Exhibit
10.4



EMPLOYMENT AGREEMENT 



INDUSTRIAL MINERALS, INC., for
and on behalf of itself as well as its affiliated corporations (collectively referred to
as the “Company”), and MR. ROBERT DINNING (the “Employee”) agree to
enter into this EMPLOYMENT AGREEMENT (the “Agreement”) dated as of July
1st, 2007, as follows: 



	1.  	Employment.  







             
  The
Company shall employ Employee, and Employee shall be employed by the Company upon the
terms and subject to the conditions set forth in this Agreement. 



	2.  	Term
of Employment.  







             
  The
period of Employee’s employment under this Agreement shall begin as of July
1st, 2007 and shall continue thereafter until terminated in accordance with the
circumstances set out in Section 5 as well as the provisions of this Agreement. 



     	3.	
          Duties and Responsibilities. 


          



     	(a)	
          Employee shall serve as CFO & Secretary. In such capacity,
          Employee shall perform such duties as may be assigned to Employee from time to
          time by the Company. 


          



     	(b)	
          Employee shall faithfully serve the Company, devote Employee’s full working
          time, attention and energies to the business of the Company and perform the
          duties under this Agreement to the best of Employee’s abilities. 


          



     	(c)	
          Employee shall: (i) comply with all applicable laws, rules and regulations, and
          all requirements of all applicable regulatory, self-regulatory, and
          administrative bodies; (ii) comply with the Company’s rules, procedures,
          policies, requirements, and directions; and (iii) not engage in any other
          business or employment without the written consent of the Company except as
          otherwise specifically provided herein. 


          



     	4.	
         Compensation and Benefits. 


          



     	(a)	
          Base Salary. During the Employment Term, the Company shall pay Employee a
          base salary at the annual rate of one hundred and eight thousand (C$108,000)
          Canadian dollars per year (“Base Salary”). Such Base Salary shall be
          paid in accordance with the Company’s standard payroll practice for
          employees. 


          



     	(b)	
          Benefit Plans. Employee shall be eligible to participate in or receive
          benefits under any pension plan, profit sharing plan, medical and dental
          benefits plan, life insurance plan, short-term and long-term disability plans,
          supplemental and/or incentive compensation planpractices or arrangements, or any
          other benefit plan or arrangement, generally made available by the Company to
          employees of similar status and responsibilities (“similarly situated
          employees”). 


          



     	(c)	
          Incentive/Bonus. Employee shall be eligible for an annual bonus or any
          other incentive compensation payment (“bonus”) which the Company may
          establish for similary situated employees. 


          











     	(d)	
          Stock Options. Employee shall be awarded two million (2,000,000) stock
          options, the award, vesting and exercise of which stock options shall be subject
          to the provisions of the Company’s Stock Option Grant Agreement. 


          



     	(e)	
          Vacation. Employee shall be entitled to four (4) weeks’ paid
          vacation each calendar year. The scheduling of any vacation time must be
          approved by the Employer. Vacation time will not be accumulated from year to
          year and any unused entitlement will be forfeited provided, however, that the
          Employer will provide any vacation pay entitlements pursuant to applicable
          employment standards legislation. 


          



     	(f)	
          Business Expenses. The Company shall promptly reimburse Employee for the
          ordinary and necessary business expenses incurred by Employee in the performance
          of Employee’s duties hereunder in accordance with the Company’s
          customary practices applicable to employees, provided that such expenses are
          incurred and accounted for in accordance with the Company’s policy. 


          



     	(g)	
          Taxes. The Company shall be required to withhold from any compensation
          and benefits payable under this Agreement all applicable taxes. 


          



     	5.	
        Termination of Employment. 


          




               Employee’s
employment shall be terminated under the following circumstances: 



     	(a)	
          Death. Employee’s employment shall terminate as of the date of
          Employee’s death. 


          



     	(b)	
           Total Disability. The Company may terminate Employee’s
          employment hereunder upon Employee’s becoming Totally Disabled. For
          purposes of this Agreement, Employee shall be “Totally Disabled” if
          Employee is physically or mentally incapacitated so as to render Employee
          incapable of performing the usual and customary duties under this Agreement.
          Employee’s receipt of disability benefits under the Company’s
          long-term disability plan or receipt of Social Security disability benefits
          shall be deemed conclusive evidence of Total Disability for purpose of this
          Agreement; provided, however, that in the absence of Employee’s receipt of
          such long-term disability benefits or Social Security benefits, the Company may,
          in its reasonable discretion (but based upon appropriate medical evidence),
          determine that Employee is Totally Disabled. 


