Document:

Exhibit 10.9  

ASSIGNMENT OF LEASE 

THIS ASSIGNMENT made the
15th day of August 2003. 

BETWEEN: 

INDUSTRIAL MINERALS
INCORPORATED 

(the
“Assignor”) 

and 

INDUSTRIAL MINERALS
CANADA INC. 

(the
“Assignee”) 

WHEREAS: 

	 	1. 	By
a lease dated September 10th, 1993 and registered on October 1,           1993
as Instrument Number 364704 in the Land Registry office of the County of
          Renfrew (the “Lease”). Her Majesty The Queen In Right Of The Province
          Of Ontario (the “Lessor”), leased under the Mining Act to
Consolidated           North Coast Industries Ltd. the premises (the “Premises”)
known as           Schedules “A-1" and “A-2” attached hereto, for a
term of 21           years and subject to the terms and conditions set out therein.  

	 	2. 	By
Assignment of Lease dated December 21st, 2001 and registered in           the
Land Registry of the County of Renfrew on January 22, 2002 as Instrument No.
          R0429883, Great Basin Gold Ltd., as successor in interest to Consolidated North
          Coast Industries Ltd., assigned its interest in said lease to Paul C. McLean,
          Estate of Pierre G. Lacombe and Frank G. Tagliamonte, as owners of the premises
          as set out in Schedule “A” attached hereto, free of encumbrance;  

	 	3. 	By
Assignment of Lease dated January 31, 2002 and registered in the Land           Registry
Office of the County of Renfrew on March 4, 2002 as Instrument No.           R429007,
Paul C. McLean, Estate of Pierre G, Lacombe and Frank G. Tagliamnote,           assigned
their interest in said Lease to Westland Capital Inc., as owner of the           premises
as set out in Schedule “A” attached hereto, free of           encumbrance.  

	 	4. 	By
Assignment of Lease dated January 31, 2002 and registered in the Land           Registry
Office of the County of Renfrew on March 4, 2002 as Instrument No.           R429008,
Westland Capital Inc., assigned its interest in said Lease to           Industrial
Minerals Incorporated, as owner of the premises as set out in           Schedule “A” attached
hereto, free of encumbrance.  

	 	5. 	The
Assignee has requested the Assignor to transfer the residue of the term of
          years and assign to it the lease:  

NOW THEREFORE: 

In consideration of $1.00, paid by
the Assignee to the Assignor (the receipt of which is hereby acknowledged) the Assignor as
beneficial owner hereby assigns to the Assignee the Assignor’s interest in the
Premises together with the unexpired residue of the term of the Lease and all benefits to
be derived form it subject to the payment of the renst and the observance and performance
of the covenants, provisos, and conditions on the part of the lessee contained in the
Lease. 

WITNESS our hands and seals. 

SIGNED, SEALED AND DELIVED 
in
the presence of: 

		
		Industrial Minerals Incorporated

Per: /s/ John Melnyk

         John Melnyk

Industrial Minerals Canada Inc.

Per: /s/ John Melnyk

         John Melnyk 

303373.1Exhibit 10.10

Consulting Services
Agreement  

        This
Consulting Services Agreement is made as of the 1st day of July, 2007 between
Industrial Minerals, Inc. a company incorporated under the laws of the State of
Delaware, having a business address at One Dundas Street West, Suite 2500, Toronto,
Ontario M5G 1Z3 (“IMI”), and Mr. A. John Carter, Businessman,
having an address at 73 Raymar Place, Oakville, Ontario L6J 6M1 (the
“Consultant”). 

