EXHIBIT 10.1

                      AGREEMENT AND PLAN OF REORGANIZATION
                        INDUSTRIAL MINERALS INCORPORATED
                                       And
                                PNW CAPITAL, INC.

     This  Agreement  ("Agreement"),  is entered into as of January 31, 2002, by
and  between  Industrial   Minerals   Incorporated   ("Industrial"),   a  Nevada
corporation,  PNW Capital,  Inc. ("PNW"),  a Delaware  corporation,  and certain
shareholders of Industrial ("Industrial Shareholders").

                                    RECITALS

     WHEREAS,  Industrial and PNW are corporations duly organized under the laws
of the States of Nevada and Delaware, respectively; and

     WHEREAS, the Industrial  Shareholders are the owners of at least 90% of the
issued and outstanding common stock of Industrial (31,500,000 shares); and

     WHEREAS,  it is the intention that all of the issued and outstanding shares
of  Industrial  shall be  acquired by PNW in  exchange  solely for PNW's  voting
stock;

     WHEREAS,  Industrial  shareholders agree to exchange issued and outstanding
stock to PNW to accomplish a tax free reorganization  pursuant to Section 368 of
the Internal Revenue Code; and

     WHEREAS,  PNW and the Industrial  Shareholders agree that 90% of the common
shares  issued and  outstanding  of Industrial  shall be exchanged  with PNW for
31,500,000  shares  of the  common  stock of PNW.  (The pro rata  number  of PNW
shares, shall be delivered to the Industrial  Shareholders in exchange for their
Industrial shares as hereinafter set forth);

     NOW, THEREFORE, for good and sufficient  consideration,  it is agreed among
the parties as follows:

                                    ARTICLE I
                                The Consideration

1.1  Subject to the  conditions  set forth  herein on the  "Effective  Date" (as
herein defined),  Industrial  Shareholders shall exchange 90% of the outstanding
shares of  Industrial  for  31,500,000  shares of common PNW common  stock.  The
parties  contemplate  that closing will occur within 20 days.  1.1 Upon closing,
Industrial Shareholders shall receive pro rata shares of $.0001 par value voting
common stock of PNW on a one share for one share basis

1.2 If this Agreement is duly adopted by the holders of the requisite  number of
shares of Industrial,  in accordance with the applicable laws and subject to the
other provisions hereof,  such documents as may be required by law to accomplish
the Agreement shall be filed as required by law to effectuate same, and it shall
become effective


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                                   ARTICLE II
                         Issuance and Exchange of Shares

2.1 The shares of $.0001 par value  common stock of PNW shall be issued by it to
Industrial   Shareholders   at  closing.   PNW  shall  undertake  all  necessary
arrangements to issue the requisite number of shares called to by this Agreement
and shall make all necessary  arrangements  with its transfer  agent to complete
the exchange of the shares contemplated herein.

2.2 PNW  represents  that no  outstanding  options or warrants  for its unissued
shares exist.

2.3 The stock transfer books of Industrial  shall be closed on February 8, 2002,
and thereafter no transfers of the stock of Industrial shall be made. Industrial
shall appoint Heritage Transfer Agent. as exchange agent ("Exchange  Agent"), to
accept  surrender  of  the  certificates   representing  the  common  shares  of
Industrial,  and to  cancel  the same  upon  confirmation  of the  issuance  and
delivery of PNW shares to Industrial Shareholders.

2.4 No  fractional  shares  of PNW  stock  shall be  issued  as a result  of the
Agreement. Shares shall be rounded to nearest whole share.

2.5 Each holder of a certificate or certificates  representing  common shares of
Industrial,  upon presentation and surrender of such certificate or certificates
to the Exchange Agent,  shall be entitled to receive the consideration set forth
herein.  Upon such  presentation,  surrender,  and  exchange as provided in this
Section 2.5,  certificates  representing  shares of Industrial  previously  held
shall be canceled.  Until so presented  and  surrendered,  each  certificate  or
certificates which represented issued and outstanding shares of Industrial shall
be deemed for all  purposes to evidence  the right to receive the  consideration
set forth in Section 1.2 of this  Agreement.  If the  certificates  representing
shares of  Industrial  have been  lost,  stolen,  mutilated  or  destroyed,  the
Exchange  Agent shall require the  submission of an indemnity  agreement and may
require the submission of a bond in lieu of such certificate.

                                   ARTICLE III
                           Representations, Warranties
                           And Covenants of Industrial

     No  representations  or  warranties  are  made  by any  director,  officer,
employee or  shareholder  of Industrial,  as  individuals,  except as and to the
extent stated in this  Agreement.  Industrial  hereby  represents,  warrants and
covenants to PNW as follows:


3.1 Industrial is a corporation  duly  organized,  validly  existing and in good
standing  under the laws of the State of Nevada,  and has the corporate powe and
authority to own or lease its  properties  and to carry on its business as it is
now being conducted.  The Articles of Incorporation and Bylaws of Industrial are
complete and accurate.