          



     	(c)	
          Termination by the Company for Cause. The Company may terminate
          Employee’s employment hereunder for “Cause” at any time after
          providing written notice to Employee. 


          



          	 	(i) 	
               For purposes of this Agreement, the term “Cause” shall mean any of the
               following: (A) conviction of a criminal offence; (B) deliberate and continual
               refusal to perform employment duties reasonably requested by the Company or an
               affiliate after thirty (30) days’ written notice by certified mail of such
               failure to perform, specifying that the failure constitutes cause (other than as
               a result of vacation, sickness, illness or injury); (C) fraud or embezzlement;
               (D) gross misconduct or gross negligence in connection with the business of the
               Company or an affiliate which has substantial effect on the Company or the
               affiliate; or (E) breach of any of the covenants set forth in Section 7 hereof. 


               










          	 	(ii) 	
               Any determination of Cause under this Agreement shall be made by the Company
               after giving Employee a reasonable opportunity to be heard. 


               



     	(d)	
          Voluntary Termination by Employee. Employee may terminate employment
          hereunder at any time after providing forty-five (45) days’ written notice
          to the Company. 


          



     	(e)	
          Termination by the Company without Cause. The Company may terminate
          Employee’s employment hereunder without Cause at any time after providing
          written notice to Employee. 


          



	6.  	Compensation
Following Termination of Employment.  







               In
the event that Employee’s employment hereunder is terminated, Employee shall be
entitled to the following compensation and benefits upon such termination: 



     	(a)	
          Termination by Reason of Death. In the event that Employee’s
          employment is terminated by reason of Employee’s death, the Company shall
          pay the following amounts to Employee’s beneficiary or estate: 


          



          	 	(i) 	
               Any accrued but unpaid Base Salary for services rendered to the date of death,
               any accrued but unpaid expenses required to be reimbursed under this Agreement,
               and any vacation accrued to the date of death. 


               



          	 	(ii) 	
               Any benefits to which Employee may be entitled pursuant to the plans, policies
               and arrangements referred to in Section 4(c) hereof as determined and paid in
               accordance with the terms of such plans, policies and arrangements. 


               



          	 	(iii) 	
               An amount equal to the Base Salary (at the rate in effect as of the date of
               Employee’s death) which would have been payable to Employee if Employee had
               continued in employment for a six (6) month period following the date of death.
               Such amount shall be paid in one lump sum within thirty (30) days of when
               notification of the date of death has been given to the Company. 


               



     	(b)	
          Termination by Reason of Total Disability. In the event that
          Employee’s employment is terminated by reason of Employee’s Total
          Disability as determined in accordance with Section 5(b), the Company shall pay
          the following amounts to Employee: 


          



          	 	(i) 	
               Any accrued but unpaid Base Salary for services rendered to the date of
               termination, any accrued but unpaid expenses required to be reimbursed under
               this Agreement, any vacation accrued to the date of termination. 


               



          	 	(ii) 	
               Any benefits to which Employee may be entitled pursuant to the plans, policies
               and arrangements referred to in Section 4(c) hereof shall be determined and paid
               in accordance with the terms of such plans, policies and arrangements. 


               



          	 	(iii) 	
               An amount equal to the maximum amount of the long term disability benefits
               payable to Employee under the Company’s long-term disability plan. 


               











     	(c)	
          Termination for Cause or Voluntary Termination by Employee. In the event
          that Employee’s employment is terminated by the Company for Cause pursuant
          to Section 5(c), or Employee terminates employment pursuant to Section 5(d), the
          Company shall pay the following amounts to Employee: 


          



          	 	(i) 	
               Any accrued but unpaid Base Salary for services rendered to the date of
               termination, any accrued but unpaid expenses required to be reimbursed under
               this Agreement, any vacation accrued to the date of termination. 


               



          	 	(ii) 	
               Any benefits to which Employee may be entitled pursuant to the plans, policies
               and arrangements referred to in Section 4(c) hereof shall be determined and paid
               in accordance with the terms of such plans, policies and arrangements. 


