended		ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Revenues	Nil		Nil		Nil
Operating expenses	1,481,601		1,269,173		1,972,406
Income (loss) from operations	(1,481,601	)	(1,269,173	)	(1,972,406	)
Other income (expenses)	(827,165	)	(142,015	)	(459,634	)
Net income (loss)	(2,308,766	)	(1,411,188	)	(2,432,040	)
Total assets	42,899,214		44,773,605		46,210,759
Shareholders’ equity	42,460,757		44,448,587		45,754,932
Outstanding common shares	67,832,226		67,765,559		67,765,559
Dividends per common share	Nil		Nil		Nil
Net income (loss) per share, fully diluted	(0.03	)	(0.02	)	(0.04	)

Under Canadian GAAP, the Company capitalizes all costs related to the acquisition, exploration and development of non-producing mineral properties. Under U.S. GAAP, acquisition costs of mineral rights are capitalized, but exploration and development costs are expensed as incurred, until the establishment of commercially mineable reserves is complete, at which time any further exploration costs are capitalized. Under Canadian GAAP, enterprises in the development stage are encouraged to disclose cumulative information from the inception of the development stage. Under U.S. GAAP, this disclosure is required. Cumulative net losses since inception aggregate $14,016,092. The differences in accounting for mineral properties under Canadian and U.S. GAAP had the following effects on the Company’s financial statements.

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(i) Net Loss and Loss per Share

	12 months		12 months		12 months
	ended		ended		ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Net loss under Canadian GAAP .	(2,308,766	)	(1,411,188	)	(2,432,040	)
Capitalized expenditures on unproven mineral properties	785,160		(635,126	)	(3,581,188	)
Net loss under U.S. GAAP	(1,523,606	)	(2,046,314	)	(6,013,228	)
Loss per share under U.S. GAAP – basic and diluted	(0.02	)	(0.03	)	(0.09	)

(ii) Mineral Properties

	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Mineral properties under Canadian GAAP	38,555,291		39,071,469		38,365,557
Capitalized expenditures on unproven mineral properties	(18,801,891	)	(19,587,051	)	(18,951,925	)
Reclassification to investment in joint venture	(69,024	)	−		−
Mineral properties under U.S. GAAP	19,684,376		19,484,418		19,413,632

(iii) Investment in Joint Venture

	Nov. 30,	Nov. 30,	Nov. 30,
	2010	2009	2008
	$	$	$
Investment in joint venture under Canadian GAAP	−	−	−
Reclassification from mineral properties	69,024	−	−
Investment in joint venture under U.S. GAAP	69,024	−	−

(iv) Deficit

	Nov. 30,		Nov. 30,		Nov. 30,
	2010		2009		2008
	$		$		$
Deficit under Canadian GAAP	(14,016,092	)	(11,707,326	)	(10,296,138	)
Capitalized expenditures on unproven mineral properties	(18,801,891	)	(19,587,051	)	(18,951,925	)
Deficit under U.S. GAAP	(32,817,983	)	(31,294,377	)	(29,248,063	)

For Canadian GAAP, cash flows relating to mineral property exploration are reported as investing activities. For U.S. GAAP, these costs would be characterized as operating activities.

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We had no operating revenues during the year ended November 30, 2010, which is unchanged from the previous year. We do not currently generate revenues or cash flows from operations (except for interest income and some small payments that are credited to mineral resources on the balance sheet rather than being identified as revenues in our statement of operations). This was in accordance with expectations as we are an exploration stage company and expect to finance activities through joint ventures, the sale of property interests, and by raising additional share capital when market conditions are suitable.

We reported a net loss of $2,308,766 or $0.03 per share for the year ended November 30, 2010, compared to a net loss of $1,411,188, or $0.02 per share for the year ended November 30, 2009, and a net loss of $2,432,040 or $0.04 per share for the year ended November 30, 2008. Of the loss for the year ended November 30, 2010, $641,080 was a non-cash expense related to the write-down of two mineral properties, SR1 Raglan and Harp Lake. During the year, we decided to not renew our mining claims on those two properties so that we could focus our resources on our other properties. The comparative figure for 2009 is a nil and for 2008 is a write-down of $647,368.

Our results include a loss on foreign exchange of $66,764 for which the comparative figure for 2009 is a loss of $217,206 and for 2008 is a gain of $302,950. Our policy has been to maintain U.S. cash balances for the payment of expenses incurred in U.S. dollars so the loss results from the appreciation of the Canadian dollar during the last part of the year. The Canadian dollar continued to strengthen, resulting in the loss, but our U.S. dollar exposure has been reduced from the previous year because our MAN Alaska mineral property was moved into a joint venture during the year which had the effect of reducing our exposure since the net U.S. dollar monetary assets held by the joint venture do not expose us directly to foreign exchange risk.

General and administrative expenses for the year ended November 30, 2010 were $1,481,601, compared to $1,269,173 in the previous year and $1,972,406 for the year ended November 30, 2008. The increase in expenses is attributable primarily to non-cash stock-based compensation which increased to $320,936 from $104,843 in the previous year and 253,569 for the year ended November 30, 2008. That amount increased because most of those payments that related to incentive compensation for 2009 were not approved or paid until 2010. Excluding the effect of that change, administration and general expense in 2010 was almost unchanged from the previous year. Accounting and audit costs during 2009 decreased significantly from the year ended November 2008.

Interest income decreased to $34,679 for the year ended November 30, 2010 compared to $66,816 for the previous year and $301,390 for the year ended November 30, 2008 due to a decrease in the cash balance and a reduction in interest rates over the years. Interest expense was $ nil for the years ended November 30, 2010, 2009 and 2008. Change in fair value of investments for the year ended November 30, 2010 is reported as a loss of $154,000 compared to a gain of $8,375 in the previous year and a loss of $399,105 for the year ended November 30, 2008. When we receive warrants as part of an option agreement with a venture partner, under Canadian GAAP we are required to record the warrants at their fair value, and then record changes in their fair value at each balance sheet date. The loss during the year ended November 30, 2010 resulted from changes in the fair value of the warrants received during 2010, which are recorded as investments of $49,750 at November 30, 2010.

Cash used by operating activities was $1,102,353 for the year ended November 30, 2010, compared to $1,512,680 in the previous year, and $484,251 in the year ended November 30, 2008. The cash flow use from loss for the year was reduced by the write-down for impairment of mineral properties of $641,080 for the year ended November 30, 2010, compared to $ nil in the previous year and $647,368 in the November 30, 2008 and stock-based compensation expense of $320,936 for the year ended November 30, 2010 compared to $104,843 for the year ended November 30, 2009 and $253,569 for November 30, 2008, since these are both non-cash expenses. Investing activities provided cash of $410,140 for the year ended November 30, 2010 while investing activities consumed cash of $4,289,682 for the year ended November 30, 2009 and $4,775,586 for the year ended November 30, 2008. For the year ended November 30, 2010, the cash flows provided by investing activities were from the redemption of short-term investments compared to the purchase of short term investments during 2009 and 2008. The capitalization of expenditures on mineral properties offset a portion of the cash flows provided by investing activities for the year ended November 30, 2010 and contributed to the cash flows used by investing activities for the years ended November 30, 2009 and 2008. Financing activities provided cash of $507,800 for the year ended November 30, 2010. We did not raise any cash through financing activities in the years ended November 30, 2009 and 2008.

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Critical accounting estimates

The preparation of our financial statements requires management to make various judgments with respect to estimates and assumptions. On an ongoing basis, management regularly reevaluates its estimates and assumptions; however actual amounts could differ from those based on such estimates and assumptions. In the opinion of management, none of the accounting estimates reflect matters that are highly uncertain at the time the accounting estimate is made or that would have a material impact on the Company’s financial condition, changes in financial condition or results of operations.

Mineral property costs

One of the most critical areas where estimates are used is in the area of the valuation of the carrying value of our mineral property costs. Under Canadian GAAP, the costs of acquiring mineral properties are capitalized until the viability of the mineral property is determined and would be amortized against future production following commencement of commercial production or are written off if the properties are sold, allowed to lapse or abandoned. General and administrative costs are expensed in the period incurred. The estimated values of mineral properties are assessed by management on a continual basis. If the carrying values exceed estimated recoverable values, then the costs are written down to the estimated recoverable values. Management’s estimates of mineral prices, recoverable resources, and operating, capital and reclamation costs are subject to certain risks and uncertainties that may affect the recoverability of mineral property costs. Although management has made its best estimate of these factors, it is possible that changes could occur that would adversely affect management’s estimate of the net cash flows to be generated from the properties. At present we have no proven or probable reserves.

Exchange rates and currency risk

We maintain our accounting records using Canadian dollars as our functional currency. United States dollar transactions are converted to the functional currency as follows: at the transaction date, each asset, liability, revenue and expense is translated into Canadian dollars at the exchange rate in effect on that date. At each period end, all monetary assets and liabilities are translated into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in the consolidated statement of operations. We do not hedge our currency exposure except to the extent that the activity provides a natural hedge when expected disbursements in United States funds offset expected receipts. Fluctuation in the exchange rates between the United States dollar and the Canadian dollar could have a material effect on our financial condition and results of operations. At November 30, 2010, we had net monetary assets denominated in United States funds of $586,671 (US$571,470). Based upon the year-end balance, an increase of 15% in the Canada to U.S. dollar exchange would result in an increase in the net loss and comprehensive loss of $88,000, and a reduction of 15% would result in a reduction in the net loss and comprehensive loss of $107,000. We believe that it is not likely but it is possible that the exchange rate could fluctuate by more than 15% within the next 12 months.

B. Liquidity and Capital Resources

On March 15, 2007, we completed a brokered private placement of 10,000,000 subscription receipts for $0.90 each, for gross proceeds of $9,000,000. Upon completion of the amalgamation with Pure Nickel Inc., the subscription receipts were automatically converted into units comprised of one post-consolidation common share of the Company and one-half of one post-consolidation warrant. Each whole warrant is exercisable into a common share at price of $1.20 for a term of 18 months. The agent employed for this financing received a cash commission of 7% of the gross proceeds and agent’s compensation and advisory warrants equal to 5% of the gross number of securities sold in the offering. Each agent’s warrant and advisory warrant was exercisable into one post-consolidation common share at a price of $0.90 each for a period of 18 months. These warrants expired in September 2008.

During the third quarter 2007, we completed a financing of $27,500,000 by the sale of 22,000,000 units for $1.25 each consisting of one common share and one half warrant, each whole warrant being exercisable for a period of 18 months into a common share of the Company for $1.75 per share. These warrants expired in January 2009.

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Currently, none of our property interests generate revenue. Our capital needs have historically been met by the issuance of securities (either through private placements, the exercise of stock options, shares for services, property or other assets).

We had cash and cash equivalents, restricted cash and cash equivalents and short-term investments of $4,104,904 at November 30, 2010 compared to $5,527,662 at November 30, 2009 and $7,750,559 at November 30, 2008. Working capital was $3,843,307 at November 30, 2010 compared to $5,351,560 at November 30, 2009 and $7,369,731 at November 30, 2008. Current liabilities at November 30, 2010 consisted of accounts payable and accrued liabilities payable totaling $438,457 compared to $325,018 at November 30, 2009 and $455,827 at November 30, 2008.

The exploration and development of our mineral projects will require substantial additional capital. A significant portion of the 2011 exploration program may be funded by ITOCHU as part of the MAN project – as of the date of this Annual Report, February 11, 2011, this had not yet been confirmed.

During 2011 we plan to continue to focus on our high priority properties (MAN and William Lake), and continue to seek joint venture, earn-in or other arrangements by which to advance the exploration of our properties without the cost of all of the work being borne by us. Management reviews the properties on a regular basis and abandons claims and writes off their book value when it is determined that further exploration is not likely to be productive. Management last carried out this review at November 30, 2010.

Management believes that the working capital on hand at November 30, 2010 will be sufficient to cover general and administrative expenses and property holding and exploration costs for the current fiscal year.

C. Research and development, patents and licenses, etc.

Not applicable.

D. Trend information

Our financial performance will be directly affected by the exploration activities to be conducted on our projects, the results of those activities, and the possible development of the properties for commercial production of nickel and/or other valuable minerals. Should the results of such exploration activities warrant bringing any of the projects into commercial production, substantial additional funds would be required. Until such time as commercial production is achieved (and there can be no assurance it will be), we will continue to incur administrative costs and exploration expenditures that are either deferred or expensed, depending upon the nature of those expenditures, resulting in continuing operating losses and significant cash requirements. In the future, should the development of our mineral projects occur, financial performance will become more closely linked to the prices obtained for the nickel and/or other metals produced. We are of the view that the previous historically high price of nickel may not be regained; however the long-term forecast price is sufficiently attractive to justify our focus on nickel projects. Demand for nickel and base metals is expected to remain strong for the foreseeable future, primarily due to demand from China, India and other developing economies. While this will encourage increased exploration and production, the overall growth in supply is not expected to keep pace with demand growth in the near future.

We report our financial results in Canadian dollars, although a significant portion of our revenues, if any, could be earned in U.S. dollars, and our costs are historically primarily in Canadian dollars, although this could change if the MAN Alaska project accounts for a significant portion of our activities. The Canadian dollar has shown significant volatility against the U.S. dollar. If this volatility continues, the effect could be to add further uncertainty to our future financial results.

E. Off-Balance Sheet Arrangements

We are not engaged in any off-balance sheet arrangements.

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F. Tabular Disclosure of Contractual Obligations

Disclosure of Contractual Obligations as at November 30, 2010

(a) We have commitments for an office lease requiring minimum payments of $4,508 per month until its expiry in 2013:

Contractual obligations	Total	Less than one year	1-3 years	3-5 years	More than 5 years
Operating lease obligations	$121,716	$54,096	$67,620	−	−
Total	$121,716	$54,096	$67,620	−	−

G. Safe Harbor

Statements included herein, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation, statements as to management’s beliefs, strategies, plans, expectations or opinions in connection with the Company’s performance, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate and may differ materially from actual future events or results. Please see “Note regarding forward looking statements” on page 8, as well as our risk factors set forth herein beginning on page 11.

Readers are referred to the documents filed by us on both the SEDAR and EDGAR web sites: specifically the most recent quarterly reports, annual report and material change reports, as each may be amended from time to time, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

ITEM 6.           Directors, Senior Management and Employees

A. Directors and Senior Management

Information about our directors and named executive officers as of February 11, 2011 is set forth below:

			Date of first election
Name	Position	Age	or appointment
Named Executive Officers
David R. McPherson	Director, President and Chief Executive Officer	57	March 26, 2007
Jeffrey D. Sherman	Chief Financial Officer	55	February 6, 2008
Directors
Robert Angrisano	Director	56	February 10, 1999
Harry Blum	Director	49	March 26, 2007
R. David Russell	Director, Chair of the Board	54	March 27, 2006
Constantine Salamis	Director	77	March 26, 2007
W.S. (Steve) Vaughan	Director	73	March 26, 2007

A brief biography of our directors and named executive officers follows:

Mr. David McPherson was appointed President and CEO of the Company in December 2007. From October 2001 until October 2005 Mr. McPherson was a Vice-President with First Ontario Credit Union and led strategy development, product and marketing groups. Since November 2005 he has maintained his own management consultant practice. Mr. McPherson has over 25 years of financial institution experience with Canadian Imperial Bank of Commerce, a number of those years being at the executive level. He has had responsibility for large regional retail and small business banking operations. He has served in an advisory capacity to a number of community based economic development groups including Niagara Growth Fund, a regional venture capital fund based in Niagara.

