Document:

EXHIBIT 10.5

               MINING LEASE AND OPTION T0 PURCHASE

     Mining Lease and Option to Purchase ("Lease Agreement") made this 20th
day of July 2001 (the "Effective Date"), between Kaibab Industries, Inc., an
Arizona corporation ("Kaibab Industries" or "Lessor") of 4602 E. Thomas Road,
Phoenix, Arizona 85018, as Lessor and Unico, Incorporated, an Arizona
corporation ("Unico" or "Lessee") of P .0. Box 777, Magalia, California
95954, as Lessee.

     WHEREAS Kaibab Industries is the owner of certain mining claims more
fully described below (the "Claims") and desires to lease the Claims to Unico;
and

     WHEREAS Kaibab Industries has taken all necessary board action and no
shareholder action is necessary to approve the lease of the Claims to Unico;

     THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

     1.  Property Leased and Purchase Option. In consideration of the
covenants and agreements hereinafter expressed to be kept and performed by
Unico, Kaibab Industries hereby leases to Unico all of the equipment and other
personal property described on Exhibit "A" and the following premises located
in Garfield County, State of Utah consisting of patented mining claims and
mill sites (if any):

     The patented mining claims in the Henry Mountain Mining
     District in Garfield County, State of Utah, all of U.S.
     Survey #3002, Mineral Entry #2103, consisting of the
     following: El Padre, Cuprum, Stevenite, Coney, Bromide
     Lodes, and the Triume Placer, containing 83.34 acres and
     more particularly described in the Deed Record Book "B"
     at Pages 215-220 of the records of the Office of the
     County Recorder of Garfield County, Utah (collectively
     he "Leased Premises").

     As additional consideration for the commitments of Lessee found herein,
Lessor hereby grants to Lessee an option to purchase all of the Claims and
mill sites (if any) as described herein (including all dumps, if any), and all
equipment and other personal property described on Exhibit A, commencing with
the Effective Date of this Lease Agreement and continuing thereafter for a
period of three years.  The option exercise price shall be One Million Dollars
($1,000,000) less any amounts paid by Unico to Kaibab Industries for the
separate purchase of any of the equipment or other personal property described
on Exhibit A. Any net smelter returns paid by Unico to Kaibab Industries
pursuant to section 3 shall not be counted as part of the purchase price.
Upon exercise of the purchase option and payment therefor in cash or certified
funds, Lessor shall convey good and marketable title to the above described
Leased Premises to Lessee, free and clear of any liens, encumbrances,
overriding royalties, carried interests or other interests, except such as may
have arisen on account of Lessee's operation and lease of the Leased Premises.
Upon exercise of this purchase option and payment of all amounts due hereunder
by Lessee, this Lease Agreement and all rights of either party thereto shall
be extinguished and Lessee shall become the fee title owner of the above
described Leased Premises and all of the equipment and other personal property
described on Exhibit A.

     Lessee shall give Lessor at least 10 days advance written notice of its
intention to exercise the purchase option.

     Lessor agrees to furnish Lessee with copies of (or at its option to make
available for copying by Lessee) all maps, drawings, reports and any available
mine history, showing the location of drill holes, drifts driven, stockpiles,
blocked out reserves, probable and or possible reserve estimates, assays,
assay reports, development and other data, as is reasonably available to
Lessor.  Lessee agrees to return any and all such information to Lessor as
soon as copied or within 30 days. Lessor shall furnish Lessee copies of
drilling reports on the property at the time of signing of this Lease
Agreement, which shall be returned to Lessor as provided above.  At any
termination of this Lease Agreement, Lessee agrees to furnish any similar data
or information as to its development of the Claims to Lessor on the same
basis. Lessee agrees to accept the property "as is" and to indemnify and hold
Lessor harmless for any damages incurred by Lessor arising out of damage to
property or the personal injury or death of the employees or agents of Lessee,
or any other person where such damage arises on account of or in connection
with the use, operation or development of the property by Lessee.

     Lessor agrees, warrants and represents that its board of directors has
taken all action necessary to enter into this Lease Agreement and that
shareholder approval of this Lease Agreement is not necessary.  Lessor further
agrees, warrants and represents that neither the execution of this document
nor the exercise of the purchase option by Lessee would result in the
disposition of all or substantially all of the assets of Lessor so as to
require shareholder approval under applicable state law.  Further, Lessor
agrees, warrants and represents that in the event any shareholder of Lessor
threatens to contest or contests, by court action or otherwise, the grant or
validity of the Lease Agreement or the grant, validity or exercise of the
purchase option thereunder, in any manner, that Lessor will indemnify and hold
harmless Lessee from any and all damages, costs and attorneys fees it may
suffer as a result of such contest and Lessor agrees to use its best efforts
to obtain any shareholder approval or consent which may be determined to be
required.

