INDUSTRIAL MINERALS INC. ANNOUNCES ENGAGEMENT OF AGENT FOR UP TO US $10 MILLION FUNDING

NEWS RELEASE

INDUSTRIAL MINERALS, INC.

2904 South Sheridan Way, Suite #100 – Oakville Ontario Canada L6J 7L7

INDUSTRIAL MINERALS INC. ANNOUNCES ENGAGEMENT

OF AGENT FOR UP TO US $10 MILLION FUNDING

Toronto, Ontario, Canada — May 13th, 2008 — Industrial Minerals Inc. (IMI) -OTCBB: IDSM - (or “the Company”) today announced it has engaged a placement agent (the “Agent”) to conduct a brokered private placement of special warrants (“Special Warrants”) to raise, on a best efforts agency basis, up to US $10.0 million including a Bridge Funding of US $500,000.

This funding will be used to carry out the next major phase of the Company’s strategic plan for developing the Bissett Creek natural graphite operations near North Bay, Ontario. This plan includes: a 2008 exploratory drill program; pilot plant construction; and EPCM (Engineering, Procurement, and Construction Management) work to develop the full commercial plant. Funds will also be used to complete a new exchange listing, and for working capital requirements.

"The market demand for our large graphite flake has become increasingly clear over the past few months and this funding will allow us to expand the resource, develop state-of-the art processing technologies, and begin critical development work with customers around the world”, said David Wodar, President & CEO of Industrial Minerals Inc

The funding process will also include completion of a listing on a recognized Canadian stock exchange, and the addition of at least two new Directors with direct mining industry experience to fill vacancies on the Board of IMI.

The funding and exchange listing is expected to be further supported by a planned share consolidation program to be approved by shareholders. This critical step is required to price the offering in line with market conditions, and to make enough shares available to support the offering. In this regard it is worth noting that approximately 5 million previously issued warrants that could have been exercised in April, 2008 expired.

Final details of the Offering to shareholders will be provided in the weeks ahead as both the Company and its Agent complete the terms of funding. Closing of the private placement is scheduled to take place on or about July 15^th, 2008, and is subject to the satisfaction of customary closing conditions including the receipt of necessary regulatory approvals .

Any Special Warrants, common shares and warrants issuable upon exercise of the Special Warrants, and the common shares issuable upon exercise of the warrants contemplated under this funding have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction, and may not be offered or sold in the United States or to, or for the account or benefit of, a U.S. person without registration under, or an applicable exemption from, the registration requirements of the Securities Act, and will be subject to resale restrictions in Canada.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

About Industrial Minerals, Inc.

Industrial Minerals Inc. through its wholly owned subsidiary Industrial Minerals Canada Inc., headquartered in Oakville, Ontario, Canada, owns 100% of the undivided interest in the Bissett Creek Graphite patented mineral lease, containing a resource of approximately 725,000 tonnes (327,700 tonnes indicated & 397,900 tonnes inferred) of flake graphite based on approximately 7.0% of the patented mineral leases that have been drilled to date. The property is comprised of 28 claims covering an area of approximately 1,315 hectares (3,250 acres). It has been the subject of substantial earlier exploration drilling, trenching and metallurgical test work by KHD Canada, Kilborn Engineering, Pincock Alan and Holt and Cominco Engineering Services. The property is located in Maria Township in the Province of Ontario, Canada. The Company believes the property is one of the largest and purest natural flake graphite deposits in the world. Its goal is to become the leading producer of large flake crystalline graphite in North America and a prominent market participant internationally.

Forward Looking Statements

All statements contained herein, as well as oral statements that may be made by the Company or by officers, directors or employees of the Company acting on the Company’s behalf that are not statements of historical fact, constitute “forward-looking statements” and are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 21E of the United States Securities Exchange Act of 1934, as amended.. Such forward-looking statements include our statements about future financing, future relationships with customers and operational plans that depend upon financing that we have not secured as of the date of this press release.   All forward looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties are outlined in the Company’s Annual Report on Form 10-K for 2007 as filed with the Securities and Exchange Commission. There can be no assurance that future developments affecting the Company will be those anticipated by management, or set forth in this news release. The Company is not obligated, and assumes no obligation, to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.   The reader is cautioned not to place undue reliance on forward-looking statements.

Cautionary Note to US Investors – The United States Securities and Exchange Commission (SEC) limits disclosure for U.S. reporting purposes to mineral deposits that a company can economically and legally extract or produce. The reader is cautioned that the term, “resource,” is not a term that is recognized by SEC guidelines for disclosure of mineral properties. Generally, “resources” estimates do not rise to the level of certainty required by SEC guidelines. The mineralized material described above is not considered a “reserve” as that term is used in the mining industry and in SEC disclosure guidelines. The Company must undertake a feasibility study before it can estimate the value of its mineral assets.   U.S. investors are urged to consider closely the disclosure in our Form 10-KSB, File No. 000-30651. You can review and obtain copies of these filings from the SEC’s website at http://www.sec.gov/edgar.shtml.

NO STOCK EXCHANGE, SECURITIES COMMISSION, OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.

Industrial Minerals, Inc.

For further information, please contact:

David Wodar, President

Industrial Minerals Inc

dwodar@industrialmineralsinc.com

Tel: 905.829.0220

Toll free: 1.888.829.0220

www.industrialmineralsinc.com