               



     	(d)	
          Termination by the Company Without Cause. In the event that
          Employee’s employment is terminated by the Company pursuant to Section 5(e)
          without cause for reasons other than death, Total Disability or Cause, the
          Company shall pay the following amounts to Employee: 


          



          	 	(i) 	
               Any accrued but unpaid Base Salary for services rendered to the date of
               termination, any accrued but unpaid expenses required to be reimbursed under
               this Agreement, any vacation accrued to the date of termination. 


               



          	 	(ii) 	
               Any benefits to which Employee may be entitled pursuant to the plans, policies
               and arrangements referred to in Section 4(c) hereof shall be determined and paid
               in accordance with the terms of such plans, policies and arrangements. 


               



          	 	(iii) 	
               Any outstanding or unpaid Base Salary as of the date of Employee’s
               termination. The Employee shall also be eligible for a bonus or incentive
               compensation payment to the extent a bonus is justified, and to the extent
               bonuses are paid to similarly situated employees, pro-rated for the year with
               respect to the date of Employee’s termination, and paid when similarly
               situated employees are paid. 


               



          	 	(iv) 	
               An amount equal to the Base Salary (at the rate in effect as of the date of
               Employee’s termination) which would have been payable to Employee if
               Employee had continued in employment for a twelve (12) month period following
               the date of death. Such amount shall be paid in accordance with the
               Company’s standard payroll and pay period procedures. 


               



          	 	(v) 	
               The Company completely at its expense will continue for Employee and
               Employee’s spouse and dependents, group health plans, programs or
               arrangements, in which Employee was entitled to participate as of the date of
               termination, until the earlier of : (A) last day of period during which Employee
               receives payment in accordance with clause (iii) above; (B) Employee’s
               death (provided that benefits payable to Employee’s beneficiaries shall not
               terminate upon Employee’s death); or (C) with respect to any particular
               plan, program or arrangement, the date Employee becomes covered by a comparable
               benefit provided by a subsequent employer. 


               











     	(e)	
          No Other Benefits or Compensation. Except as may be provided under this
          Agreement, under the terms of any incentive compensation, employee benefit, or
          fringe benefit plan applicable to Employee at the time of Employee’s
          termination or resignation of employment, Employee shall have no right to
          receive any other compensation, or to participate in any other plan, arrangement
          or benefit, with respect to future periods after such termination or
          resignation. 


          



     	7.	
          Restrictive Covenants. 


          



     	(a)	
          Competitive Activity. Employee covenants and agrees that at all times
          during Employee’s period of employment with the Company, and for a period
          of one (1) year after the date of termination of Employee’s employment,
          whether such termination is voluntary or involuntary, by wrongful discharge, or
          otherwise, or the date of the cessation of payments made to the Employee
          pursuant to Section 6 of this Agreement, whichever is later, Employee will not,
          directly or indirectly, engage in, assist, or have any active interest or
          involvement, whether as an employee, agent, consultant, creditor, advisor,
          officer, director, stockholder (excluding a holding of less than 1% of the stock
          of a public company), partner, proprietor or any type of principal whatsoever in
          any person, firm, or business entity which, directly or indirectly, is engaged
          in the same business as that conducted and carried on by the Company, without
          the Company’s specific written consent to do so. 


          



     	(b)	
          Non-Solicitation. Employee covenants and agrees that at all times during
          Employee’s period of employment with the Company, and for a period of one
          (1) year after the date of termination of Employee’s employment, whether
          such termination is voluntary or involuntary, by wrongful discharge, or
          otherwise, or the date of the cessation of payments made to the Employee
          pursuant to Section 6 of this Agreement, whichever is later, Employee will not
          directly or indirectly (i) induce any customers of the Company or corporations
          affiliated with the Company to patronize any similar business which competes
          with any material business of the Company; (ii) canvass, solicit or accept any
          similar business from any customer of the Company or corporations affiliated
          with the Company; (iii) directly or indirectly request or advise any customers
          of the Company or corporations affiliated with the Company to withdraw, curtail
          or cancel such customer’s business with the Company; (iv) directly or
          indirectly disclose to any other person, firm or corporation the names or
          addresses of any of the customers of the Company or corporations affiliated with
          the Company;or (v) directly or indirectly request, solicit, invite, suggest or
          entice any employees of the Company to leave their employment with the Company. 


          



     	(c)	
          Non-Disparagement. Employee covenants and agrees that Employee shall not
          engage in any pattern of conduct that involves the making or publishing of
          written or oral statements or remarks (including, without limitation, the
          repetition or distribution of derogatory rumors, allegations, negative reports
          or comments) which are disparaging, deleterious or damaging to the integrity,
          reputation or good will of the Company, its management, or of management of
          corporations affiliated with the Company. 