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Mr. Jeffrey Sherman has had extensive experience as CFO of numerous corporations, written about 20 books, and lectured extensively on finance, treasury and governance, including as an adjunct professor at York University from 1984 to 2000, and executive development and other programs for the Institute of Chartered Accountants of Ontario since 1980. His most recent book isCash Management Toolkit, published by the Canadian Institute of Chartered Accountants in 2010. From October, 1999 to October 2003, he was Vice President and CFO at Herbert A. Watts Limited, a business services company, and was instrumental in its subsequent sale. From October 2003 to April 2005, Mr. Sherman served as CFO of VisualSonics Inc., a manufacturer of laboratory instrumentation, and from 1999 to present Mr. Sherman has been President of Anagram Services, a consulting company. He graduated with a Bachelor of Commerce from the University of Toronto, and an M.B.A. from York University, and obtained his designation as a Chartered Accountant in 1979.

Mr. Robert Angrisano was Chairman of the Board from December 2007 to April 29, 2010. He was president of the Company between 2005 and March 27, 2007, and CEO of the Company from May, 2006 to March 27, 2007. He retired from Microsoft Corp. in July, 2004 after spending more than 11 years in a variety of positions including Director of Technology, Director of Business Windows and Senior Principal Technologist. Mr. Angrisano was the President, a director and a principal shareholder of M.A.N. Resources, Inc., which was acquired by Nevada Star Resource Corp. in February, 2002. Mr. Angrisano has spent over 35 years in senior levels of management in the high technology industry and has been involved in the mining industry since 1995. Mr. Angrisano is a Fire Commissioner for Kittitas County Fire District #8 (a publicly elected position) and holds various positions in non-industry related Boards and Steering Committees. He graduated from the University of Oregon with a degree in Business Administration.

Mr. Harry Blum, managing partner of Collins Barrow Toronto LLP, Chartered Accountants, was previously a partner with the transaction advisory services group of DMCT, LLP, which merged with Collins Barrow Toronto LLP in 2008. He has over 20 years of audit, tax and advisory experience. Formerly a senior professional with Price Waterhouse, Mr. Blum joined DMCT in 1992 and was admitted to its partnership in 1995. Since that time, his practice has focused on the mid-market offering specialized transaction and financial advisory services across various industry sectors including manufacturing, financial services, technology, professional services, and consumer products. Mr. Blum previously served as President and Director of Whitmore Resource Corp. from July, 2000 to November 2004. Harry graduated with a Bachelor of Commerce from the University of Toronto and obtained his designation as a Chartered Accountant in 1989.

Mr. David Russell was appointed Chair of the Board on April 29, 2010. He graduated from the Montana School of Mineral, Science and Technology with a Bachelor of Science Degree in Mining Engineering. With over 27 years in the mining industry, Mr. Russell was President and Chief Executive Officer and a director of Apollo Gold from 2002 to July 2010. Apollo Gold is a gold mining company with operations and exploration projects in Canada, the United States, and Mexico. Mr. Russell’s past positions include: Vice-President and Chief Operating Officer of Getchell Gold Company/Placer Dome Gold, General Manager, US Operations, LAC Minerals Ltd. (now Barrick Gold Corporation), Manager, Underground Mining, Independence Mining Company, Project Manager, Hecla Mining Company, and Manager, Lincoln Project FMC/Meridian Gold.

Mr. Constantine Salamis, a mining engineer, has been involved in numerous mineral exploration and production companies throughout his 50 year career, including Falconbridge Nickel, Inco Ltd., SOQUEM and Manicouagan Minerals, a Canadian public company he founded in 2004. In addition to Mr. Salamis’ North American experience, overseas he has completed geological evaluation assignments for international agencies, including the World Bank and the United Nations.

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Mr. W.S. (Steve) Vaughan has been a partner at the law firm Heenan Blaikie since February, 2007 and was a partner of McMillan Binch Mendelsohn from February, 2002 to January, 2007. Mr. Vaughan has participated in natural resource transactions in more than 50 countries over the past five years. He served as a director of Atomic Energy of Canada Limited from 1992 to 1998 and was Chair of its Environmental Committee. Mr. Vaughan has also served on various committees advising Canadian governments, the Ontario Securities Commission and Toronto Stock Exchange on issues such as mineral policy, mineral strategy, mining finance, mining taxation, seed capital, junior resource policies, over-the-counter trading and nuclear issues. Mr. Vaughan is a director and member of the Securities Committee of the Prospectors and Developers Association of Canada. He is a former director of the Toronto Branch of the Canadian Institute of Mining, Metallurgy and Petroleum and a past member of the Joint Toronto Stock Exchange Ontario Securities Commission Mining Standards Task Force. Mr. Vaughan has a Bachelor of Science and Master of Science Degree in Geology as well as a law degree and has worked in, or been closely associated with all facets of the mineral exploration, mine finance and securities industries since 1955.

B. Compensation

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis describes and explains the significant elements of our compensation programs.

The objectives of our compensation program are to retain and motivate qualified executive officers who will drive our success while promoting an alignment of interests between the executive officers and the shareholders. Compensation consists of three elements: base salary, short-term incentive bonus, and stock options. The Compensation Committee reviews annually each component and appropriate competitive factors, and makes recommendations based upon performance.

Base salaries: The primary element of our compensation program is base salary. Our view is that a competitive base salary is a necessary element for retaining and attracting qualified employees. The base salary of each executive is determined based upon survey data and other competitive information, number of years’ experience, and comparison to other base salaries paid in similar situations.

Short-term incentive bonus: In addition to establishing competitive base salaries and stock option incentives, one of the objectives of the executive compensation strategy is to encourage and recognize strong levels of performance by linking achievement of specific goals with variable cash compensation in the form of a short-term incentive bonus. Target bonus awards range up to 50% of base salary for the achievement of specific operational objectives, in particular for the achievement of corporate milestones. Bonuses for the year ended November 30, 2009 were paid out during April 2010 when specific milestones were achieved.

Stock options:The number of stock options granted is reviewed at each grant date to provide medium-term incentives. Options granted to directors who are not employees vest immediately and expire after three years. The terms and conditions of options granted to executives and other employees are reviewed for each grant at the time that it is made. Further information is present on our stock option plans below.

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Board of Directors

The following table shows the compensation received by each director, other than the director who served as an officer during the fiscal year, for the year ended November 30, 2010.

Name	Fees Earned ($)	Share- Based Awards ($)	Option- Based Awards ($)	Non-Equity Incentive Plan Compensation ($)	Pension Value ($)	All Other Compensation ($)	Total ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
Robert Angrisano	13,300	−	14,610	−	−	−	27,910
Harry Blum	24,750	−	29,220	−	−	−	53,970
R. David Russell	30,050	−	29,220	−	−	−	59,270
Constantine Salamis	14,400	−	14,610	−	−	−	29,010
W.S. (Steve) Vaughan	14,400	−	14,610	−	−	−	29,010

During the year ended November 30, 2010, members of the Board of Directors, other than directors who are employees of the Company, received director fees in accordance with the following standard arrangements:

Annual fee – Chair of the Board	$20,000
Annual fee – Chair of the Audit Committee	$15,000
Annual fee – other Directors	$10,000
Fee per Board or Committee Meeting attended, up to and including April 29, 2010	$600
Fee per Committee Meeting attended for Chair of the Committee, up to and including April 29, 2010	$750
Fee per Board or Committee Meeting attended, after April 29, 2010	$500
Fee per Committee Meeting attended for Chair of the Committee, after April 29, 2010	$750

The following table provides a summary of the options outstanding and the exercise price of the options granted to the Company’s directors as of November 30, 2010.

Name	Number of securities underlying unexercised options (#)	Option Exercise Price ($)	Option Expiration Date	Value of unexercised in-the-money options ($)
Robert Angrisano	100,000	0.26	April 21, 2011	−
	100,000	0.065	March 31, 2012	12,500
	100,000	0.20	April 29, 2013	−
Harry Blum	100,000	0.26	April 21, 2011	−
	100,000	0.065	March 31, 2012	12,500
	200,000	0.20	April 29, 2013	−
R. David Russell	100,000	0.26	April 21, 2011	−
	100,000	0.065	March 31, 2012	12,500
	200,000	0.20	April 29, 2013	−
Constantine Salamis	100,000	0.26	April 21, 2011	−
	100,000	0.20	April 29, 2013	−
W.S. Vaughan	100,000	0.26	April 21, 2011	−
	100,000	0.065	March 31, 2012	12,500
	100,000	0.20	April 29, 2013	−

Closing share price at November 30, 2010 was $0.19.

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Executive Compensation

There were two Named Executive Officers of the Company during the year ended November 30, 2010: David McPherson, President and CEO, and Jeffrey Sherman, CFO. “Named Executive Officer” means (a) each Chief Executive Officer; (b) each Chief Financial Officer; (c) each of the Company’s three most highly compensated executive officers, other than the Chief Executive Officer and the Chief Financial Officer, who were serving as executive officers at the end of the most recently completed financial year and whose total salary and bonus exceeds $150,000; and (d) any additional individual for whom disclosure would have been provided under (c) except that the individual was not serving as an officer of the Company at the end of the most recently completed financial year.

Summary Executive Compensation Table

Name and Principal Position	Year	Salary ($)	Share- Based Awards ($)	Option- Based Awards(1) ($)	Non-Equity Incentive Plan Compensation ($)		Pension Value ($)	All Other Compensation ($)	Total ($)
					Annual Incentive Plans	Long- term Incentive Plans
David McPherson President and Chief ExecutiveOfficer	2010	240,000	−	54,960	120,000	−	−	18,000(2)	432,960
Jeffrey Sherman Chief FinancialOfficer	2010	76,750	−	13,740	20,000	−	−	−	110,490

____________________
Notes:

(1)	The fair value of the stock options granted, estimated using the Black-Scholes fair value option pricing model at the date of each grant.
(2)	All Other Compensation consists of a car allowance.

Executive Incentive Plan Awards
Outstanding Option-Based Awards

Name	Number of securities underlying unexercised options (#)	Option Exercise Price ($)	Option Expiration Date	Value of unexercised in- the-money options ($)
David McPherson	250,000	0.26	April 21, 2011	−
	400,000	0.06	December 17, 2011	39,000 (1)
	400,000	0.20	April 29, 2013	−(2)
Jeffrey Sherman	100,000	0.31	February 5, 2011	−
	25,000	0.06	December 17, 2011	3,250
	100,000	0.20	April 29, 2013	−(3)

(1)	Of the 400,000 options issued to David McPherson at an exercise price of $0.06, only 300,000 were exercisable at November 30, 2010.
(2)	Of the 400,000 options issued to David McPherson at an exercise price of $0.20, only 200,000 were exercisable at November 30, 2010.
(3)	Of the 100,000 options issued to Jeffrey Sherman at an exercise price of $0.20, only 50,000 were exercisable at November 30, 2010.

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Termination Agreements for Directors and Senior Officers

Mr. McPherson became President and CEO on December 20, 2007. Under an employment contract that was effective April 1, 2008, Mr. McPherson is paid an annual salary of $240,000, payable monthly in equal installments. Under the contract, he also receives a monthly car allowance of $1,500, and premiums for life and disability insurance paid for by the Company. In the event of termination without cause or if a terminating event occurs because of a change in control of the Company (or similar event, as defined in the contract), Mr. McPherson will receive a minimum of 24 months’ salary plus $100,000.

Stock Option Plans

Our stock option plans provide for equity participation by directors, officers, employees and service providers of the Company or affiliate of the Company and permitted assigns of such individuals (“Eligible Person”) through the acquisition of common shares pursuant to the grant of options. Our Board of Directors administers the plan. Options may be granted to purchase common shares on terms that the directors may determine, subject to the limitations of the stock option plan and the requirements of the TSX.

The following is a summary of the terms of the stock option plan and is qualified in its entirety by the full text of the stock option plan which is available for review at our offices and is attached as Exhibit 4.3 to our Annual Report on Form 20-F filed with the SEC on May 21, 2008:

1. The number of common shares to be reserved and authorized for issuance, pursuant to options granted under the stock option plan, is 10% of our issued and outstanding common shares from time to time;

2. Subject to limited exceptions, the exercise price for options granted under the our stock option plan will not be less than the volume weighted average price of our common shares on the TSX for the five (5) trading days immediately preceding the relevant date;

3. In the event that no specific determination is made by the Board with respect to the expiry date and the vesting schedule of options granted pursuant to the stock option plan, each option shall be exercisable 10 years from the date it was granted and may be exercised for no more than 20% of the common shares covered by the option during each 12 month period following the first anniversary of the date of the grant;

4. Subject to limited exceptions, an option and all rights to purchase common shares pursuant thereto shall expire and terminate immediately upon the optionee who holds such option ceasing to be an Eligible Person. The Board, however, can pass a resolution stating that an option can remain outstanding despite the optionee ceasing to be an Eligible Person; and

5. Options granted under the stock option plan are non-assignable, except in limited circumstances.

See Item 6.E - “Share Ownership of Director and Officers,” – below, for a table setting out the stock options currently held by our directors and officers.

C. Board Practices

Each director is currently serving a one-year term. Directors hold office until the next annual meeting of shareholders, and until his successor has been elected and qualified.

Audit Committee

We have an Audit Committee that appoints the independent auditor to be engaged by the Company and reviews with the independent auditor the scope and results of the audits, our internal accounting controls, and the professional services furnished by the independent auditors. The members of the Audit Committee are Harry Blum (Chair) and R. David Russell. The Board is currently seeking a third member for its Audit Committee. All current members of the Audit Committee meet the independence criteria set out in Multilateral Instrument 52-110 –Audit Committees (“52-110”), and the Corporate Governance Guidelines and the Audit Committee performs the role described in section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The responsibilities and operation of the Audit Committee are set out in the charter of the Audit Committee, the complete text of which is set forth below:

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Introduction and Purpose

Pure Nickel Inc. (the “Company”) is a publicly-held company and operates in a highly competitive and regulated environment. The Company’s business involves an environment that is highly regulated at both the federal and state level in the United States and the provincial level in Canada.

The Audit Committee is appointed by and shall assist the Board of Directors (the “Board”) of Pure Nickel Inc. in fulfilling its oversight responsibilities in the following principal areas: (1) accounting policies and practices, (2) the financial reporting process, (3) financial statements provided by the Company to the public, (4) risk management including systems of accounting and financial controls, (5) appointing, overseeing and evaluating the work and independence of the external auditors, and (6) compliance with applicable legal and regulatory requirements. In addition to the responsibilities specifically enumerated in this Mandate, the Board may refer to the Committee such matters and questions relating to the financial position and operations of the Company as the Board may from time to time see fit.

Composition and Membership.The Committee shall consist of at least three directors appointed annually by the Board and selected based upon the following, in accordance with applicable laws, rules and regulations:

Independence. Each member shall be independent in accordance with applicable legal and regulatory requirements and in such regard shall have no direct or indirect material relationship with the Company which could, in the view of the Board, reasonably interfere with the exercise of a member’s independent judgment.

Financially Literate. Each member shall be financially literate or must become financially literate within a reasonable period of time after his or her appointment to the Committee. For these purposes, an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.

Meetings. The Audit Committee shall meet at least four times annually, in person or by telephone and more frequently as circumstances dictate. The Audit Committee Chair shall prepare or approve an agenda in advance of each meeting.