        WHEREAS,
the Consultant has experience in metallurgical research, process engineering at mines and
mineral processing with particular expertise in plant and equipment design, equipment
sourcing, and plant construction at mines; 

        AND
WHEREAS, IMI requires such expertise at its Bissett Creek mine in Northern Ontario and
the Consultant desires to provide consulting services to IMI, as hereinafter set out; 

        NOW,
THEREFORE, in consideration of the mutual covenants and provisions herein contained, the
Consultant and IMI agree as follows: 

	1.  	Consulting
Services.  

        
      Consultant
shall as and when requested by IMI during reasonable business hours, furnish the Company
with his best advice, information, judgment and knowledge with respect to mineral
processing and process engineering at IMI’s Bissett Creek mine in Northern Ontario,
with particular focus on the plant and equipment design, equipment sourcing and plant
construction, all as described in the Project Director’s Responsibilities which are
set out in Schedule “A”, Statement of Work, hereto.  

	2.  	Conduct
of Services.  

        
      Consultant
shall dedicate such reasonable time and efforts as may be required in order to fulfill its
obligations hereunder. The Consultant represents and warrants to IMI that it shall provide
the services described herein in a cooperative fashion, promptly, efficiently in
accordance with standards of quality acceptable to IMI acting reasonably, and in a good
and workmanlike manner. 

	3.  	Consultant’s
Remuneration and Expenses.  

        
      In
consideration of the satisfactory performance by the Consultant of its obligations set out
in this Consulting Services Agreement IMI shall: (a) pay the Consultant $10,000.00 per
month during the term of this Consulting Services Agreement; and (b) award and grant the
Consultant the option to acquire 1,100,000 shares of IMI as set out in the Stock Option
Grant Agreement attached as Schedule “B” hereto. 

        
      In
addition, the Consultant shall be reimbursed for its expenses reasonably and properly
incurred in performing its services hereunder, provided always that such expenses have
been approved in advance by IMI. The Consultant shall be solely responsible for any and
all payments or deductions required to be made respecting unemployment insurance,
workmen’s compensation, income tax, pension plans and such other similar pay list
deductions or payments. 

	4.  	Term
and Termination.  

        
      This
Consulting Services Agreement shall be in force and effect from July 1, 2007 and shall
continue until terminated by IMI by ten (10) days prior written notice given to the
Consultant, whereupon this Consulting Services Agreement shall terminate on the expiration
of the notice period and thereafter no longer be of any force or effect. In the event this
Consulting Services Agreement is terminated by IMI prior to the completion by the
Consultant of the services set out in the Statement of Work, Schedule “A”, then
the Consultant shall nevertheless be entitled to retain its award from the allotment of
1,100,000 IMI shares (see Schedule “B”) as IMI may, acting reasonably, in its
discretion determine. 

	5.  	Independent
Contractor.  

        
      This
is an Agreement for the performance of a service and the Consultant is engaged by IMI as
an independent contractor for the sole purpose of providing a service. The Consultant is
not engaged as a coventurer, partner, agent or employee of IMI and no act or omission by
the Consultant shall in any way obligate or be binding upon IMI. 

	6.  	Non-Solicitation.  

        
      Consultant
covenants and agrees that at all times during Consultant’s period of engagement with
IMI, and for a period of one (1) year after the date of termination of Consultant’s
engagement, Consultant will not directly or indirectly (i) induce any customers of IMI or
corporations affiliated with IMI to patronize any similar business which competes with
IMI; (ii) canvass, solicit or accept any similar business from any customer of IMI; (iii)
directly or indirectly request or advise any customers of IMI or corporations affiliated
with IMI to withdraw, curtail or cancel such customer’s business with IMI; (iv)
directly or indirectly disclose to any other person, firm or corporation the names or
addresses of any of the customers of IMI or corporations affiliated with IMI; or (v)
directly or indirectly request, solicit, invite, suggest or entice any employees of IMI or
its affiliates to leave their employment with IMI or its affiliated companies. 

	7.  	Non-Disparagement.  

        
      Consultant
covenants and agrees that Consultant 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 IMI, its management, or of management of
corporations affiliated with IMI. 