     Lessee may, in its discretion, record the Notice of Interest attached
hereto as Exhibit B.

     2. Term; Assignment. Unico shall hold the Leased Premises for the purpose
of mining all kinds of minerals and ores for a period of three (3) years from
the date of this Lease Agreement (the "Effective Date"), unless the Lease
Agreement is sooner terminated under any provision contained herein.  Each
party, with the prior written consent of the other, which consent shall not be
unreasonably withheld, shall have the power to assign or sublet this Lease
Agreement or any interest hereunder.  Notwithstanding the Effective Date,
Unico shall have reasonable access to the Leased Premises prior to the
Effective Date to prepare work plans and complete preliminary preparations.

     3. Duties of Lessee; Payments to Kaibab Industries. Unico agrees to
perform all work in a thorough and workmanlike manner, to keep underground
workings securely timbered, drained, and clear of loose rock and rubbish, to
properly dispose of loose rock outside the mine, to comply with all mining and
environmental laws, rules and regulations, to keep accurate accounts, to
render necessary statements to Kaibab Industries showing the amount and
character of production, and to pay to Kaibab Industries, or its designated
agent, as rental for the leased Claims, a five percent (5%) net smelter return
upon all ore taken from the Leased Premises during the term of this Lease
Agreement. Net smelter return payments shall be adjusted to provide for
payment of the actual cost of transportation from the mine to the receiving
plant or smelter, and less any assaying, weighing, treatment and special
sampling charges. Net smelter return payments by Unico shall be made to Kaibab
Industries at the above address, or its designated agent or bank by the 15th
of the month next succeeding the calendar month during which Unico shall have
received payment for such shipment.  Unico shall conduct resource definition
and an induced polarization geophysical survey of the property.  All data
gathered by Unico concerning the Property during the term of this Agreement
shall be shared with Kaibab Industries.  Unico shall carry its own worker's
compensation and liability insurance.

     4.  Minimum Production Requirements.  Unico agrees that commencing 30
days after the Effective Date of this Lease Agreement, Unico shall then begin
to produce not less than the lesser of the following: (a) the mining and
removal of a minimum of 1,000 tons of ore per month from the Leased Premises;
or (b) the refining of a minimum of 1,000 ounces of gold per month mined from
the Leased Premises.  Because mining operations of the Leased Premises are
seasonal, the parties agree that these minimum production requirements shall
only apply from June 10 until November 20 (a total of 5 months and 10 days)
during each year during the term of this Lease Agreement, and the minimum
production requirements for all partial months shall be pro rated.

     5. Right of Access. Kaibab Industries or its designated representative,
shall have the right, upon reasonable notice, to enter upon the Leased
Premises to inspect the same or take samples therefrom, and to enter upon the
mill site at Unico's Deer Trail Mine (to verify that there has been no
commingling of ores as described in Section 10), and Lessee will render to
Lessor reasonable assistance in its power in so doing.  Kaibab Industries
shall also have the right, upon reasonable notice, to review and make copies
of the books and records of Unico which relate to this Lease Agreement.

     6. Taxes and Assessments. Unico agrees to pay when due all taxes and
assessments levied against the Leased Premises on account of the production of
ore under this Lease Agreement.  All assessment work shall be performed and
affidavits of labor recorded by Lessee in due time as may be required by law.
To the extent that Lessee's operating expenditures on the Leased Premises
exceed the minimum required to qualify for assessment work on any unpatented
claims (if any) included in the Leased Premises, the excess may be reported by
Lessor to qualify as assessment work on its contiguous unpatented claims (if
any) as permitted by law.

     7. Default by Lessee. Unico agrees that in case of its failure in any
substantial respect to keep and fulfill any one or more of the covenants or
agreements herein or its failure to pay any net smelter returns due Kaibab
Industries, it shall then be lawful for Lessor to declare this Lease Agreement
ended. Upon any default by Lessee, Lessor shall give Lessee written notice of
such default and Lessee shall have thirty days (30 days) thereafter to correct
such default. In the event of an uncorrected default, (and also upon
termination of this Lease Agreement) Lessee agrees to surrender and deliver
the Lessor quiet and peaceable possession of the Leased Premises. Upon
termination of this Lease Agreement, for any reason other than the exercise of
the purchase option by Lessee, Lessee shall have a period of 30 days in which
to remove any and all of its own mining equipment being used in operating the
Leased Premises or transporting ore from such operations.

     In the event that a default occurs due to Lessee's failure to pay to
Lessor any net smelter returns due to the Lessor, then Lessee shall continue
to be liable to pay all delinquent net smelter returns to Lessor, regardless
of whether Lessor terminates this Lease.