Responsibilities and Duties. The Company’s management is responsible for preparing the Company’s financial statements, while the external auditors are responsible for auditing those financial statements. The Committee is responsible for overseeing the conduct of those activities by the Company’s management and external auditors, and overseeing the activities of any internal audit initiatives. The Company’s external auditors are accountable to the Committee as representatives of the Company’s shareholders.

It is recognized that members of the Committee are not full-time employees of the Company and do not represent themselves to be accountants or auditors by profession or experts in the fields of accounting or auditing or the preparation of financial statements. It is not the duty or responsibility of the Committee or its members to conduct auditing or accounting reviews or procedures. Each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Company from whom it receives information, and (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary.

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The specific responsibilities of the Committee are as follows:

• Make regular reports to the Board of Directors of the Company.

• Appoint the independent auditors to be engaged by the Company, establish the audit fees of the independent auditors, pre-approve any non-audit services provided by the independent auditors, including tax services, before the services are rendered.

• Review the scope of the independent auditor’s audit examination, including their engagement letter, prior to the annual audit of the Company’s financial statements.

• Instruct the independent auditors to report directly to the Audit Committee any serious difficulties or disputes with management, and ensure they are appropriately resolved.

• Review and evaluate the performance of the independent auditors and review with the Board of Directors all proposed discharges of the independent auditors.

• Review each annual audit with the independent auditor at the conclusion of the audit. The review shall include all comments or recommendations of the independent auditor, all audit problems or difficulties and management’s response.

• Review and discuss with management the procedures undertaken in connection with the required certifications for regulatory filings and other reports including their evaluation of the Company’s disclosure controls and procedures and internal controls, as well as any and all fraud, whether or not material, that involves management or others who have a significant role in the Company’s internal controls.

• Review management’s assessment of the effectiveness of the Company’s internal controls over financial reporting and disclosure, and the independent auditor’s related attestation. Consider with management and the independent auditors whether any changes to such internal controls are appropriate.

• Review with management the Company’s quarterly and annual financial results prior to regulatory filings and the issuance of related press releases.

• Be authorized to hire outside counsel or other consultants as necessary.

• Perform such other duties as are assigned by the Board of Directors.

• Review the Audit Committee’s charter annually and recommend all proposed changes to the Board of Directors.

• Periodically evaluate and take steps to improve the effectiveness of the Audit Committee in meeting its responsibilities under this Charter.

Public Disclosure

This Charter shall be included on the Company’s website. The Company’s annual report to shareholders will state that this Charter is available on the Company’s website and will be available upon request to the Company’s Corporate Secretary.

Compensation Committee

The Company’s Compensation Committee is currently comprised of two independent directors. The current members of the Compensation Committee are Harry Blum (Chair) and R. David Russell. The Committee is intended to have three members, and the Board expects to appoint a third member to the Compensation Committee in due course. The responsibilities and operation of the Compensation Committee are set out in the Compensation Committee Mandate, the text of which is set forth below:

General

The Board of Directors (the “Board”) of Pure Nickel Inc. (the “Company”) has delegated the responsibilities, authorities and duties described below to the compensation committee (the “Committee”). For the purpose of this mandate, the term “Company” includes the Company and its subsidiaries.

The overall purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities in relation to compensation by developing, monitoring and assessing the Company’s approach to the compensation of its directors, senior management and employees.

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Members

1. The Committee will be comprised of a minimum of three directors, each of whom shall be, in the determination of the Board, “independent” for the purposes of National Instrument 58-101Disclosure of Corporate Governance Practices. Each Committee member shall satisfy the independence and experience requirements, if any, imposed by applicable securities laws, rules or guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules. Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the Board.

2. Members of the Committee shall be appointed annually by the Board at the first meeting of the Board after the annual general meeting of shareholders. Each member shall serve until such member’s successor is appointed, unless that member resigns or is removed by the Board or otherwise ceases to be a director of the Corporation. The Board shall fill any vacancy if the membership of the Committee is less thanthree directors.

3. The Chair of the Committee will be designated by the Board, on the recommendation of the Corporate Governance and Nominating Committee, or, if it does not do so, the members of the Committee may elect a Chair by vote of a majority of the full Committee membership. The Chair of the Committee shall be responsible for overseeing the performance by the Committee of its duties, for assessing the effectiveness of the Committee and individual Committee members and for reporting periodically to the Board.

Meetings

4.The Committee will meet at least once a year and meetings will be scheduled to facilitate the committee carrying out its responsibilities. Additional meetings will be held as deemed necessary by the Chair of the Committee. The Committee shall have an in-camera session without non-independent directors and management as a regular feature of each regularly scheduled meeting.

5. Meetings of the Committee shall be validly constituted if a majority of the members of the Committee is present in person or by telephone conference. A resolution in writing signed by all the members of the Committee entitled to vote on that resolution at a meeting of the Committee is as valid as if it had been passed at a meeting of the Committee.

6. The Committee shall submit the minutes of all meetings to the Board, and when requested to, shall discuss the matters discussed at each Committee meeting with the Board.

Committee Charter and Performance

7. The Committee shall have a written charter that sets out its mandate and responsibilities and the Committee shall review and assess the adequacy of such charter and the effectiveness of the Committee at least annually or otherwise, as it deems appropriate, and propose any recommended changes to the Corporate Governance and Nominating Committee who will do same and recommend any changes to the Board for approval. Unless and until replaced or amended, this mandate constitutes that charter.

Committee Authority and Responsibilities

8. The Committee shall have the power and authority to perform the following duties and fulfill the following responsibilities:

(i)       Review the compensation practices and policies of the Company to ensure that they are competitive and that they provide appropriate motivation for corporate performance and increased shareholder value and make recommendations to the Board regarding same.

(ii)      Oversee the administration of the Companies compensation programs, including incentive compensation plans and equity-based plans, and the nature of the compensation provided under such programs to ensure that all management compensation programs are linked to meaningful and measurable performance targets.

(iii)     Make recommendations to the Board regarding the adoption, amendment or termination of compensation programs and the formal approval of the adoption, amendment and termination of compensation programs of the Company, including for greater certainty, ensuring that if any equity-based compensation plan is subject to shareholder approval, that such approval is sought.

(iv)      Establish and evaluate the appropriateness of performance goals for performance-based compensation and make recommendations to the Board regarding same.

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(v)       Periodically survey the executive compensation practices of other comparable companies and report back to the Board.

(vi)      Annually review and make recommendations to the Board regarding retainers and fees paid to members of the Board; (vii) Annually review and make recommendations to the Board regarding the annual base salary and bonus targets for the senior executives of the Company.

(viii)    Review and make recommendations to the Board regarding annual corporate goals and objectives for the Chief Executive Officer (the “CEO,”) evaluate the CEO’s performance against such goals and objectives and report its findings and conclusions to the Board.

(ix)      Annually review and make such recommendations to the Board, as are appropriate based on its review, regarding the CEO’s annual base salary, the CEO’s bonus and any stock option grants and other awards to the CEO under the Companies compensation programs. In evaluating the CEO’s compensation, the Committee will consider the Corporation’s performance and relative shareholder return, the compensation of CEOs at other companies, and the CEO’s compensation in past years.

(x)       Annually review and make recommendations to the Board regarding the Company’s directors and officers liability insurance policies.

(xi)      Review and recommend to the Board for approval the annual report on executive compensation required to be prepared under applicable corporate and securities legislation, regulation and rules including the disclosure concerning members of the Committee and settle the reports required to be made by the Committee in any document required to be filed with a regulatory authority and/or distributed to shareholders.

(xii)     Determine and recommend to the Board for approval the award to employees of stock options under the Company’s stock option plan.

(xiii)    Annually review and make such recommendations to the Board, as are appropriate, the Corporation’s key human resources policies and programs.

(xiv)    At the request of the Board, investigate and report on such other matters as it considers necessary or appropriate in the circumstances.

Authority to engage outside advisors

9. The Committee has the authority to engage outside advisors as it determines necessary to carry out its duties.

10. The Company shall provide appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment (a) of compensation to any advisors engaged by the Committee, and (b) of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

The Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee is comprised of two independent directors. The current members of the Corporate Governance and Nominating Committee are Harry Blum (Chair) and R. David Russell. The Board expects to appoint a third member in due course. The responsibilities and operation of the Corporate Governance and Nominating Committee are set out in the Corporate Governance and Nominating Committee Mandate, the text of which is set forth below:

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE CHARTER

Introduction and Purpose

1. The Board of Directors (the “Board”) of Pure Nickel Inc. (the “Company”) has delegated the responsibilities, authorities and duties described below to the corporate governance and nomination committee (the “Committee”). For the purpose of this charter, the term “Company” includes the Corporation and its subsidiaries.

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2. The Company is publicly-held and operates in a highly competitive and regulated environment. The Company’s business involves an environment that is highly regulated at both the federal and state level in the United States and the provincial level in Canada. To assist the Board in its responsibilities relating to reviewing the Company’s operational compliance with applicable legal requirements and sound ethical standards, the Board has created a Committee.

Composition and Membership

3. The Committee shall be comprised of three or more directors, each of whom the Board has determined is “independent” for the purposes of National Instrument 58-101 Disclosure of Corporate Governance Practices and satisfies the independence and experience requirements, if any, imposed by applicable securities laws, rules or guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules. The members of the Committee are appointed by the Board at the annual organizational meeting of the Board and serve until their successors are duly appointed and qualified. Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.

Meetings

4. The Committee shall meet annually or more frequently in person, telephonically or electronically as circumstances dictate. A majority of the Committee members currently holding office constitutes a quorum for the transaction of business. The Committee shall take action by the affirmative vote of a majority of the Committee members present at a duly held meeting.

Responsibilities and Duties

5. The Committee shall undertake the following responsibilities and duties:

Development of Guidelines and Procedures

(i)       Oversee the development, issuance and distribution and review of appropriate ethics and legal compliance guidelines and procedures.

(ii)      Oversee the development and implementation of guidelines and procedures to ensure satisfactory relationships with the Corporation’s principal regulatory authorities.

(iii)     Oversee the development and implementation of employee communication and training on ethics and compliance issues.

Ensure Adequate Guidance, Reporting and Investigation Processes

(i)       Monitor and review periodically the systems that management has established to implement the Company’s ethics and compliance guidelines.

(ii)       Ensure that the Company maintains clear channels of communication.

(iii)      Oversee receiving periodic reports regarding investigations of compliance violations.

(iv)      Ensure that business units have processes in place for receiving and investigating reports of compliance violations, and advising the Committee of these reports.

(v)       Review with the Company’s General Counsel legal compliance matters, including corporate securities trading policies.

(vi)      Review current/pending litigation and regulatory proceedings bearing on corporate governance in which the Company is a party.

Monitor Compliance with Compliance Guidelines and Ethics Policies

(i)       Ensure that appropriate internal and/or external audits and surveys are conducted to verify adherence to Company compliance guidelines and procedures.

(ii)      Commission special audits as necessary to verify adherence to the Company’s compliance guidelines and procedures.

(iii)     Review significant cases of employee conflict of interest and related-party transactions, misconduct or fraud.

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(iv)      Monitor audits/examinations by governmental or other regulatory agencies.

Evaluation and Recommendation of Board Membership

(i)       Evaluate and make recommendations to the full Board concerning the number and accountability of Board committees, committee assignments and committee membership rotation practices.

(ii)      Establish and articulate qualifications, desired background, and selection criteria for members of the Board imposed by applicable securities laws, rules or guidelines, any applicable stock exchange requirements or guidelines and any other applicable regulatory rules.

(iii)     Make recommendations to the full Board concerning all nominees for Board membership, including the re-election of existing Board members. The Committee may retain any reputable search firm to be used to identify director candidates. The Committee has the sole authority to retain and terminate search firms and approve the search firm’s fees and other retention terms.

(iv)      On an annual basis, solicit input from the full Board and conduct a review of the effectiveness of the operation of the Board, Board committees and individual Board members, including reviewing and monitoring compliance with governance and operating practices and the Corporate Governance Principles.

Governance and Evaluation

(i)       Guide the directors in the evaluation of corporate governance as and when appropriate.

(ii)      Develop and recommend to the Board a set of corporate governance principles applicable to the Company and review these principles at least annually.

(iii)     Report to the Board summarizing the Committee’s actions and any significant issues considered by the Committee.

(iv)     Perform such other functions as assigned by law, the Company’s Articles of Incorporation or Bylaws, or the Board.

Delegation to Subcommittees

The Committee may, in its discretion, form and delegate authority to subcommittees when appropriate.

Performance Evaluation

The Committee shall, from time to time, conduct an evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The performance evaluation shall also include a review of the adequacy of this charter and shall recommend to the Board any revisions to this charter deemed necessary or desirable, although the Board shall have the sole authority to amend this charter. The performance evaluation shall be conducted in such a manner as the Committee deems appropriate.

Public Disclosure

This charter shall be included on the Company’s website and the charter and/or a reference thereto may be included in the Company’s public continuous disclosure record as may be required by applicable securities laws or as deemed advisable by management of the Company.

Miscellaneous Internal Governance Charters

The following charters and policies may be found on our website atwww.purenickel.com/s/Governance.asp (i) Insider Trading Policy, (ii) Financial Management Code of Conduct, (iii) Health and Safety Policy, (iv) Environmental Policy, (v) Communication and Disclosure Policy, and (vi) Whistle Blower Policy.

D. Employees

As at November 30, 2010, we employed five people, three on a full-time and two on a part-time basis, and retained four individuals under contracts for service. In addition, we engage numerous outside contractors on a fee-for-service basis for conducting exploration activities.

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E. Share Ownership

The following table shows the shareholdings of the Directors and Senior Management as of February 11, 2011.

1. Common Shares Owned by Officers and Directors

Table No. 7: Shareholdings of Directors and Senior Management, as of February 11, 2011

Director or Officer	Number of common shares owned(1)	Percentage of common shares outstanding at February 11, 2011(1)(2)
Robert Angrisano	2,895,479(3)	4.09%
Harry Blum	501,200(4)	0.73%
David McPherson	1,125,000(5)	1.63%
David Russell	450,000(6)	0.66%
Constantine Salamis	266,667(7)	0.39%
W.S. (Steve) Vaughan	300,000(8)	0.44%
Jeffrey Sherman	350,000(9)	0.51%

(1)	Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of February 11, 2011, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
(2)	Percentages are based on 67,832,226 Common Shares issued and outstanding as of February 11, 2011 unless otherwise noted.
(3)	Includes 300,000 Common Shares Robert Angrisano has the right to acquire pursuant to outstanding stock options.
(4)	Includes 400,000 Common Shares Harry Blum has the right to acquire pursuant to outstanding stock options.
(5)	Includes 850,000 Common Shares David McPherson has the right to acquire pursuant to outstanding stock options.
(6)	Includes 400,000 Common Shares David Russell has the right to acquire pursuant to outstanding stock options.
(7)	Includes 200,000 Common Shares Constantine Salamis has the right to acquire pursuant to outstanding stock options.
(8)	Includes 300,000 Common Shares Steve Vaughan has the right to acquire pursuant to outstanding stock options.
(9)	Includes 175,000 Common Shares Jeffrey Sherman has the right to acquire pursuant to outstanding stock options.

Table No. 8: Stock Options held by directors and officers, outstanding as of February 11, 2011.