3.2 The  aggregate  number of shares which  Industrial is authorized to issue is
100 millionshares of common stock with no par value.

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3.3 Industrial has complete and  unrestricted  power to enter into and, upon the
appropriate  approvals  as  required  by law,  to  consummate  the  transactions
contemplated by this Agreement.

3.4 Neither the making of nor the  compliance  with the terms and  provisions of
this  Agreement and  consummation  of the  transactions  contemplated  herein by
Industrial will conflict with or result in a breach or violation of the Articles
of Incorporation or Bylaws of Industrial.

3.5 The  execution,  delivery and  performance  of this  Agreement has been duly
authorized  and approved by  Industrial's  Board of Directors and Industrial has
received unanimous Shareholder approval for this Agreement.

3.6 There are no legal proceedings or regulatory  proceedings  pending involving
material claims,  or to the knowledge of the officers of Industrial,  threatened
against Industrial or affecting any of its assets or properties,  and Industrial
is not in any material  breach or violation of or default  under any contract or
instrument to which  Industrial is a party, and no event has occurred which with
the lapse of time or action by a third party could  result in a material  breach
or violation of or default by Industrial  under any contract or other instrument
to which  Industrial is a party or by which it or any of its  properties  may be
bound or affected,  or under its respective Articles of Incorporation or Bylaws,
nor is there any court or regulatory order pending, applicable to Industrial.

3.7  Industrial  has no employee  benefit plan,  including  non-qualified  stock
awards, options, and consulting fees for independent contractors.

3.8 No  representation  or  warranty  by  Industrial  in this  Agreement  or any
certificate  delivered  pursuant  hereto  contains  any  untrue  statement  of a
material  fact or  omits to state  any  material  fact  necessary  to make  such
representation or warranty not misleading.


3.9      Industrial Assets.
         -----------------

     (A)  Industrial  is the "lessee" of lease number  364704  consisting of the
following:

     All those parcels or tracts of land and land under water in the Township of
     Head,  Clara and Maria,  in the County of Renfrew and  Province of Ontario,
     containing by  admeasurement  564.569  hectares,  be the same more or less,
     composed of those parts of lots 21, 22, 23, 24 and 25,  Concessions  IV and
     V, and part of the bed of Mag Lake  and the bed of the  unnamed  lake,  and
     lots 23, 24 and 25 and the north half of lots 21 and 22,  Concession III as
     shown on the plan of the geographic Township of Maria,  designated as parts
     1, 2, 3 and 5 on a plan and a field notes  deposited  in the Land  Registry
     Office at Pembroke as Plan 49R-11203,  comprising  mining claims EO 608306,
     EO 608346,  EO 608347,  EO 608374,  EO  608348,  EO 608373,  EO 608349,  EO
     608372, EO 608369, SO 998760, SO 1084577,  EO 800884, EO 800880, EO 800881,
     EO 608350,  EO 608371,  EO 608367,  EO  608370,  EO 608376,  EO 608368,  EO
     608302, SO 1117797, SO 998754, SO 1117798, SO 998755, SO 1117799, SO 998756
     and SO 998757.

     (B) Industrial  further  covenants and warrants that  equipment  associated
     with  production  of the  described  lease  number  364704  in (A) above is
     included in this agreement.


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3.10
     a. Liens.  No one other than  Industrial  has any right,  title,  interest,
lien,  claim,  security  interest,  restriction  or  encumbrance  in,  on  or to
Industrial's  assets except as otherwise  disclosed in filings with  appropriate
governmental agencies reflecting security interests.

     b. Material Contracts.  Industrial does not have any material  obligations,
contracts,  agreements,  leases, subleases,  commitments or understanding of any
kind,  nature or  description,  oral or written,  fixed or contingent  due or to
become due, existing or inchoate. Except as otherwise disclosed.

     c. No  Undisclosed  Liabilities.  Industrial  does not  have  any  material
liabilities  or   obligations,   including,   without   limitation,   contingent
liabilities for the performance of any obligation which have not been disclosed.

                                   ARTICLE IV
                Representations, Warranties and Covenants of PNW

     No  representations  or  warranties  are  made  by any  director,  officer,
employee  or  shareholder  of PNW as  individuals,  except as and to the  extent
stated in this Agreement or in a separate written statement.