          



     	(d)	
          Protected Information. Employee recognizes and acknowledges that Employee
          has had and will continue to have access to various confidential or proprietary
          information concerning the Company and corporations affiliated with the Company
          of a special and unique value which may include, without limitation, (i) books
          and records relating to operation, finance, accounting, sales, personnel and
          management, (ii) policies and matters relating particularly to operations such
          as customer service requirements, costs of providing service and equipment,
          operating costs and pricing matters, and (iii) various trade or business
          secrets, including business opportunities, marketing or business diversification
          plans, business development and bidding techniques, methods and processes,
          financial data and the like (collectively, the “Protected
          Information”). Employee therefore covenants and agrees that Employee will
          not at any time, either while employed by the Company or afterwards, knowingly
          make any independent use of, or knowingly disclose to any other person or
          organization (except as authorized by the Company) any of the Protected
          Information. 


          











8.
    Enforcement of
Covenants. 



        The
covenants contained in Section 7 hereof constitute a series of separate covenants. If in
any judicial proceeding, a court shall hold that any of the covenants set forth in Section
7 exceed the time, geographic, or occupational limitations permitted by applicable laws,
Employee and the Company agree that such provisions shall and are hereby reformed to the
maximum time, geographic, or occupational limitations permitted by such laws. Further, in
the event a court shall hold unenforceable any of the separate covenants deemed included
herein, then such unenforceable covenant or covenants shall be deemed eliminated from the
provisions of this Agreement for the purpose of such proceeding to the extent necessary to
permit the remaining separate covenants to be enforced in such proceeding. Employee and
the Company further agree that the covenants in Section 7 shall each be construed as a
separate agreement independent of any other provisions of this Agreement, and the
existence of any claim or cause of action by Employee against the Company whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of any of the covenants of Section 7. 



9.
    Non-Disclosure of
Agreement Terms. 



        Employee
agrees that Employee will not disclose the terms of this Agreement to any third party
other than Employee’s immediate family, attorney, accountants, or other consultants
or advisors or except as may be required by any governmental authority. 



10.
    Assignment. 



        Except
as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, representatives, successors
and assigns. This Agreement shall not be assignable by Employee. 



11.
    Entire Agreement;
Amendment. 



         This
Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Employee and the Company or any of its subsidiaries
or affiliated entities relating to the terms of Employee’s employment by the Company.
It may not be amended except by a written agreement signed by both parties. 



12.
    Governing Law. 



         This
Agreement shall be governed by and construed in accordance with the laws in force in the
Province of Ontario, Canada. 











13.
          Notices. 



         
     Any
notice, consent, request or other communication made or given in connection with this
Agreement shall be in writing and shall be deemed to have been duly given when delivered
or mailed by registered or certified mail, return receipt requested, or by facsimile or by
hand delivery, to those listed below at their following respective addresses or at such
other address as each may specify by notice to the others: 




	 	To the Company: 	           Industrial Minerals, Inc.    
                              One Dundas
Street West, Suite 2500      
                  Toronto, Ontario M5G 1Z3  






	 	         To Employee: 	
              At the address for Employee set forth below 






     	14.	
         Miscellaneous. 


          



     	(a)	
          Waiver. The failure of a party to insist upon strict adherence to any
          term of this Agreement on any occasion shall not be considered a waiver thereof
          or deprive that party of the right thereafter to insist upon strict adherence to
          that term or any other term of this Agreement. 


          



     	(b)	
          Interpretation. Section headings are used herein for convenience of
          reference only and shall not affect the meaning of any provision of this
          Agreement. Whenever the context so requires, the use of the singular shall be
          deemed to include the plural and vice versa. 


          



     	(c)	
          Counterparts. This Agreement may be executed in any number of
          counterparts, each of which so executed shall be deemed to be an original, and
          such counterparts will together constitute but one Agreement. 


          



        IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day
and year first above written. 
















		
	Mr. Robert Dinning as EMPLOYEE: 

                                 



/s/ Robert Dinning 

    Robert Dinning 

(Signature)

                                 

Address:  #1209-409 Granville Street

           
      Vancouver, British Columbia

           
      
Canada, V6C 1T2 
	INDUSTRIAL MINERALS, INC.

By:



/s/ Dick van Wyck

 (Signature)



Name: Dick van Wyck



Title: President 










300642.1