Director or Officer	Number of Common Shares	Exercise Price ($)	Expiry Date
R. David Russell	100,000	$0.26	April 21, 2011
R. David Russell	100,000	$0.065	March 31, 2012
R. David Russell	200,000	$0.20	April 29, 2013
Robert Angrisano	100,000	$0.26	April 21, 2011
Robert Angrisano	100,000	$0.065	March 31, 2012
Robert Angrisano	100,000	$0.20	April 29, 2013
Steve Vaughan	100,000	$0.26	April 21, 2011
Steve Vaughan	100,000	$0.065	March 31, 2012
Steve Vaughan	100,000	$0.20	April 29, 2013
David McPherson	250,000	$0.26	April 21, 2011
David McPherson	400,000	$0.06	December 17, 2011
David McPherson	400,000	$0.20	April 29, 2013
Harry Blum	100,000	$0.26	April 21, 2011
Harry Blum	100,000	$0.065	March 31, 2012
Harry Blum	200,000	$0.20	April 29, 2013

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Director or Officer	Number of Common Shares	Exercise Price ($)	Expiry Date
Constantine Salamis	100,000	$0.26	April 21, 2011
Constantine Salamis	100,000	$0.20	April 29, 2013
Jeffrey Sherman	100,000	$0.31	February 5, 2011
Jeffrey Sherman	25,000	$0.06	December 17, 2011
Jeffrey Sherman	100,000	$0.20	April 29, 2013

ITEM 7.           Major Shareholders and Related Party Transactions

A.Major Shareholders

There are 67,832,226 issued and outstanding shares of our common stock as of the date of the filing of this Annual Report. As of the date of the filing of this Annual Report, to our knowledge, no persons hold directly or indirectly or exercise control or direction over, shares of our common stock carrying 5% or more of the voting rights attached to all issued and outstanding shares of the common stock except as stated under Item 6.E above or set out in the table below. The shares of our common stock owned by our major shareholder have identical voting rights as those owned by our other shareholders.

Name	Number of shares	Percentage
Everest Capital Global Fund LP	5,900,000	8.71%

Geographic Breakdown of Shareholders

The following lists the geographical distribution of shareholders at February 11, 2011:

Location	Number of registered shareholders	Number of shares
Canada	19	47,351,848
United States	107	20,480,378
Other	0	0
Total	126	67,832,226

Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing-house was located. Note that many shareholders hold shares in street name through their brokerage accounts, consequently the number of beneficial shareholders is considerably greater than the number of registered shareholders shown above.

B. Related Party Transactions

During the year ended November 30, 2010, we entered into the following transactions with related parties:

(a)     We paid a legal firm, of which a Mr. S. Vaughan, a director, was a principal during the year ended November 30, 2010, $38,430 (previous year, $42,960) for legal services.

(b)     A director, Mr. Robert Angrisano, is part of a group of investors that has a net profit interest in copper production of the Copper King property, and a director, Mr. Constantine Salamis, is the founder and a significant shareholder of Manicouagan Minerals Inc., which holds an option on one of our properties.

These transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties. These transactions were equivalent to terms agreed upon in similar transactions with non-affiliated parties.

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(c)     We had an amount receivable of $85,776 (previous year, $nil) from MAN Alaska LLC, the joint venture of which the Company has a 70% participating interest, as reimbursement for expenses incurred or amounts paid by the Company on behalf of MAN Alaska LLC. The amount is non-interest bearing, unsecured, is due on demand and was repaid during January 2011.

C. Interests of Experts and Counsel

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

ITEM 8.           Financial Information

A. Consolidated Statements and Other Financial Information

Reference is made to Item 17 Financial Statements for the financial statements included in this Annual Report.

On June 15, 2009 the Company (through a subsidiary) filed an action for declaratory relief against Western Utah Copper Company (WUCC) in the United States District Court, Utah, requesting interpretation of and the status and rights under an agreement. WUCC filed an answer and counterclaim, and, the Company filed a response to the counterclaim. In May 2010, WUCC and its parent company filed for Chapter 11 bankruptcy and appointed a new chief executive officer. WUCC has significant secured and unsecured debts and its assets appear to be less than its outstanding loans. The Company’s litigation was automatically stayed due to the Chapter 11 filing, and it has requested that the court lift the stay in connection with the litigation as it believes that resolution of its claims is a critical element in the bankruptcy. On August 27, 2010, a new action was launched against the Company by WUCC which is very similar to the counterclaims made in response to the Company’s original lawsuit.

Management is of the opinion the court actions and related claims by WUCC are without merit and that the most likely outcome is that management of the property, upon which the operation’s concentrate mill is located, will revert back to the Company. Failing that, the Company believes that the actions taken by it will ensure that the agreement under which it filed the claim for declaratory relief remains in place and will be confirmed by the court. However, the outcome of litigation is always uncertain.

We are not aware of any legal claim known to be contemplated by any governmental authorities.

We have never paid a dividend and it is unlikely that we will declare or pay a dividend in the future.

B. Significant Changes

Reference is made to Item 17 Financial Statements, specifically Note 20 of the November 30, 2010 financial statements, for a description of the differences between Canadian GAAP and U.S. GAAP.

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ITEM 9.           Offer and Listing Details

A. Price History

TSX and TSXV (Canadian dollars)

	High	Low
Month and Year	$	$
Fiscal year ended November 30, 2010	0.245	0.125
Fiscal year ended November 30, 2009	0.28	0.04
Fiscal year ended November 30, 2008	0.65	0.025
Fiscal year ended November 30, 2007	1.60	0.49
Fiscal year ended November 30, 2006	0.38	0.12
Quarter ended November 30, 2010	0.205	0.13
Quarter ended August 31, 2010	0.195	0.135
Quarter ended May 31, 2010	0.245	0.13
Quarter ended February 28, 2010	0.185	0.125
Quarter ended November 30, 2009	0.20	0.115
Quarter ended August 31, 2009	0.28	0.165
Quarter ended May 31, 2009	0.26	0.055
Quarter ended February 28, 2009	0.085	0.04
November 2010	0.20	0.16
October 2010	0.205	0.15
September 2010	0.165	0.13
August 2010	0.155	0.135
July 2010	0.195	0.14
June 2010	0.195	0.14

NASD OTCBB (US dollars)

	High	Low
Month and Year	$	$
Fiscal year ended November 30, 2010	0.225	0.12
Fiscal year ended November 30, 2009	0.30	0.03
Fiscal year ended November 30, 2008	0.633	0.02
Fiscal year ended November 30, 2007	1.52	0.48
Fiscal year ended November 30, 2006	0.345	0.104
Quarter ended November 30, 2010	0.195	0.121
Quarter ended August 31, 2010	0.19	0.1233
Quarter ended May 31, 2010	0.225	0.121
Quarter ended February 28, 2010	0.1635	0.12
Quarter ended November 30, 2009	0.20	0.11
Quarter ended August 31, 2009	0.30	0.132
Quarter ended May 31, 2009	0.30	0.041
Quarter ended February 28, 2009	0.09	0.03
November 2010	0.21	0.16
October 2010	0.195	0.15
September 2010	0.1648	0.121
August 2010	0.1355	0.1233
July 2010	0.19	0.135
June 2010	0.185	0.141

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Common Share Price History and Trading Information

Our common shares are listed on the Over the Counter Bulletin Board (the “OTCBB”) under the stock symbol “PNCKF”. In Canada, our common shares are currently listed for trading on the TSX under the symbol “NIC.” Prior to August 14, 2007, they were listed on the TSX-V under the stock symbol “NIC.” The TSX-V (prior to August 14, 2007), the TSX (as of August 14, 2007) and the OTCBB are the only exchanges on which the common shares are traded. The tables set out above present the high and low sale prices for the common shares for the five most recent financial years, the two most recent financial years by quarter end and the most recent six months for each of the TSX, TSX-V and OTCBB.

ITEM 10. Additional Information

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Common Shares

Our authorized share capital consists of an unlimited number of common shares without par value carrying one vote per share. As at February 11, 2011, there were 67,832,226 common shares issued and outstanding. The following summary of certain terms of our common shares does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of the Company articles of amalgamation and by-laws and applicable law. Copies of our articles of amalgamation and by-laws are attached as Exhibits 1.1, 1.2, and 1.3 to our Annual Report on Form 20-F filed with the SEC on May 21, 2008 and is incorporated by reference herein.

The holders of our common shares are entitled to:

• one vote for each common share held at all meetings of shareholders of the Company; and

• receive, rateably, the remaining property of the Company after payment or provision for its liabilities in the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs.

The holders of common shares have no pre-emptive, redemption, subscription or conversion rights. Modifications to the rights, privileges, restrictions and conditions attached to the common shares (including creation of another class of shares that rank prior to or on a parity with the common shares) requires an affirmative vote of two-thirds of the votes cast at a meeting of the holders of common shares.

We were incorporated under the laws of British Columbia, Canada, on April 29, 1987, and were continued under theCanada Business Corporations Act on April 7, 2009. Please refer to our Annual Report on Form 20-F for the year ended November 30, 2009 for information regarding the effect of our continuance under theCanada Business Corporations Act.

C. Material Contracts

None.

D. Exchange Controls

There are no laws, governmental decrees or regulations in Canada that restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to non-resident holders of our shares, other than the withholding tax requirements (Reference is made to Item 10E) and theProceeds of Crime (Money Laundering) and Terrorist Financing Act. TheProceeds of Crime (Money Laundering) and Terrorist Financing Act requires that persons and entities report the importation or exportation of currency or monetary instruments of a value equal to or greater than $10,000 to Canadian customs officers in the prescribed form and manner.

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There are no limitations under the laws of Canada, or in our constituting documents, with respect to the right of non-resident or foreign owners to hold or vote Shares other than those imposed by theInvestment Canada Act, as described below.

TheInvestment Canada Act is a federal Canadian statute which regulates the acquisition of control of existing Canadian businesses and the establishment of new Canadian businesses by an individual, government or entity that is a “non-Canadian” as defined in theInvestment Canada Act. Such investments are generally reviewable under theInvestment Canada Act by the Minister, designated as being responsible for the administration of theInvestment Canada Act. Reviewable investments, generally, may not be implemented prior to the Minister’s determining that the investment is likely to be of “net benefit to Canada” based on the criteria set out in theInvestment Canada Act. Generally investments by non-Canadians consisting of the acquisition of control of Canadian businesses which are otherwise non-reviewable and the establishment of new Canadian businesses are subject to certain notification requirements under theInvestment Canada Act in the prescribed form and manner.

Management of the Company believes that it is not currently a “non-Canadian” for purposes of theInvestment Canada Act and therefore it is not subject to the Act. However, if the Company were to become a “non-Canadian” in the future, acquisitions of control of Canadian businesses by the Company would become subject to theInvestment Canada Act. Generally, the direct acquisition by a “non-Canadian” of an existing Canadian business with gross assets of $5 million or more is reviewable under theInvestment Canada Act, unless the business is acquired by a WTO investor in which the thresholds are $250 million and $265 million for transactions closing in 2005 and 2006, respectively. Generally, indirect acquisitions of existing Canadian businesses (with gross assets over $50 million) are reviewable under theInvestment Canada Act, except in situations involving “WTO investors” where indirect acquisitions are generally not reviewable but are nonetheless subject to notification. In transactions involving Canadian businesses engaged in the production of uranium, providing financial services, providing transportation services or which are cultural businesses, the benefit of the higher “WTO investor” thresholds do not apply.

Acquisitions of businesses related to Canada’s cultural heritage or national identity (regardless of the value of assets involved) may also be reviewable under theInvestment Canada Act. In addition, investments to establish new, unrelated businesses are not generally reviewable but are nonetheless subject to notification. An investment to establish a new business that is related to the non-Canadian’s existing business in Canada is not subject to notification under theInvestment Canada Act unless such investment relates to Canada’s cultural heritage or national identity.

Any proposed take-over of the Company by a “non-Canadian” would likely only be subject to the simple notification requirements of theInvestment Canada Act, as in all likelihood that non-Canadian would be a “WTO investor” for purposes of theInvestment Canada Actprovided that the high WTO threshold is not met. Generally, a “WTO investor” is an individual, other than a Canadian, who is a national of a country that is a member of the World Trade Organization or a business entity controlled by such an individual. Virtually all countries of the Western world are members of the World Trade Organization. The Company would have to have a gross asset base of at least $5 million for a direct acquisition, and at least $50 million for an indirect acquisition, before the reviewable transaction provisions of theInvestment Canada Act would apply to a third party non-Canadian acquirer that is not a WTO investor.

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E. Taxation

E.(i). Certain Canadian Federal Income Tax Consequences – General

The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of the common-voting shares of the Company (a “Holder”) who deals at arm’s length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the “Act”) and the Canada – United States Income Tax Convention (the “Treaty”), is at all relevant times resident in the United States, is not, and is not deemed to be, resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a Business in Canada. Special rules, which are not discussed below, may apply to a U.S. Holder that is an insurer that carries on Business in Canada and elsewhere.

Under the Act and the Treaty, a. Holder of the common-voting shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Act to have been paid or credited on such shares. The withholding tax rate is 5% where the Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some Holders such as qualifying pension funds and charities. Reference is made to “Item 10E.4 – United States Taxation” for a more detailed discussion of the United States tax considerations relating to an investment in the Shares.

E (ii) Dividends

A Holder will be subject to Canadian withholding tax (“Part XIII Tax”) equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-U.S. Income Tax Convention (1980) as amended (the “Treaty”), the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States and who is the beneficial owner of the dividend, shall not exceed 15%. If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, the withholding tax rate is reduced to 5% and, in all other cases, the tax rate is 15% of the gross amount of the dividend (under the provisions of the Treaty). In determining whether a company meets the 10% voting stock ownership requirement for the purpose of determining eligibility for the 5% withholding tax rate, a company will be deemed to own its proportionate share of company voting stock owned by an entity that is considered fiscally transparent under the laws of the United States and which is not a resident of Canada. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

E (iii) Disposition of Common Shares

A Holder who disposes of a common share, including by deemed disposition on death, will not normally be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted “taxable Canadian property” as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder if the share is listed on a designated stock exchange unless the Holder or persons with whom the Holder did not deal at arm’s length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company. The TSX is a designated stock exchange under the Tax Act. A Holder who is a resident of the United States and realizes a capital gain on a disposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resource properties, (b) the common share formed part of the Business property of a permanent establishment that the Holder has or had in Canada within the 12 month period preceding the disposition, or (c) the Holder is an individual who (i) was a resident of Canada at any time during the 10 years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada.

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A Holder who is subject to Canadian tax in respect of a capital gain realized on a disposition of a common share must include one-half of the capital gain (taxable capital gain) in computing the Holder’s taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one-half of any capital loss (allowable capital loss) arising on a disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains realized in any of the three preceding years or any subsequent year.

E (iv) United States Federal Income Tax Considerations

General

The following discussion is for informational purposes only and is not intended as tax or legal advice. Each potential holder should seek advice based on the holder’s particular circumstances from an independent tax advisor.

The following summarizes the material U.S. federal income tax consequences of acquiring, holding, and disposing of our common shares. This discussion is based on the U.S. federal income tax laws as currently in effect as contained in the Internal Revenue Code (“Code”), Treasury Regulations, and relevant judicial decisions and administrative guidance. The federal tax laws are subject to change, possibly on a retroactive basis, and any such change may materially affect the tax consequences of acquiring, holding, or disposing of our common shares. No rulings or opinions of counsel have been or will be requested with respect to any tax-related matter discussed herein. There can be no assurance that the positions the Company takes on tax matters will be accepted by the Internal Revenue Service (“IRS”). This discussion relates only to U.S. federal income taxes and not to any local, state, or foreign taxes or U.S. federal taxes other than income taxes.