     In the event that a default occurs due to Lessee's failure to meet the
minimum production requirements specified in Section 4 of this Lease
Agreement, then Lessor's exclusive remedy shall be to terminate this Lease
Agreement, and Lessor may then require Lessee to purchase all or any portion
of the equipment and personal property described on Exhibit A for the agreed
upon value specified on Exhibit A.  In no event shall Lessee be required to
pay to Lessor the value of any net smelter returns that Lessor would have
received if the minimum production requirements had been met, or any other
damages due to Lessee's failure to meet minimum production requirements.

     8.  Successors and Assigns. All covenants and agreements contained herein
shall extend to and be binding upon the heirs, legal representatives,
successors, and assigns of the parties.

     9. Termination. Lessee may, at any time, surrender and terminate this
Lease Agreement upon giving to Lessor sixty (60) days notice in writing and
paying all net smelter returns owing through the effective date of
termination.  The parties may also terminate this Lease Agreement by mutual
agreement. This Lease Agreement shall terminate three (3) years from the
Effective Date or upon execution of the purchase option and payment of the
purchase price by Lessee.  Lessor may terminate this Lease Agreement as
described in paragraph 7 above or otherwise as permitted by law.  If this
Lease Agreement is terminated for any reason other than Lessee's exercise of
the option granted herein, Lessee shall record a release of the Notice of
Interest in a form satisfactory to Lessor.

     In the event Lessee acquires any interest in any other claims located
within one mile of the Leased Premises ("Nearby Claims") during the term of
this Lease Agreement, and in the event Lessee does not exercise the purchase
option described in Section 1, then upon the termination of this Lease
Agreement, Lessee's interest in all such Nearby Claims shall be transferred to
Lessor without Lessor being required to make any payments to Lessee therefor.

     10. No Commingling of Ores. Unico agrees to keep all of the ore removed
from the Leased Premises separate from ore removed from the Deer Trail Mine
and all other mines that may be operated by Unico in the future.  Unico will
take steps to assure that there is no commingling of ores, so that Unico's
performance under this Lease Agreement can be accurately measured and any
amounts to become due and owing to Kaibab Industries under this Lease
Agreement in the future can be accurately computed.

     11. Compliance with Laws.  All operations of Lessee shall be conducted so
as to comply with the laws of the State of Utah and with all statutes, rules,
regulations, orders, and requirements of federal authorities and Lessee agrees
to indemnify and hold harmless Lessor for any obligations, liens or similar
liabilities arising as a result of the operations of Lessee and constituting a
lien or obligation against the Leased Premises. The parties understand and
agree that the mine is an underground mine and that no significant reclamation
of the mine site is anticipated following normal mining procedures on the
Claims. Lessor is not aware of any notice of non-compliance from any
governmental agency regarding the property. Each party to this Lease Agreement
shall be responsible for any environmental, pollution or aesthetic
requirements or liability legitimately made or assessed by a governmental
entity attributable to each party's respective period of occupancy and
operation of the Claims. To the extent permitted by law, Lessee shall be
entitled to any depletion allowance on the property as a result of its mining
activities.  If Lessee exercises its option to purchase, Lessee shall be
responsible for any environmental, pollution or aesthetic requirements related
to the property, which arise on or after the Effective Date of the Lease
Agreement, and Lessee shall defend and hold Lessor harmless from and against
any claim, liability or expense, including assessment or remediation costs,
arising out of any such environmental, pollution or aesthetic requirements.

     12. Entire Agreement; Governing Law. This Lease Agreement contains the
entire agreement between the parties hereto and any amendments thereto shall
be in writing. This Lease Agreement shall be governed and construed under the
laws of the State of Utah.

     EXECUTED as of the date first above written.

LESSEE:                                    LESSOR:

UNICO, INCORPORATED                        KAIBAB INDUSTRIES, INC.

/s/ Ray C. Brown                           /s/ R. Bruce Whiting_____
Ray C. Brown, President                    R. Bruce Whiting, President

State of Nevada           )
                          : ss.
County of Clark           )

     Personally appeared before me, Ray C. Brown, this 28th day of July, 2001,
who declared to me that he is the President of Unico, Incorporated and
acknowledged to me that he executed the foregoing agreement on behalf of said
corporation by authority of a resolution of its board of directors or bylaws.

/s/ M. Dana Burgess
NOTARY PUBLIC

Commission  Expires: 9-22-01
Residing At: _Las Vegas, Nevada

State of Arizona        )
                        : ss.
County of Maricopa      )

     Personally appeared before me, R. Bruce Whiting, this 20th day of July,
2001, who declared to me that he is the President of Kaibab Industries, Inc.
and acknowledged to me that he executed the foregoing agreement on behalf of
said corporation by authority of a resolution of its board of directors or
bylaws.

 /s/ Marcia D. Fixel
 NOTARY PUBLIC

Commission  Expires: 11-18-04
Residing At: _Chandler, Arizona

                            EXHIBIT A
 DESCRIPTION OF EQUIPMENT AND OTHER PERSONAL PROPERTY COVERED BY
          THE LEASE AGREEMENT AND ITS AGREED UPON VALUE.