	8.  	Protected
Information.  

        
      Consultant
recognizes and acknowledges that Consultant will have access to various confidential or
proprietary information concerning IMI and corporations affiliated with IMI 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”).
Consultant therefore covenants and agrees that Consultant will not at any time, either
while engaged by IMI or afterwards, knowingly make any independent use of, or knowingly
disclose to any other person or organization (except as authorized by IMI) any of the
Protected Information. 

	9.  	Intellectual
Property.  

        
      All
original works of authorship that result from the performance by Consultant of his duties
hereunder are and will be and will remain the sole and exclusive property of the IMI.
Consultant, at the IMI’s request and sole expense, will assign to the IMI in
perpetuity all intellectual property rights that he may have in such works of authorship.
Such assignment shall be done by documents as prepared by IMI. Should IMI elect to
register claims of copyright to any such works of authorship, Consultant will, at the
expense of IMI, do such things, sign such documents and provide such reasonable
cooperation as is necessary for IMI to register such claims, and obtain, protect, defend
and enforce such proprietary rights. Consultant shall have no right to use any trademarks
or proprietary marks of IMI without the express, prior written consent of IMI regarding
each use. 

	10.  	Applicable
Law.  

        
      This
Agreement and the rights and obligations of the parties shall be governed by the laws in
force in the Province of Ontario, and the parties hereby attorn to the jurisdiction of the
courts of the Province of Ontario. In the event a dispure between the parties arises which
they cannot resolve, then the matter may be referred by either party to arbitration in
Toronto, Ontario under the provisions of the Arbitration Act, 1991 S.O. 1991, c.17.
The parties shall select a single arbitrator to act as the arbitrator, and the arbitration
determination shall be final and binding upon the parties. 

        
      In
witness whereof the parties hereto have duly signed and executed this Consulting
Services Agreement. 

		
	

                                   

                                   

                                   

___________________________________

                                   

                                   

                                   

                                   
	Mr.  John A. Carter:

)

)   /s/ John A. Carter

)________________________________________ Witness

Industrial Minerals,  Inc.

By:

 /s/ David J. Wodar

_________________________________________

David J. Wodar, President

Schedule “A”
– Statement of Work  

PROJECT DIRECTOR (PD)
RESPONSIBILITIES  

Overview  

The success of IDI’s graphite
mining operation at Bissett Creek will be driven by thorough metallurgical research,
intelligent process engineering, and creative planning. While this will be a team effort
on many levels, there will be a fundamental requirement for the experienced judgement of a
minerals processing professional. This will be particularly true in areas related to plant
and equipment design, equipment sourcing, and plant construction. All of these factors
will fall under the responsibility of the Project Director as outlined below. 

1)   Metallurgical Research  

Understanding the profile of the
Bissett Creek ore body; the unique properties of raw graphite; and the range of finished
product specs that the Company’s customers may require will involve a series of
metallurgical testing steps. This understanding will be critical in defining and designing
the type of equipment and process the Company will require. To this end, the Project
Director will oversee a metallurgical testing phase that will consist of five basic steps
as follows: 

          	 	i) 	
               43-101 Report – once this report by Geostat Systems is complete, elements
               such as the ore body model, flake distribution and drainage tests will require a
               detailed review by the Project Director in terms of their implications for the
               plant design. 

          	 	ii) 	
               Channel sample studies – using the most widely worked pit on the site, the
               Project Director will direct a channel sample study that will the run-of-mine
               ore characteristics as they will be delivered to the jaw crushing phase of the
               operation. This study will be done by physically cutting out a representative
               “face” sample of the ore from the full height of the pit. This sample
               is then processed through a Ro-Tap Sieve Shaker to assess how the ore will
               behave during crushing. 

          	 	iii) 	
               Liberation studies – the fracture characteristics of the ore will also
               provide critical insight in designing the front end of the plant. This
               information may provide creative opportunities to reduce the ore drying
               requirements will may not only cut energy costs, it may also permit early
               recovery of the large graphite flakes that much of the marketplace is after. 