Because this discussion is a general summary, it does not address all aspects of U.S. federal income taxation that may be relevant to a particular holder in light of the holder’s particular circumstances, nor does it address certain types of holders subject to special treatment under the federal income tax laws, including but not limited to tax-exempt organizations, qualified benefit plans, insurance companies, financial institutions, broker-dealers, dealers in securities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, holders that are partnerships or other pass-through entities for federal income tax purposes, regulated investment companies, real estate investment companies, real estate mortgage investment conduits, expatriates, persons liable for alternative minimum tax, persons whose “functional currency” is not the U.S. dollar, persons holding their investment as part of a hedging, constructive sale or conversion, straddle, or other risk-reducing transaction, and persons acquiring common shares in connection with the performance of services.

This discussion addresses only holders: (i) who are U.S. holders (except as specifically noted under “Non-U.S. Holders of Common Shares”); and (ii) hold our common shares as capital assets. For this purpose, “U.S. holders” are beneficial owners of our common shares who are individual citizens or residents of the United States, corporations or other business entities organized under the laws of the United States, any state, or the District of Columbia, estates whose worldwide income is subject to U.S. federal income tax, trusts that are subject to primary supervision by a U.S. court and for which U.S. persons control all substantial decisions, or trusts that have made a valid election under applicable Treasury Regulations to be treated as a United States person (within the meaning of the Code).

Distributions and Dividends

Subject to the discussion of the controlled foreign corporation and passive foreign investment company rules below, a U.S. holder will be required to include in gross income as dividends (taxable as ordinary income) the amount of any distribution paid on common shares to the extent the distribution is paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any Canadian withholding taxes deducted from the amount distributed to a U.S. holder are treated as constructively distributed to the U.S. holder for this purpose. Distributions in excess of our earnings and profits will be applied against and will reduce the U.S. holder’s basis in the common shares and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of common shares. In the case of a U.S. holder that is a corporation, a dividend from a non-U.S. corporation will generally be taxable at regular corporate rates currently up to 35 percent and will generally not qualify for a dividends-received deduction. Certain non-corporate U.S. holders receiving dividends from a Canadian corporation may be eligible for a reduced U.S. tax rate on “qualified dividends” if received in tax years through 2012 as long as we are not a passive foreign investment company for the year of the distribution or the preceding year (as determined on a shareholder-by-shareholder basis) and the holder satisfies certain holding-period requirements. Distributions of current or accumulated earnings and profits paid in a non-U.S. currency to a U.S. holder will be includible in the income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate on the day the distribution is received. A U.S. holder that receives a non-U.S. currency distribution and converts the non-U.S. currency into U.S. dollars on the date of receipt will realize no foreign currency gain or loss. If the U.S. holder converts the non-U.S. currency to U.S. dollars on a date subsequent to receipt, the U.S. holder will have foreign exchange gain or loss based on any appreciation or depreciation in the value of the non-U.S. currency against the U.S. dollar from the date of receipt to the date of conversion, which will generally be U.S.-source ordinary income or loss.

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Disposition of Common Shares

Subject to the discussion of the controlled foreign corporation and passive foreign investment company rules below, upon the sale, exchange, or other taxable disposition of common shares, a U.S. holder will recognize capital gain or loss in an amount equal to the difference between the amount realized on the disposition and the U.S. holder’s basis in its common shares. A U.S. holder’s basis in its common shares is usually the cost of the common shares.

For common shares traded on an established securities market, a U.S. holder that uses the cash method of accounting calculates the U.S. dollar value of foreign currency proceeds received on the sale date as of the date that the sale settles, while a U.S. holder that uses the accrual method of accounting is required to calculate the value of the proceeds of the sale as of the “trade date,” unless the U.S. holder elects to use the settlement date to determine its proceeds of sale. This rule applies even though the stock may be treated as disposed of on a date other than the settlement date.

Capital gain from the sale, exchange or other disposition of common shares held more than one year is long-term capital gain. Long-term capital gains recognized by certain non-corporate holders on or before December 31, 2012 may qualify for a maximum rate of taxation of 15 percent. Gain or loss recognized by a U.S. holder on a sale, exchange or other disposition of common shares will generally be treated as U.S. source income or loss for U.S. foreign tax credit purposes. The deductibility of a capital loss is subject to limitations, as are losses upon a taxable disposition of common shares if the U.S. holder purchases, or enters into a contract to purchase, substantially identical securities within 30 days before or after any disposition. A U.S. holder that receives foreign currency upon disposition of common shares and converts the foreign currency into U.S. dollars subsequent to receipt will have foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against the U.S. dollar, which gain or loss will generally be U.S.-source ordinary income or loss.

Deduction or Credit for Foreign Taxes Withheld

U.S. holders will have the option of claiming the amount of any non-U.S. income taxes paid or withheld at source either as a deduction from gross income or as a credit against their U.S. federal income tax liability. Individuals who do not claim itemized deductions, but instead utilize the standard deduction, may not claim a deduction for the amount of the non-U.S. income taxes withheld, but such amount may be claimed as a credit. The amount of foreign income taxes that may be claimed as a credit in any year is subject to complex limitations and restrictions that must be determined on an individual basis by each holder. These limitations include, among others, rules that limit foreign tax credits allowable with respect to specific classes of income to the U.S. federal income taxes otherwise payable with respect to each such class of income. The total amount of allowable foreign tax credits in any year generally cannot exceed one’s regular U.S. tax liability for the year attributable to foreign source taxable income. In some limited circumstances, a U.S. holder that is an individual may be able to claim a foreign tax credit without regard to the foregoing limitation. This would be the case if the individual holder’s entire foreign-source income for the year was passive income shown on an information return (generally Form 1099) and the associated foreign income taxes were no more than $300 ($600 in the case of a joint return). A U.S. holder will be denied a foreign tax credit with respect to non-U.S. income tax withheld from dividends received on the common shares to the extent the U.S. holder has not held the common shares for at least 16 days of the 31-day period beginning 15 days before the ex-dividend date or to the extent the U.S. holder is under an obligation to make related payments with respect to substantially similar or related property. Any days during which an U.S. holder has substantially diminished its risk of loss on the common shares are not counted toward meeting the required 16-day holding period.

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Under certain circumstances and subject to complex rules and limitations, U.S. holders that are corporations and own 10 percent or more of our common shares may be entitled, upon the payment of dividends, to an “indirect” foreign tax credit under Section 902 of the Code with respect to foreign income taxes paid by the Company.

Controlled Foreign Corporation

For U.S. federal income tax purposes, a “controlled foreign corporation” is a foreign corporation in which U.S. holders who own at least 10 percent of the voting power (directly, indirectly through foreign entities, or by constructive ownership through certain related persons) collectively own more than 50 percent of the voting power or value. If we are or become a controlled foreign corporation, such 10-percent U.S. holders must include in their current U.S. taxable income their shares of the corporation’s “Subpart F income” (i.e., certain passive income, sales or service income, insurance income, or oil-related income, and income from specified disfavored activities or ostracized foreign countries), even if such income is not distributed, and their shares of the corporation’s earnings invested in U.S. property (to the extent such earnings have not been previously included as Subpart F income). Subpart F income in any year cannot exceed the Company’s current earnings and profits and may possibly be reduced by deficits in earnings and profits for prior years, as well as by the deficits of certain non-U.S. subsidiaries. If Subpart F income is reduced by the current earnings and profits limitation, any excess of earnings and profits over Subpart F income in later years is recharacterized as Subpart F income to the extent of the prior reduction. These income inclusions are taxable at ordinary income rates and are not eligible for the capital gains tax rate on qualified dividends.

Gains from the sale or other taxable disposition of common shares by a U.S. holder that is or was a 10-percent U.S. holder at any time during the five-year period ending with the disposition when the Company was a controlled foreign corporation are treated as ordinary (dividend) income to the extent of the earnings and profits of the Company attributable to the common shares sold or exchanged while the Company was a controlled foreign corporation, but only to the extent that the earnings and profits have not previously been taken into account as Subpart F income or as an investment in U.S. property. Gains so recharacterized may be eligible for the capital gains tax rate currently available for qualified dividends.

If the Company is a controlled foreign corporation for a given year, any non-U.S. corporate subsidiaries of the Company may also be controlled foreign corporations, with the consequences to 10-percent U.S. holders generally as described above.

If the Company is classified as both a passive foreign investment company as described below and a controlled foreign corporation, the Company will generally not be treated as a passive foreign investment company with respect to 10-percent U.S. holders while the Company is a controlled foreign corporation. This rule generally will be effective for taxable years of the Company ending with or within the taxable years of 10-percent U.S. holders.

We have not conducted any investigation into whether the Company is a controlled foreign corporation. We can provide no assurance that the Company is not and has not been, or that it will not become in the future, a controlled foreign corporation. U.S. holders should consult an independent tax advisor about how the controlled foreign corporation rules apply in connection with their purchasing, holding, or disposing of our common shares.

Passive Foreign Investment Company

We will be a passive foreign investment company, or PFIC, if 75 percent or more of our gross income in a taxable year, including the pro rata share of the gross income of any company in which we are considered to own 25 percent or more of the common shares by value, is passive income. We will also be a PFIC if at least 50 percent of our assets in a taxable year, averaged over the year and ordinarily determined based on fair market value, including the pro rata share of the assets of any company in which we are considered to own 25 percent or more of the common shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents, royalties, and gains from the disposition of passive assets. PFIC status cannot be determined until the close of the year in question and is determined annually.

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If we are a PFIC, each U.S. holder must, upon certain excess distributions by us and upon the U.S. holder’s disposition of common shares at a gain, allocate the excess distributions or gain ratably over the U.S. holder’s holding period for the common shares. The portion of the distributions or gain allocated to prior taxable years is taxable at the highest rate on ordinary income for the year to which allocated and subject to an interest charge as if the tax had been due in the prior year. The portion allocated to the current year is taxable at the prevailing rates for ordinary income. Additionally, if we are a PFIC, a U.S. holder who acquires common shares from a deceased person who was a U.S. holder would not receive the step-up of the income tax basis to fair market value for such common shares. Instead, the U.S. holder would have a tax basis equal to the deceased’s tax basis, if lower. Furthermore, the IRS has issued proposed regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by certain U.S. holders that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and certain transfers at death. This proposed regulation is not yet effective, but the IRS could make it effective at any time, possibly with retroactive effect.

Although a determination as to a corporation’s PFIC status is made annually, common shares held by a U.S. holder during any year in which we are a PFIC will generally continue to be treated in later years as stock in a PFIC, and thus subject to the punitive rules described above, even if we do not meet the income or asset test for PFIC status in those later years. To avoid this “once a PFIC, always a PFIC” rule, the U.S. holder must make a qualified electing fund (“QEF”) election covering all taxable years during which it held the common shares and in which we were a PFIC, make a mark-to-market election, if available, or elect to “purge the PFIC taint” in its common shares in conjunction with a QEF election, a mark-to-market election, or otherwise, as described below.

If a U.S. holder has made a QEF election covering all taxable years during which it held common shares and in which we were a PFIC, distributions and gains will not be taxed as described above, nor will the denial of a basis step-up at death described above apply. Instead, gain realized on a sale or other taxable disposition of the PFIC common shares will be taxable as capital gain without any interest charge. The U.S. holder, however, will be required for each taxable year in which we are a PFIC to include in income the holder’s pro rata share of our ordinary earnings as ordinary income and a pro rata share of our net capital gain as long-term capital gain, regardless of whether such earnings or gain have in fact been distributed. Payment of taxes on undistributed income may be deferred under a separate election. If deferred, the taxes will be subject to an interest charge. Where earnings and profits that were included in income under this rule are later distributed, the distribution will not be a dividend. The basis of a U.S. shareholder’s common shares under the QEF rules is increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. In order to comply with the requirements of a QEF election, a U.S. holder must receive certain information from us. We can provide no assurance that we will possess or provide the information necessary for U.S. holders to make or maintain a QEF election.

A QEF election must generally be made by the extended due date for filing the U.S. holder’s income tax return for the first taxable year to which the election will apply. Once made, the election continues in effect for subsequent taxable years unless invalidated, terminated, or revoked. A QEF election may be made for prior taxable years in only very limited circumstances.

If a QEF election is not in force for all taxable years during which the holder held common shares and in which we were a PFIC, then in addition to the rules described above requiring U.S. holders that make QEF elections to include in income their shares of our undistributed earnings and net capital gains for years in which we are a PFIC, the U.S. holder will, under the “once a PFIC, always a PFIC” rule, continue to be subject to the punitive rules described above for excess distributions and dispositions of common shares at a gain. This will be the case even if the Company ceases to qualify as a PFIC in subsequent years.

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To eliminate this PFIC taint, a U.S. holder in this circumstance may, in conjunction with a QEF election, elect to recognize the gain in its common shares as if it had sold the common shares on the first day of the taxable year for which the QEF election is made, as long as the U.S. holder held the common shares and can establish their fair market value on that day. A U.S. holder that so elects to purge the PFIC taint in its common shares treats the deemed sale transaction as a disposition of PFIC stock. Thus any gain recognized is subject to the punitive rules for dispositions of PFIC stock described above. The U.S. holder’s adjusted basis for the common shares is increased by any gain recognized, and its holding period for the common shares is treated for purposes of the PFIC rules as beginning on the date of the deemed disposition. Thereafter, the U.S. holder is subject to the rules described above for U.S. holders making QEF elections covering all taxable years during which the U.S. holder held common shares and in which the Company was a PFIC. Other purging rules may be available if the Company is a controlled foreign corporation or for the last year during which the Company meets the income or asset test for PFIC status.

If our common shares are treated as “regularly traded” on a “qualified exchange or other market,” as provided in applicable Treasury Regulations, a U.S. holder of our common shares may, in lieu of making a QEF election, elect to mark the common shares to market annually, recognizing as ordinary income or loss each year an amount equal to the difference between the holder’s adjusted tax basis in the common shares and their fair market value. Losses would be allowed only to the extent of net mark-to-market gain previously included by the U.S. holder under the election in previous taxable years. As with the QEF election, a U.S. holder who makes a mark-to-market election would not be subject to the general PFIC regime and the denial of basis step-up at death described above. We can provide no assurance that our common shares are or will be in the future eligible for the mark-to-market election.

If we are a PFIC and, at any time, have a non-U.S. subsidiary that is classified as a PFIC, U.S. holders of common shares generally would be deemed to own, and also would be subject to the PFIC rules with respect to, their indirect ownership interests in that lower-tier PFIC. If we are a PFIC and a U.S. holder of common shares does not make a QEF election in respect of a lower-tier PFIC, the U.S. holder could incur liability for the deferred tax and interest charge described above if either (i) we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or (ii) the U.S. holder disposes of all or part of its common shares. A mark-to-market election under the PFIC rules with respect to common shares would not apply to a lower-tier PFIC, and a U.S. holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in that lower-tier PFIC. Consequently, U.S. holders of common shares could be subject to the PFIC rules with respect to income of the lower-tier PFIC the value of which had already been taken into account indirectly via mark-to-market adjustments. Similarly, if a U.S. holder made a mark-to-market election under the PFIC rules in respect of the common shares and made a QEF election in respect of a lower-tier PFIC, that U.S. holder could be subject to current taxation in respect of income from the lower-tier PFIC the value of which had already been taken into account indirectly via mark-to-market adjustments

We have not conducted any investigation as to whether we are a PFIC. We can provide no assurance that we are not and have not been nor that we will not in the future become a PFIC, nor can we provide any assurance that we will have timely knowledge or notify U.S. holders of our PFIC status in the future.