Description of Equipment or Personal Property with the Agreed Upon Value
 ----------------------------------------------------------------------------
|Dux Ore Hauler D100-208     |$ 6,000 | John Deere Loader 79932      |$ 8,000|
|Case Backhoe 580C8427       | 11,000 | Hercules Generator 2004A 15KW|  2,500|
|Isuzu Engine 301612         |  1,000 | Lincoln Welder A859446 400DC |  1,500|
|Quincy Compressor 325-4-239-|    400 | Wilfley Lg Concentrator Table|  7,000|
| L                          |        | 7405 17945                   |       |
|Super Collider 90930dynamill|  2,000 | Lab items,crucibles,molds,etc|    500|
|Wilfley Sm Concentrator     |  2,000 | Klondike Trommel 125         |    800|
| Table 18548                |        | Centrifugal Pump 981209 1998 | 25,000|
|Veculla Electric 3638 Mod.30|  1,000 | Misc. Items (see list below) |  5,000|
|Sioux Water Heater          |    900 | Grand Rapid Power Source     |  2,000|
| Model #D1000 1000000 BTU   |        | Koch Dryer Oven Mod. 959-402L|    200|
|Dryer Steam 1998            |  1,000 | Pumps (see list below)       | 15,225|
|Tanks (see list below       | 24,405 | Gardner Denver 83 Drill      |    300|
|Long Year Drill             |  8,000 | 6 electric motors            |    500|
|Safety Equipment*           |  1,000 | Furnace hood                 |    200|
|Vent Fans                   |    200 | Electrical panel             |    200|
|Vacuum Pumps                |    200 | Water pumps                  |    200|
|Tilt Furnace 430 crucible   |  2,000 | HyGy Collider                | 25,000|
|Brawn Mixers                |  5,325 |                              |       |
|Winkie Drill w/rods         |  6,000 |                              |       |
------------------------------------------------------------------------------

                        Total $164,755.00

Misc items: 14" conveyor w/belt, sm. ball mill, sm. jig, jack tank, chemicals,
lumber, tele. poles, tables, water meters, etc., flooring, electrical cords,
misc. wire on pallet, castings and propane stove.
Tanks: 1-350 gal. cone/stand, 2-1100 gal. cone w/stand, 2-1600 gal. cone
w/stand, 1-375 gal vertical , 1-550 gal. vertical, 2-1050 gal. vertical, 1-
1600 gal. vertical, 3-6500 gal. vertical all new.
Pumps: 5-w/40 IHF, 5 w/50 IHF 14.4 cubic meters per minute, 5-w/65 IHF 28.8
cubic meters per minute.
* To include miners belts, lights, w/charger, self rescuers, boots, first aid
kits, etc.

                             /s/ RBW
                             -------
                             initials

                             /s/ RCB
                             -------
                             initials

                            EXHIBIT B

WHEN RECORDED MAIL TO: Unico, Incorporated
c/o Ray C. Brown
P.O. Box 777
Magalia, CA 95954

                        NOTICE OF INTEREST

Notice is hereby given that Unico, Incorporated, an Arizona corporation,
claims an interest in the real property described below, on Exhibit A attached
hereto, located in Garfield County, Utah. Said interest is evidenced by that
certain MINING LEASE AND OPTION TO PURCHASE dated July __, 2001 wherein Kaibab
Industries, Inc. is Lessor and  Unico, Incorporated is Lessee.  The property
affected by the MINING LEASE AND OPTION TO PURCHASE is located in Garfield
County, State of Utah, and is more particularly described as follows:

     The patented mining claims in the Henry Mountain Mining District in
     Garfield County, State of Utah, all of U.S. Survey #3002, Mineral Entry
     #2103, consisting of the following: El Padre, Cuprum, Stevenite, Coney,
     Bromide Lodes, and the Triume Placer, containing 83.34 acres and more
     particularly described in the Deed Record Book "B" at Pages 215-220 of
     the records of the Office of the County Recorder of Garfield County,
     Utah.

Dated the ____ day of July, 2001.

                                                Unico, Incorporated

                                                ________________________
                                                Ray C. Brown, President
STATE OF __________     )
                        :ss.
COUNTY OF _________     )

     On the ____ day of July, 2001, personally appeared before me Ray C.
Brown, who being by me duly sworn, did say that he is the President of Unico,
Incorporated and that he signed the foregoing Notice of Interest on behalf of
the corporation by authority of its board of directors or bylaws and
acknowledged to me that said corporation executed the same.

                                           _____________________________
                                           Notary Public

Commission Expires:____________
Residing in: __________________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

<PAGE>
                                   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.

<PAGE>

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.

<PAGE>

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.
<PAGE>

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.

<PAGE>
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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}]]