     PNW hereby represents, warrants and covenants to Industrial, as follows:

4.1 PNW is a corporation  duly organized,  validly  existing and will be in good
standing  under  the  laws of the  State of  Delaware  at  closing,  and has the
corporate power and authority to own or lease its properties and to carry on its
business as it is now being conducted.  The Articles of Incorporation and Bylaws
of PNW,  copies of which have been  delivered  to  Industrial,  are complete and
accurate.

4.2 The  aggregate  number  of  shares  which  PNW is  authorized  to  issue  is
100,000,000  shares of common  stock with a par value of $.0001  per  share,  of
which 1,000,000 shares are issued and outstanding. Upon Shareholder approval PNW
will  cause  31,500,000  shares  to be  issued  to the  Industrial  Shareholders
pursuant to the terms of this Agreement.

4.3 PNW has  complete  and  unrestricted  power  to  enter  into  and,  upon the
appropriate  approvals  as  required  by law,  to  consummate  the  transactions
contemplated by this Agreement.

4.4 Neither the making of nor the  compliance  with the terms and  provisions of
this Agreement and consummation of the transactions  contemplated  herein by PNW
will  conflict  with or result  in a breach  or  violation  of the  Articles  of
Incorporation or Bylaws of PNW.

4.5 The  execution of this  Agreement has been duly  authorized  and approved by
PNW's Board of Directors.

4.6 There are no legal proceedings or regulatory  proceedings involving material
claims pending,  or to the knowledge of the officers of PNW,  threatened against
PNW,  or  affecting  any of its  assets,  or  properties,  and PNW is not in any
material  breach  or  violation  of or  default  under  any  contract  or  other
instrument to which PNW is a party,  and no event has  occurred,  which with the
lapse of time or action by a third  party could  result in a material  breach or
violation of, or default by PNW under any contract or other  instrument to which
PNW is party or by which it or any of its  properties  may be bound or affected,
or under its respective  Articles of Incorporation  or Bylaws,  nor is there any
court or regulatory order pending, applicable to PNW.
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4.7 PNW debt is less than $40,000 USD.

4.8 All  liabilities to PNW have been properly  provided for and are adequate to
comply with all regulatory requirements regarding the same.

                                    ARTICLE V
                                     Closing

5.1 The parties  contemplate  that closing will occur on or before  February 20,
2002. The closing shall be considered  complete upon (1) the surrender of all of
the  outstanding  shares of  Industrial  stock to the  Exchange  Agent;  (2) the
issuance, transfer and delivery of PNW stock certificates to the Exchange Agent;
and (3) the  cancellation of Industrial stock by the Exchange Agent and delivery
of the cancelled Industrial stock.

5.2 The  cancellation of Industrial  stock shall be accomplished by the Exchange
Agent  writing  cancelled  across  the  face  of each  of the  Industrial  stock
certificates and surrendering them to PNW.

5.3 The  parties  agree that the  Exchange  Agent shall have  authority  to deal
directly with PNW's transfer agent and to distribute PNW stock to the Industrial
Shareholders as contemplated herein.

                                   ARTICLE VI
                            Miscellaneous Provisions

6.1 Fax Signatures. The parties agree that signatures,  which are transmitted by
facsimile,  shall be valid and effective as though  original  signatures to this
Agreement.

6.2 Each of the signatures to this Agreement hereby warrants and represents that
to the extent he is signing this Agreement in any representative  capacity, that
he is fully authorized to sign such Agreement in such capacity.

6.3 This Agreement  constitutes the sole and entire agreement and  understanding
of  the  parties  with  respect  to the  subject  matter  hereof.  Any  and  all
discussions,  negotiations,  commitments,  and  understandings,  whether oral or
otherwise,  relating to the subject matter of this Agreement, are merged herein.
No  representations,  oral or  otherwise,  express or implied,  other than those
contained in this Agreement, have been made or relied upon by any party.


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6.4 This Agreement  shall be  interpreted  under and governed by the laws of the
State of Colorado.

6.5 Further Documentation.  The parties agree to execute any documents necessary
to comply with the provisions of this Agreement.

6.6 Execution In  Counterparts.  This Agreement may be executed in  counterparts
all of which shall be deemed an original  under the Federal  Rules of  Evidence,
provided,  however, that to be effective, this Agreement must be executed by all
of the parties.

     Date and sign the date first above written.

PNW CAPITAL, INC.


By: /s/ Dan Silva
Dan Silva, President

                                      INDUSTRIAL MINERALS CORPORATION


                                      By: __________________________________
                                          ___________________, President


                                      By: ___________________________________
                                          ____________________, Shareholder


                                      By: ___________________________________
                                          ____________________, Shareholder


                                      By: ___________________________________
                                          ____________________, Shareholder


                                      By: __________________________________
                                          _____________________Shareholder

                                      By: __________________________________
                                          ____________________, Shareholder