The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above, including our ownership of any non-U.S. subsidiaries. As a result, U.S. holders of common shares are strongly encouraged to consult their tax advisors about the PFIC rules in connection with their purchasing, holding or disposing of common shares.

Non-U.S. Holders of Common Shares

Except as described in “Information Reporting and Backup Withholding” below, a non-U.S. holder of common shares will not be subject to U.S. federal income tax on the payment of dividends on common shares and gain from the disposition of common shares unless: (i) such item is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States and, where required by an applicable income tax treaty, such item is attributable to a permanent establishment or, in the case of an individual, a fixed place of business, in the United States; or (ii) the income is U.S. source income and the non-U.S. holder is an individual who holds the common shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition, certain other conditions are met, and the non-U.S. holder does not qualify for an exemption. If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to such income in the same manner as a U.S. holder unless otherwise provided in an applicable income tax treaty. A non-U.S. holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax with respect to such income at a rate of 30 percent (or at a reduced rate under an applicable income tax treaty). If the second exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax at a rate of 30 percent (or at a reduced rate under an applicable income tax treaty) on the amount by which such non-U.S. holder’s capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of disposition of the common shares.

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Information Reporting and Backup Withholding

U.S. holders generally will be subject to information reporting requirements with respect to dividends paid on common shares and on the proceeds from the sale, exchange or disposition of common shares. In addition, for payments made by or through a U.S. person or a U.S. office of a non-U.S. person: (i) U.S. holders will be subject to back-up withholding (currently at 28 percent) on dividends paid on common shares, and on the sale, exchange or other disposition of common shares, unless the U.S. holder provides a duly executed IRS Form W-9 or otherwise establishes an exemption; (ii) non-U.S. holders generally are not subject to information reporting or back-up withholding with respect to dividends paid on common shares, or the proceeds from the sale, exchange or other disposition of common shares, provided that such non-U.S. holder certifies to its foreign status on the applicable duly executed IRS Form W-8 or otherwise establishes an exemption. Back-up withholding is not an additional tax and the amount of any back-up withholding will be allowable as a credit against a holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS.

U.S. holders of common shares may also be required to file information returns with the IRS with their tax returns or otherwise. In particular, any U.S. holder that becomes the owner, directly, indirectly, or constructively, of 10 percent or more of the Company’s common shares will generally be required to file such a return on Form 5471. In addition, for taxable years beginning after March 17, 2010, U.S. Holders will be required to file annual reports for each year the Company is a PFIC and may be required to report the ownership of the Company’s common shares as a “specified foreign financial asset” under Section 6038D of the Code. A failure to meet these reporting requirements may not only subject the U.S. holder to penalties but may also cause the statute of limitations on the U.S. holder’s U.S. income tax return to remain open, either as to affected income or other related items (if reasonable cause is established for the reporting failure) or to the U.S. holder’s entire return (if reasonable cause is not established). Other filing requirements may apply and U.S. holders should consult their own tax advisors concerning all applicable requirements.

F. Dividends and Paying Agents

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

G. Statements by Experts

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

H. Documents on Display

Copies of the documents referred to in this document may be inspected during normal business hours at our offices at Suite 900, 95 Wellington Street West, Toronto, Ontario, Canada M5J 2N7. Our telephone number is (416) 644.0066.

I. Subsidiary Information

Not applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

ITEM 11.           Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position, results of operations, or cash flows due to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, commodity price risk, and other relevant market or price risks. We do not have any activities related to derivative financial instruments or derivative commodity instruments.

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The mining and minerals exploration industry is exposed to a variety of risks including the uncertainty of developing a project to the point where an ore body is indicated or likely. We mitigate these risks to the extent we are able by:

• utilizing competent, professional consultants as support teams to company staff;

• performing careful and thorough geophysical, geological and engineering analyses of each prospect;

• focusing on a limited number of core properties.

Market risk for our company is the possibility that a change in the price for a mineral subject to one of our exploration programs, foreign currency exchange rates, or interest rates will cause the value of our common stock, and other securities we may choose to issue, to decrease and therefore it will become more difficult for us to raise financing for our further exploration efforts. Ultimately, this could impact the potential of any given exploration project. Because of these potential impacts, we are exposed to commodity price risks, credit risk and foreign currency exchange rate risks.

Commodity Price Risk

As discussed above, our capital resources may be indirectly dependent upon, or correlated to, the prevailing market prices of the minerals subject to our exploration efforts. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control.

Credit Risk

We do not currently engage in any activities that subject us to credit risk, other than a low level of credit risk due to our cash and short-term investments being held as deposits at major financial institutions.

ITEM 12.           Description of Securities other than Equity Securities

Not Applicable. This Form 20-F is being filed as an Annual Report under the Exchange Act.

Part II

ITEM 13.           Defaults, Dividend Arrearages and Delinquencies

None.

ITEM 14.           Material Modifications to the Rights of Securities Holders and Use of Proceeds

None.

ITEM 15T.          Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Our chief executive officer (principal executive officer) and chief financial officer (principal financial and accounting officer) have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) as of the end of the period covered by this annual report. Based on that evaluation, our chief executive officer and chief financial officer have concluded that our current disclosure controls and procedures are adequate and effective.

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(b)	Management’s Annual Report on Internal Control over Financial Reporting.The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:
		pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
		provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and
		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
		The framework used by management to evaluate internal controls over financial reporting isInternal Control – Integrated Frameworkissued by the Committee of Sponsoring Organizations (COSO), as implemented by their subsequent publicationInternal Control over Financial Reporting – Guidance for Smaller Public Companies.
(c)	Changes in Internal Controls. There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
	Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
	The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of November 30, 2009. Based on its assessment, management believes that, as of November 30, 2009, the Company’s internal control over financial reporting is effective.
	This Annual Report on Form 20-F does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only a management’s report in this Annual Report on Form 20-F.

ITEM 16A.          Audit Committee Financial Expert

All members of our Audit Committee are independent under National Instrument 52-110, and all members are financially literate under National Instrument 52-110. The Audit Committee is composed of Harry Blum and R. David Russell. The Company has designated Harry Blum as an “audit committee financial expert” as that term is defined in the SEC rules adopted pursuant to the Sarbanes-Oxley Act.

ITEM 16B.          Code of Ethics

The Company has a Code of Business Conduct and Ethics that was approved by the Company’s Board of Directors on September 19, 2006, and subsequently revised September 18, 2008, and which is posted on our website:www.purenickel.com/s/Governance.asp, and as Exhibit 11.1 to our Form 20-F filed with the SEC on May 21, 2008. The Code of Business Conduct and Ethics applies to our chief executive officer and senior financial officers.

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ITEM 16C.          Principal Accountant Fees and Services

The aggregate fees billed by the Company’s external auditors in each of the last two fiscal years for audit fees are as follows:

	Year ended November 30, 2010	Year ended November 30, 2009
Audit fees	$34,000	$32,000
Audit-related fees	$18,000	—
Tax fees	—	—
All other fees	—	$7,500
Total	$52,000	$39,500

Audit fees include services that are provided by the independent auditor in connection with statutory and regulatory filings, principally for the audit of the annual financial statements. The Audit Committee must approve in advance any non-audit related services provided by the auditor to the Company, and the fees for such services, to ensure independence of the Auditor, and in accordance with applicable regulatory standards, including applicable stock exchange requirements with respect to approval of non-audit related services performed by the auditors; and as necessary, taking or recommending that the Board take appropriate action to oversee the independence of the auditors.

ITEM 16D.          Exemptions from the Listing Standards for Audit Committees

Not applicable.

ITEM 16E.          Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 16F.          Change in Registrant’s Certifying Accountant

None.

ITEM 16G.           Corporate Governance

Not applicable.

Part III

ITEM 17.            Financial Statements

Our audited consolidated financial statements prepared by our management and approved by the Audit Committee include, starting on page F-1: Consolidated Balance Sheets of Pure Nickel Inc. as at November 30, 2009, and 2010, Consolidated Statements of Operations, Comprehensive Loss, and Deficit, and Cash Flows for the years then ended, reported upon by SF Partnership, LLP, Chartered Accountants. Incorporated by reference to our 2009 Annual Report on Form 20-F filed March 1, 2010 are: Consolidated Balance Sheets of Pure Nickel Inc. as at November 30, 2008, and 2009, Consolidated Statements of Operations, Comprehensive Loss, and Deficit, and Cash Flows for the years then ended respectively, also reported upon by SF Partnership, LLP, Chartered Accountants. These statements are prepared in accordance with Canadian GAAP, which differ in certain respects from U.S. GAAP. See the notes to the respective consolidated financial statements.

ITEM 18.            Financial Statements

See Item 17. Financial Statements.

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ITEM 19.            Exhibits

EXHIBIT INDEX

Exhibit
Number	Description
1.1	Certificate and Memorandum of Incorporation (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
1.2	Articles of continuance (incorporated by reference from our Form 6-K filed with the SEC March 6, 2009).
1.3	By-Law No. 1 of Pure Nickel Inc. (incorporated by reference from our Form 6-K filed with the SEC March 6, 2009).
4.1	Amalgamation Agreement by and among Nevada Star Resource Corp., 6658482 Canada Inc. and Pure Nickel Inc., dated as of December 14, 2006 (incorporated by reference from our Form 6-K filed with the SEC August 16, 2007.)
4.2	Share Option Plan approved by the shareholders of Pure Nickel Inc. March 30, 2007 (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
4.3	Share option plan approved by the shareholders of Pure Nickel Inc. May 13, 2008 (incorporated by reference from our Annual Report on Form 20-F filed with the SEC April 23, 2009.
6.1	Employment agreement dated May 13, 2008 with Mr. David McPherson, CEO (incorporated by reference from our Annual Report on Form 20-F filed with the SEC April 23, 2009.
6.2	Employment agreement dated January 10, 2008 with Mr. Jeffrey Sherman, CFO (incorporated by reference from our Annual Report on Form 20-F filed with the SEC April 23, 2009.
8.1	List of subsidiaries of Pure Nickel Inc. with jurisdiction of incorporation and trade name information (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
11.1	Code of Ethics (incorporated by reference from our Annual Report on Form 20-F filed with the SEC April 23, 2009.
12.1	Certification of the Principal Executive Officer under the Sarbanes-Oxley Act.*
12.2	Certification of the Principal Financial Officer under the Sarbanes-Oxley Act.*
13.1	Certification under Section 1350 of Chapter 63 of Title 18 of the United States Code.*
15.1	Audit Committee Charter (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
15.2	Compensation Committee Mandate (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
15.3	Corporate Governance and Nominating Committee Charter (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
15.4	Corporate Governance Mandate (incorporated by reference from our Annual Report on Form 20-F filed with the SEC May 21, 2008).
15.5	Consent of SF Partnership, LLP (incorporated by reference from our Annual Report on Form 20-F filed with the SEC February 17, 2011)

* Filed herewith.

SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that is has duly caused and authorized the undersigned to sign this annual report on its behalf.

Dated: February 11, 2011

By:/s/ David R. McPherson                                                                           
       David R. McPherson, Chief Executive Officer
       Pure Nickel Inc.

PURE NICKEL INC.

CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

AUDITORS' REPORT

To the Shareholders of
Pure Nickel Inc.

We have audited the consolidated balance sheets of Pure Nickel Inc. (the "Company") as at November 30, 2010 and 2009 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2010 and 2009 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Toronto, Canada	LICENSED PUBLIC ACCOUNTANTS
January 28, 2011
The Madison Centre, 4950 Yonge Street, 4th Floor, Toronto, Ontario, Canada M2N 6K1
Tel 416 250 1212   Fax 416 250 1225  www.sfgroup.ca  general@sfgroup.ca

PURE NICKEL INC.

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

November 30, 2010 and 2009

		2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	1,713,784		$	1,898,197
Restricted cash and cash equivalents (Note 4)		85,931			86,946
Short-term investments (Note 5)		2,305,189			3,542,519
Amounts receivable		43,373			116,213
Prepaid expenses and deposits		47,711			32,703
Due from related party (Note 14)		85,776			–
		4,281,764			5,676,578
Fixed assets (Note 6)		12,409			14,808
Mineral properties (Note 7)		38,555,291			39,071,469
Investments		49,750			10,750
	$	42,899,214		$	44,773,605
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	309,545		$	149,860
Accrued liabilities		128,912			175,158
		438,457			325,018
Shareholders’ equity:
Share capital (Note 8)		44,441,620			44,435,120
Contributed surplus (Note 9)		12,035,229			11,720,793
Deficit		(14,016,092	)		(11,707,326	)
		42,460,757			44,448,587
	$	42,899,214		$	44,773,605

The accompanying notes are an integral part of these consolidated financial statements.

Approved on behalf of the board of directors:

“David RMcPherson”	“Harry Blum”
David R. McPherson, Director	Harry Blum, Director

PURE NICKEL INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS,

            COMPREHENSIVE LOSS AND DEFICIT

Years ended November 30, 2010 and 2009

		2010			2009
Revenues	$	–		$	–
Expenses:
Administration and general		1,481,601			1,269,173
Loss before other income (expenses)		(1,481,601	)		(1,269,173	)
Other income (expenses):
Foreign exchange loss		(66,764	)		(217,206	)
Interest income		34,679			66,816
Impairment of mineral properties (Note 7)		(641,080	)		–
Change in fair value of investments		(154,000	)		8,375
		(827,165	)		(142,015	)
Net loss and comprehensive loss for the year		(2,308,766	)		(1,411,188	)
Deficit, beginning of year		(11,707,326	)		(10,296,138	)
Deficit, end of year	$	(14,016,092	)	$	(11,707,326	)
Loss per share – basic and diluted	$	(0.03	)	$	(0.02	)
Weighted average number of shares		67,810,004			67,765,559

The accompanying notes are an integral part of these consolidated financial statements.

PURE NICKEL INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended November 30, 2010 and 2009

		2010			2009
Operating activities:
Net loss for the year	$	(2,308,766	)	$	(1,411,188	)
Items not affecting cash:
Depreciation (net adjustment)		4,902			6,766
Impairment of mineral properties		641,080			-
Change in fair value of investments		154,000			(8,375	)
Stock-based compensation		320,936			104,843
		(1,187,848	)		(1,307,954	)
Changes in non-cash working capital items:
Amounts receivable		72,840			(84,198	)
Prepaid expenses and deposits		(15,008	)		10,281
Due from related party		(85,776	)		–
Accounts payable		159,685			(8,862	)
Accrued liabilities		(46,246	)		(121,947	)
Total cash flows used in operating activities		(1,102,353	)		(1,521,680	)
Investing activities:
Capitalized mineral property expenditures, net of recoveries		(825,702	)		(705,912	)
Redemption (purchase) of short-term investments		1,237,330			(3,492,519	)
Changes in restricted cash and cash equivalents		1,015			(86,946	)
Acquisition of fixed assets		(2,503	)		(4,305	)
Total cash flows provided by (used in) investing activities		410,140			(4,289,682	)
Financing activities:
Proceeds received from exercise of property option (Note 7(b))		507,800			–
Total cash flows provided by financing activities		507,800			-
Decrease in cash and cash equivalents during the year		(184,413	)		(5,802,362	)
Cash and cash equivalents, beginning of year		1,898,197			7,700,559
Cash and cash equivalents, end of year	$	1,713,784		$	1,898,197

Supplementary cash flow information (Note 13)

The accompanying notes are an integral part of these consolidated financial statements.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

1. NATURE OF OPERATIONS

Pure Nickel Inc. (the “Company”) was incorporated under the laws of British Columbia, Canada, and subsequently continued under the Canada Business Corporations Act.

The Company is in the business of acquiring, exploring and developing mineral properties in Canada and the United States, primarily those containing nickel, platinum group elements (PGEs), copper, gold, silver and associated base and precious metals. The Company has not yet determined whether its mineral properties contain economically recoverable reserves. The recoverability of the amounts shown for mineral properties is dependent upon the confirmation of economically recoverable reserves, the ability of the Company to enter into joint ventures or obtain financing to successfully complete their development, and upon future profitable production.

2. SIGNIFICANT ACCOUNTING POLICIES

(a)	Basis of presentation
	These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). They are expressed in Canadian dollars and include the accounts of all subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Company has a 70% undivided interest in the MAN Alaska LLC joint venture (see Note 7 (b)) which is accounted for using the proportionate consolidation method.
(b)	Use of estimates
	The preparation of consolidated financial statements in conformity with generally accepted accounting principles in Canada requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Significant areas requiring the use of estimates relate to the estimated useful lives of fixed assets, the recoverability or valuation of receivables and mineral properties, the utilization of future income tax assets and the valuation of asset retirement obligations, investments and stock-based compensation. Actual results could differ from these estimates.
(c)	Cash and cash equivalents
	Cash and cash equivalents include cash on account, demand deposits and money market investments with maturities from the date of acquisition of three months or less that are readily convertible to known amounts of cash and are subject to insignificant changes in value. Funds that are not available for use by the Company are noted as restricted.
(d)	Short-term investments
	Short-term investments consist of highly liquid short-term interest-bearing securities and GICs with a term to maturity of greater than three months on the date of purchase, and less than one year from the fiscal year-end. Short-term investments are recorded at the lower of cost or fair value.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(e)	Fixed assets
	Fixed assets are recorded at cost less accumulated depreciation. Depreciation is provided for based on the estimated useful lives of the assets using the declining balance basis at the following annual rates:

Office equipment	20%
Computer hardware	30%
Computer software	100%

(f)	Mineral properties
	Mineral property acquisition and exploration costs are recorded at cost. All direct and indirect costs related to the acquisition of the interests are capitalized until the properties to which they relate are placed into production, sold, or management determines that there is an impairment in value. Mineral properties are tested for an impairment in value when events or changes in circumstances indicate that their carrying amount may not be recoverable. The recorded cost of mineral properties consists of cash paid, the value of shares or warrants issued, and exploration and development costs incurred. These costs will be amortized on the basis of units of production produced in relation to the proven reserves available on the related property following commencement of production. When mineral properties (including property earn-ins and options) are sold before a property reaches the production stage, the proceeds are credited against the cost of the property, and any excess recognized as income.
(g)	Investments
	Investments consist of warrants received as part of option agreements negotiated with venture partners. A fair value is ascribed to the warrants at the transaction date using the Black-Scholes option-pricing model, and that amount is offset against capitalized mineral property expenditures. At each subsequent balance sheet date, the fair value is recalculated and any gain or loss is reported in the consolidated statements of operations, comprehensive loss and deficit.
(h)	Impairment of long-lived assets
	The recoverability of long-lived assets, which include fixed assets, investments, and mineral properties, is assessed when an event occurs that indicates impairment. Recoverability is based upon factors such as future asset utilization and the future undiscounted cash flows expected to result from the use or sale of the related assets. An impairment loss is recognized in the period when it is determined that the carrying amount of the asset will not be recoverable and exceeds its fair value. At that time the carrying amount is written down to fair value.
(i)	Foreign currency translation
	The consolidated financial statements are stated in Canadian dollars, which is the Company’s functional currency. Transactions and account balances in foreign currencies and the accounts of integrated foreign subsidiaries have been translated into Canadian dollars using the temporal method. Under the temporal method, monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet dates. Non-monetary assets and liabilities are translated at historic exchange rates. Revenue and expenses are translated at the exchange rates in effect on the transaction dates, except for depreciation, which is translated on the same basis as the related asset. The resulting exchange gains and losses are recognized in income.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(j)	Loss per share
	Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. Outstanding stock options and warrants have not been considered in the computation of diluted loss per share as the result would be anti-dilutive.
(k)	Stock-based compensation
	The Company has a plan for granting stock options to management, directors, employees and consultants. The Company recognizes compensation expense for this plan at fair value. Under this method, the fair value of each option grant is estimated on the date of the grant and amortized over the vesting period, with the resulting amortization credited to contributed surplus. The fair value of each grant is determined using the Black-Scholes option-pricing model. Consideration paid upon the exercise of stock options is recorded as share capital.
(l)	Asset retirement obligations
	The Company recognizes liabilities for statutory, contractual or legal obligations associated with the reclamation of mineral properties. Initially, a liability for an asset retirement obligation is recognized at its fair value in the period in which it is incurred and the corresponding asset retirement cost is added to the carrying amount of the related asset. The cost is amortized over the economic life of the asset using either the unit-of-production method or the straight-line method, as appropriate. Following the initial recognition of the asset retirement obligation, the carrying amount of the liability is adjusted for changes to the amount or timing of the underlying cash flows needed to settle the obligation. As at November 30, 2010 and 2009, the Company had not incurred any asset retirement obligations related to the exploration of its mineral properties.
(m)	Income taxes
	Future income taxes are recorded using the asset and liability method whereby future income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.
(n)	Financial instruments
	Cash and cash equivalents, short-term investments and investments are designated as held-for- trading and are measured at fair value. Amounts receivable are designated as loans and receivables and are measured at amortized cost. Accounts payable and accrued liabilities are designated as other financial liabilities and are measured at amortized cost. Changes in fair value of held-for-trading financial instruments are reflected in the consolidated statements of operations, comprehensive loss and deficit and included in deficit on the consolidated balance sheets.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

3. NEW ACCOUNTING STANDARDS

(a)	Business Combinations
	In January 2009, the CICA issued Handbook Sections 1582 –Business Combinations, 1601 –Consolidated Financial Statementsand 1602 –Non-Controlling Interestswhich replace CICA Handbook Sections 1581 –Business Combinationsand 1600 –Consolidated FinancialStatements. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under International Financial Reporting Standards (“IFRS”). Section 1601 together with Section 1602 establishes standards for the preparation of consolidated financial statements. The Company adopted these sections effective December 1, 2010, which had no effect on its consolidated financial statements.
(b)	International Financial Reporting Standards
	The Canadian Accounting Standards Board has confirmed fiscal years beginning on or after January 1, 2011 as the date that IFRS will replace Canadian GAAP for publicly accountable enterprises. As a result, the Company will report under IFRS for interim and annual periods beginning December 1, 2011 with comparative information for the fiscal year ended November 30, 2011 restated under IFRS. Adoption of IFRS as Canadian GAAP will require the Company to make certain accounting policy choices and could materially affect its reported financial position and results of operations.
4.	RESTRICTED CASH AND CASH EQUIVALENTS
	Restricted cash and cash equivalents include funds invested in guaranteed investment certificates with maturities of less than three months as security for corporate credit cards. The funds securing the corporate credit cards are restricted and cannot be withdrawn while the credit cards are outstanding.
5.	SHORT-TERM INVESTMENTS
	Short-term investments represent funds invested in guaranteed investment certificates placed with a Schedule I bank.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

6. FIXED ASSETS

				Accumulated		Net book
November 30, 2010		Cost		depreciation		value
Office equipment	$	3,866	$	1,691	$	2,175
Computer hardware		18,319		8,375		9,944
Computer software		14,776		14,486		290
	$	36,961	$	24,552	$	12,409
				Accumulated		Net book
November 30, 2009		Cost		depreciation		value
Office equipment	$	3,866	$	1,124	$	2,742
Computer hardware		15,816		5,032		10,784
Computer software		35,364		34,082		1,282
	$	55,046	$	40,238	$	14,808

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

7. MINERAL PROPERTIES

					Expenditures						Value
		Balance,			capitalized,						ascribed to			Balance,
Year ended		beginning			net of						warrants			end
November 30, 2010		of year			recoveries			Impairment			received			of year
Copper King Milford (a)	$	3,800,629		$	757,624		$	–		$	–		$	4,558,253
MAN Project (b)		9,176,276			(806,327	)		–			–			8,369,949
Salt Chuck (c)		224,325			22,033			–			–			246,358
Fond du Lac (d)		4,333,156			4,799			–			–			4,337,955
William Lake (e(i))		20,609,398			155,875			–			(193,000	)		20,572,273
Forgues and HPM (e(ii))		(95,692	)		775			–			–			(94,917	)
Manibridge (e(iii))		431,262			405			–			–			431,667
Raglan (e(iv))		566,139			55,557			(625,626	)		–			(3,930	)
Harp Lake(e(v))		12,804			2,650			(15,454	)		–			-
Rainbow (e(vi))		13,172			124,511			–			–			137,683
	$	39,071,469		$	317,902		$	(641,080	)	$	(193,000	)	$	38,555,291

					Expenditures					Value
		Balance,			capitalized,					ascribed to		Balance,
Year ended		beginning			net of					warrants		end
November 30, 2009		of year			recoveries			Impairment		received		of year
Copper King Milford (a)	$	3,800,629		$	–		$	–	$	–	$	3,800,629
MAN Project (b)		8,784,434			391,842			–		–		9,176,276
Salt Chuck (c)		199,512			24,813			–		–		224,325
Fond du Lac (d)		4,325,182			7,974			–		–		4,333,156
William Lake (e(i))		20,537,382			72,016			–		-		20,609,398
Forgues and HPM (e(ii))		(75,124	)		(20,568	)		–		-		(95,692	)
Manibridge (e(iii))		429,612			1,650			–		–		431,262
Raglan (e(iv))		351,392			214,747			–		–		566,139
Harp Lake		-			12,804			-		–		12,804
Rainbow (e(vi))		12,538			634			–		–		13,172
	$	38,365,557		$	705,912		$	-	$	-	$	39,071,469

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

7. MINERAL PROPERTIES (continued)

(a) Copper King, Milford, Utah, United States

The Copper King, Milford properties had been operated by Copper King Mining Corporation (including its subsidiary, Western Utah Copper Company – “WUCC”). The Company has a net smelter royalty (NSR) agreement with WUCC to receive 1% of the net proceeds from the first 10 million pounds of copper produced, 1.5% of net proceeds on all copper produced thereafter and 2% of net smelter proceeds on all other minerals produced. Total royalties are capped at US$10 million ($10.3 million) and may be subject to a net profits interest on copper production from certain claims (held by a group of private investors that include a current director of the Company – see Note 14) which will not exceed US$1.2 million ($1.2 million) in the aggregate. In addition there may be a 2% net smelter return royalty on certain claims, held by another party. See also Note 18 – Contingencies.

(b) MAN Property, Alaska, United States

The 72,930 hectare MAN Property is located 265 kilometres southeast of Fairbanks, Alaska. During 2008, the Company entered into an agreement with Itochu Corporation under which, in consideration for being granted an option for a participating interest in the property, Itochu agreed to reimburse exploration expenses incurred at MAN to a maximum of US$6.5 million ($7.6 million) for 2008 and 2009.

In March, 2010 Itochu exercised its option by paying US$500,000 ($507,800). In consideration for accelerating the exploration program in 2010 by 90% from the previously agreed amount, and for accelerating other payments going forward, Itochu’s participating interest granted under the option was increased to 30% from the 20% originally agreed. Itochu agreed to fund an exploration budget of US$7.5 million ($7.7 million) in 2010, and it has the right to earn up to a 75% interest in the MAN property by investing an aggregate of US$40 million (approximately $41 million) and meeting certain other conditions, by 2013.

Effective April 1, 2010, pursuant to the agreement with Itochu, this property has been owned by MAN Alaska LLC, a joint venture in which the Company has a 70% membership interest.

(c) Salt Chuck, Alaska, United States

The Salt Chuck property consists of mining claims covering approximately 1,082 hectares near the historic Salt Chuck mine on Prince of Wales Island, Alaska.

(d) Fond du Lac Project (formerly known as Axis Lake Project), Saskatchewan, Canada

Fond du Lac is located in northern Saskatchewan and comprises six contiguous claims covering 19,713 hectares on the northern edge of the Athabaska Basin.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

7. MINERAL PROPERTIES (continued)

(e) Former Xstrata properties

In 2007, the Company purchased the property rights for the properties listed below from Xstrata Nickel, a division of Falconbridge Limited, subject to a 2% net smelter return royalty. In addition, Xstrata has a one-time right to repurchase a 50% working interest in any one of the properties if certain conditions are met. Xstrata also has the right to purchase 100% of the ore produced at market prices.

(i) William Lake, Manitoba, Canada
The William Lake property is located in central Manitoba. During 2008, the Company entered into an option agreement with Rockcliff Resources Inc. under which Rockcliff may earn up to a 70% interest in the Tower property located within the William Lake property area.

(ii) Forgues and HPM, Quebec, Canada
In 2007, the Company granted Manicouagan Minerals Inc. an option to earn up to a 70% interest in 39 mining claims comprising the Forgues and HPM property in Quebec. In November 2009 Manicouagan had made the required option payments and exploration expenditures to earn a 50% interest in the property. This is a related party transaction as a director of the Company is the founder and a significant shareholder of Manicouagan (Note 14).

(iii)Manibridge, Manitoba, Canada
The Manibridge property is located in Manitoba, 128 km. southwest of Thompson. The Company has a 50-50 joint venture agreement with Crowflight Minerals Inc. to explore for deposits. Each party must contribute properties as well as $3 million each, over a four year period to fund preliminary exploration activities. The Company also has an option to earn a 50% interest from Crowflight in an area surrounding the joint venture area subject to meeting certain expenditure requirements.

(iv) Raglan, Quebec, Canada
Raglan property located in northern Quebec and comprises two properties: SR1 and Nuvilik. During the fourth quarter of 2010 the Company made the decision to not renew the mining claims on the SR1 portion of the Raglan property.

(v) Harp Lake, Labrador, Canada
The Harp Lake property is located in central Labrador and consists of mining claims covering approximately 475 hectares. During the first quarter of 2010 the Company made the decision to not renew the Harp Lake mining claims.

(vi) Rainbow, Nunavut, Canada
The Rainbow property is located in a remote region of Nunavut and consists of mining claims covering approximately 20,000 hectares.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

8. SHARE CAPITAL

(a)	Share capital
	Share capital consists of unlimited authorized common shares without par value. 67,832,226 common shares are issued and outstanding (2009 – 67,765,559).

										Total
				Contributed						shareholders’
		Capital stock		surplus			Deficit			equity
As at November 30, 2008	$	44,435,120	$	11,615,950		$	(10,296,138	)	$	45,754,932
Stock-based compensation		–		104,843			–			104,843
Net loss		–		–			(1,411,188	)		(1,411,188	)
As at November 30, 2009		44,435,120		11,720,793			(11,707,326	)		44,448,587
Exercise of stock options		6,500		(6,500	)		–			–
Stock-based compensation		–		320,936			–			320,936
Net loss		–		–			(2,308,766	)		(2,308,766	)
As at November 30, 2010	$	44,441,620	$	12,035,229		$	(14,016,092	)	$	42,460,757

(b)

Stock options

On May 13, 2008, the shareholders approved a stock option plan that permits the Company to issue share options up to a cumulative amount that may not exceed 10% of shares outstanding. This limit includes options issued under the Company’s previous option plan. The exercise price for each option granted under the Plan is based upon the five-day weighted average market price at the date of the grant, and the term may not exceed ten years from the date of the grant of the option. The specific terms including vesting period and term of the option are set by the board of directors.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

8. SHARE CAPITAL (continued)

Stock option activity since November 30, 2008 is presented below:

			Weighted
			average
	Number of		exercise
	shares		price $
Outstanding, November 30, 2008	4,175,000		0.83
Granted	1,485,000		0.09
Expired	(1,200,000	)	0.88
Outstanding, November 30, 2009	4,460,000		0.56
Granted	2,630,000		0.22
Exercised	(66,667	)	0.065
Cancelled	(33,333	)	0.065
Expired	(1,900,000	)	1.11
Outstanding, November 30, 2010	5,090,000		0.19

The following stock options are outstanding and exercisable at November 30, 2010:

Options outstanding				Options exercisable
		Weighted
		average				Weighted
Exercise		remaining		Exercise		average
price	Number of	contractual life		price	Number of	exercise
$	shares	in years	$		shares	price $
0.06	785,000	1.0		0.06	597,500	0.06
0.065	400,000	1.3		0.065	400,000	0.065
0.20	2,230,000	2.4		0.20	1,480,000	0.20
0.26	975,000	0.4		0.26	975,000	0.26
0.265	200,000	1.5		0.265	200,000	0.265
0.30	400,000	2.6		0.30	400,000	0.30
0.31	100,000	0.2		0.31	100,000	0.31
	5,090,000	1.7		0.19	4,152,500	0.20

Stock options outstanding at November 30, 2010 expire from February 5, 2011 to July 7, 2013.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

8. SHARE CAPITAL (continued)

(c)	Warrants
	Outstanding warrants are presented below:

			Weighted
			average
	Number		exercise
	of shares		price $
Outstanding, November 30, 2008	15,000,001		1.82
Expired	(11,000,001	)	1.75
Outstanding, November 30, 2009	4,000,000		2.00
Expired	(4,000,000	)	2.00
Outstanding, November 30, 2010	–		–

9. CONTRIBUTED SURPLUS

		Year ended			Year ended
		November 30,			November 30,
		2010			2009
Balance, beginning of year	$	11,720,793		$	11,615,950
Stock-based compensation expense		320,936			104,843
Exercise of stock option		(6,500	)		–
Balance, end of year	$	12,035,229		$	11,720,793

10. STOCK-BASED COMPENSATION

During the year ended November 30, 2010, the Company granted 2,630,000 stock options to directors, officers, employees and consultants of the Company (November 30, 2009 – 1,485,000). The weighted average fair value of each option granted was $0.14 (November 30, 2009 - - $0.06) using the Black-Scholes option-pricing model at the date of each grant using the following assumptions:

	Year ended	Year ended
	November 30,	November 30,
	2010	2009
Expected option lives	3.0 years	3.0 years
Risk-free interest rate	1.45% - 1.63%	1.04% - 1.79%
Expected dividend yield	0%	0%
Expected stock price volatility	124% - 126%	119% -128%

During the year ended November 30, 2010, the Company recognized $320,936 of compensation expense (2009 - $104,843), which has been recorded in the consolidated statements of operations, comprehensive loss and deficit.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

11. INCOME TAXES

In assessing the realization of the Company’s future income tax assets, management considers whether it is more likely than not that some portion or all of the future income tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of future income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The amount of future income tax assets considered realizable could change materially in the near term based on future taxable income generated during the carry-forward period.

(a)	Income Tax Reconciliation
	Income tax expense presented in the consolidated statements of operations differs from the amounts that would be computed by applying the combined Canadian federal and provincial income tax rate of 31.0% (November 30, 2009 – 33.0%) to loss before income taxes as follows:

		November 30,			November 30,
		2010			2009
Income tax recovery expected at statutory rates	$	721,000		$	466,000
Non-deductible items		(132,000	)		(53,000	)
Change to tax losses carried forward		768,000			(78,000	)
Effect of changes in enacted rate		(119,000	)		(732,000	)
Other		4,000			(8,000	)
Change in valuation allowance		(1,242,000	)		405,000
Income tax recovery	$	–		$	–

(b)	Future income tax assets and liabilities
	The significant components of the Company’s future tax assets are as follows:

		November 30,			November 30,
		2010			2009
Future income tax assets:
Non-capital tax losses carried forward	$	2,409,000		$	1,422,000
Fixed assets		1,000			1,000
Cumulative eligible capital		27,000			29,000
Change in fair value of investments		136,000			49,000
Canadian exploration and development expenses		505,000			345,000
Unrealized foreign exchange loss		56,000			46,000
Total gross future income tax assets		3,134,000			1,892,000
Valuation allowance		(3,134,000	)		(1,892,000	)
Net future income tax assets	$	–		$	–

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

11. INCOME TAXES (continued)

(c)	Non-capital losses
	As at November 30, 2010, the Company has non-capital losses carried forward for income tax purposes available to reduce taxable income in future years of approximately $9,634,000 expiring as follows:

	$
2012	159,000
2013	96,000
2014	19,000
2025	178,000
2026	381,000
2027	5,363,000
2028	1,331,000
2029	1,231,000
2030	876,000
	9,634,000

(d)

Exploration expenditures

Under the Income Tax Act, the Company can accumulate its resource related exploration expenses and development expenses (as defined by Canada Revenue Agency), carry them forward indefinitely and use them to reduce taxable income in the future. As of November 30, 2010, the Company has Cumulative Canadian Exploration expenses (CCEE) of $27,272,000 (2009 - $27,060,000) and Cumulative Canadian Development expenses (CCDE) of $233,000 (2009 - $233,000).

12. LOSS PER SHARE

The weighted average number of shares outstanding used in the computation of loss per share for the year ended November 30, 2010 was 67,810,004 (November 30, 2009 – 65,765,559). Outstanding stock options, warrants, agent share warrants and agent unit warrants have not been considered in the computation of diluted loss per share as the result is anti-dilutive.

13. SUPPLEMENTARY CASH FLOW INFORMATION

		November 30,		November 30,
		2010		2009
Non-cash investing and financing activities:
Warrants received for options on mineral property	$	193,000	$	–
Cash paid for:
Interest	$	54	$	364

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

14. RELATED PARTY BALANCES AND TRANSACTIONS

At November 30, 2010, $85,776 was due from MAN Alaska LLC, the joint venture of which the Company has a 70% participating interest, as reimbursement for expenses incurred or amounts paid by the Company on behalf of MAN Alaska LLC. The amount is non-interest bearing, unsecured, is due on demand and was repaid during January 2011.

During the year ended November 30, 2010, the Company incurred legal expenses, which are included within administration and general expenses, with a firm of which a director of the Company was a principal, of $38,430 (2009 - $42,960), and paid directors of the Company, and companies controlled by directors of the Company, $nil (2009 - $2,942) for consulting services. These transactions were in the normal course of operations and have been recorded at the exchange amounts which the parties believe to be fair value.

As described in Notes 7(a) and 7(e)(ii) respectively, a director of the Company is part of a group of investors that may have a net profit interest in copper production of the Copper King property, and a director is the founder and a significant shareholder of Manicouagan Minerals which holds an option in one of the Company’s properties.

15. FINANCIAL INSTRUMENTS

(a)	Fair value
	The Company has various financial instruments comprising of cash and cash equivalents, short- term investments, amounts receivable, due from related party, accounts payable and accrued liabilities. The carrying values of these financial instruments approximate their fair value due to their short-term maturities.
	Investments consist of warrants to purchase common shares of other entities. These are accounted for as derivatives, and thus recorded at their fair value, which at November 30, 2010 was $49,750. The valuation was calculated using the Black-Scholes option pricing model which takes into account various factors including the strike price of the warrants, the current market prices of the underlying securities and the expected volatility of the prices of the underlying securities. The latter two factors may fluctuate significantly during the term that the warrant is held. In addition, the value of the warrants is reduced as time goes by and the time remaining until expiry is reduced. For these reasons, the fair value of the investments may fluctuate significantly, with the maximum loss restricted to the fair value of the investments noted above.
(b)	Credit risk
	The following assets are exposed to credit risk: cash and cash equivalents, restricted cash and cash equivalents and short-term investments. The Company maintains all of its cash and cash equivalents, restricted cash and cash equivalents and short-term investments invested in demand deposits and short-term instruments at a major Canadian financial institution. Most of these amounts are not insured but depend upon the general creditworthiness of the institution. The Company believes that exposure to credit risk is low.
(c)	Liquidity risk
	The Company has no debt and almost all of its financial assets are liquid, therefore has very limited exposure to liquidity risk.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

15. FINANCIAL INSTRUMENTS (continued)

(d)	Interest rate risk
	The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary assets and liabilities.
(e)	Currency risk
	As the Company operates in the United States, some of the Company’s financial instruments and transactions are denominated in United States funds. Fluctuation in the exchange rates between the United States dollar and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations.
	At November 30, 2010, the Company had net monetary assets denominated in United States funds of $586,671 (US$571,470). Based upon the year-end balance, an increase of 15% in the Canada to U.S. dollar exchange would result in an increase in the net loss and comprehensive loss of $88,000, and a reduction of 15% would result in a reduction in the net loss and comprehensive loss of $107,000. Management believes that it is not likely but it is possible that the exchange rate could fluctuate by more than 15% within the next 12 months.

16. JOINT VENTURE

The Company’s investment in the MAN Alaska property is owned by MAN Alaska LLC, a joint venture in which the Company has a 70% membership interest. The joint venture was established effective April 1, 2010.

As at November 30, 2010, the Company’s interest in that joint venture consists of the following asset:

Mineral property $8,111,041

During 2010, the Company’s interest in revenues, expenses and cash flows and cash flows in the joint venture were nil.

17. CAPITAL DISCLOSURES

The Company considers all of the components of shareholders’ equity to be capital. The Company’s objectives in managing capital are to safeguard its ability to operate as a going concern and to generate a superior return to shareholders. The Company has no debt and does not expect to enter into debt financing. It expects to finance exploration activity through joint ventures, sales of property interests, and by raising additional share capital when market conditions are suitable. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements. There were no changes to the Company’s approach to capital management during the year.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

18. CONTINGENCIES

In 2009 the Company (through a subsidiary) filed an action for declaratory relief against Western Utah Copper Company (WUCC) in the United States District Court, Utah, requesting interpretation of and the status and rights under an agreement. WUCC filed an answer and counterclaim, and, the Company filed a response to the counterclaim. In May 2010, WUCC and its parent company filed for Chapter 11 bankruptcy and appointed a new chief executive officer. WUCC has significant secured and unsecured debts and its assets appear to be less than its outstanding loans. The Company’s litigation was automatically stayed due to the Chapter 11 filing, and it has requested that the court lift the stay in connection with the litigation as it believes that resolution of its claims is a critical element in the bankruptcy. On August 27, 2010, a new action was launched against the Company by WUCC which is very similar to the counterclaims made in response to the Company’s original lawsuit.

Management is of the opinion the court actions and related claims by WUCC are without merit and that the most likely outcome is that management of the property, upon which the operation’s concentrate mill is located, will revert back to the Company. Failing that, the Company believes that the actions taken by it will ensure that the agreement under which it filed the claim for declaratory relief remains in place and will be confirmed by the court. However, the outcome of litigation is always uncertain.

19. SEGMENT DISCLOSURES

The Company’s fixed assets and mineral properties by geographic distribution are as follows:

November 30, 2010		Canada		United States		Total
Fixed assets	$	12,409	$	–	$	12,409
Mineral properties		25,380,731		13,174,560		38,555,291
	$	25,393,140	$	13,174,560		38,567,700
November 30, 2009		Canada		United States		Total
Fixed assets	$	14,808	$	–	$	14,808
Mineral properties		25,870,239		13,201,230		39,071,469
	$	25,885,047	$	13,201,230	$	39,086,277

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

20. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), which differ in certain respects from those generally accepted in the United States of America (“U.S. GAAP”). Under Canadian GAAP, the Company capitalizes all costs related to the acquisition, exploration and development of non-producing mineral properties. Under U.S. GAAP, acquisition costs of mineral rights are capitalized, but exploration and development costs are expensed as incurred, until the establishment of commercially mineable reserves is complete, at which time any further exploration costs are capitalized. Under Canadian GAAP, enterprises in the development stage are encouraged to disclose cumulative information from the inception of the development stage. Under U.S. GAAP, this disclosure is required. Cumulative net losses since inception aggregate $14,016,092.

Under Canadian GAAP, the Company is required to account for the MAN Alaska LLC joint venture following proportionate consolidation. Under U.S. GAAP, the joint venture would be accounted for on the equity basis.

For Canadian GAAP, cash flows relating to mineral property exploration are reported as investing activities. For U.S. GAAP, these costs would be characterized as operating activities.

In June 2009, the FASB issued SFAS 168 –The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162. SFAS 168 provides for the FASB Accounting Standards Codification (“ASC”) to become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (GAAP). The ASC did not change GAAP but reorganizes the literature. SFAS 168 was effective for interim and annual periods ending after September 15, 2009. The adoption of this statement has not had any effect on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855); Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-9”). The standard amends Subtopic 855-10, “Subsequent Events” to remove the requirement for a SEC filer to disclose the date through which subsequent events have been evaluated. ASU 2010-9 is effective upon issuance of the final update. The Company does not expect the adoption of ASU 2010-09 to have a material impact on its consolidated financial statements.

PURE NICKEL INC.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended November 30, 2010 and 2009

20. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES (continued)

The differences in accounting for mineral properties under Canadian and U.S. GAAP had the following effects on the Company’s financial statements.

(i) Net Loss and Loss per Share

		Year ended			Year ended
		November 30,			November 30,
		2010			2009
Net loss under Canadian GAAP	$	(2,308,766	)	$	(1,411,188	)
Capitalized expenditures on unproven mineral properties		785,160			(635,126	)
Net loss under U.S. GAAP	$	(1,523,606	)	$	(2,046,314	)
Loss per share under U.S. GAAP – basic and diluted	$	(0.02	)	$	(0.03	)

(ii) Mineral Properties

		November 30,			November 30,
		2010			2009
Mineral properties under Canadian GAAP	$	38,555,291		$	39,071,469
Capitalized expenditures on unproven mineral properties		(18,801,891	)		(19,587,051	)
Reclassification to investment in joint venture		(69,024	)		–
Mineral properties under U.S. GAAP	$	19,684,376		$	19,484,418

(iii) Investment in Joint Venture

		November 30,		November 30,
		2010		2009
Investment in joint venture under Canadian GAAP	$	–	$	–
Reclassification from mineral properties		69,024		–
Investment in joint venture under U.S. GAAP	$	69,024	$	–

(iv) Deficit

		November 30,			November 30,
		2010			2009
Deficit under Canadian GAAP	$	(14,016,092	)	$	(11,707,326	)
Capitalized expenditures on unproven mineral properties		(18,801,891	)		(19,587,051	)
Deficit under U.S. GAAP	$	(32,817,983	)	$	(31,294,377	)