          	 	iv) 	
               Lab Testing – the previous plant design incorporated an innovative dry
               separation process. If this process can be successfully tested in a lab
               environment, it will provide the Company with a significant opportunity to
               differentiate itself in both the business and financial markets. This would in
               turn enhance the Company’s efforts to raise the capital required to fund
               the plant construction. At the same time, it can also provide the Company an
               opportunity to effectively compare the efficiencies and yields of a dry and wet
               process. Where possible, this might result in a hybrid operation that
               incorporates both wet and dry elements to maximize output. 

          	 	v) 	
               Pilot plant development – in early June, 2007 Geostat provided a draft
               process flowsheet for proposed wet pilot plant. A similar flowsheet must be
               established for a dry process. The Project Director will guide Geostat in
               finalizing the components included in both pilots, and act as a key supervisor
               in the setup, operation and results of these pilot plants. 

               

2)   Plant and Equipment
Design  

There are multiple subtleties
associated with the design of the plant and equipment that will be used to mine and
recover the graphite ore body. To the untrained eye, many of these issues are not readily
obvious. For example, simply altering impeller speeds on grinders can have a dramatic
impact on the recovery yields, product quality, and life of the equipment. It is only with
direct on-the-ground experience that such subtleties can be assessed and implemented. 

This experience is also crucial in
assisting stakeholders in their understanding of how budgets for these types of operations
are allocated. The table below shows the percentage of dollars that are normally spent at
each phase of the project. 

	Phase
	Percent of Total

Dollars Spent

	Research,  development, conceptualization	 	 	 	10	%
	Pre-feasibility studies and preliminary planning	 	 	 	15	%
	Detailed planning	 	 	 	20	%
	Plant Equipment and Construction	 	 	 	50	%
	Commissioning	 	 	 	5	%

As the table indicates, at least 50%
of the project budget is often spent in the planning, design and commissioning phases of
the project. Having had the opportunity to design and implement multiple mineral
processing operations over the past thirty years, including graphite mining operations,
the Project Director will be able to offer much needed practical insight into the most
cost-effective methods of constructing the plant and maximizing ore recovery. 

This area of responsibility will also
include preparing a preliminary set of process flow diagrams (PFD) for the operations.
This will provide the engineering firm engaged by the Company to process engineer the
process a clear initial template to work from. For example, while a dry process may be
preferred, there may be an opportunity or need to incorporate some wet features in the
process as well. The Project Director will be critical in developing the initial outline
of such a process, effectively identifying the pros and cons of each, and then ensuring
that the final design results in cost-effective operation. 

3)   Equipment Sourcing  

As noted in the previous table, as
much as 50% of the overall plant budget will be driven by equipment and construction
costs. A natural tendency for many of the engineering firms, equipment manufacturers and
suppliers, and many of the consultants associated with the project is to simply assume
that much of the equipment used in the operation will be new. Direct experience has shown
that in many cases this is not necessary. 

Used equipment is available from many
sources, but only an experienced mineral processing professional will know where to find
this equipment, be able to inspect and judge its true value, negotiate an effective price,
organize the supply of any ancillary equipment that may be required to bring it up to
spec, arrange for transportation, and then ultimately oversee its staging and installation
at the plant. 

Moreover, the Project Director may
also be required to oversee the fabrication of many of the components required in the
plant. These must be costed properly, suppliers identified and negotiated with,
inspections carried out, and deliveries arranged. 

These are some of the most critical
functions of the Project Director, and can often result in savings of hundreds of
thousands of dollars for a single piece of equipment. As noted above, simply knowing who
to call, where to find the equipment, and how to acquire it are most effectively handled
by a Project Director with hands on experience in this area. 

4)   Plant Construction
and Commissioning  

It is fully expected that the actual
plant construction phase will be directed by an established project manager and
engineering firm. And while these companies will almost certainly be operating under the
terms and conditions of specific contracts, there will also be a fundamental need for a
hands-on internal observer role by the Project Director. 

One reason for this is there is often
a world of difference between creating a theoretical plant design on paper, and actually
having gone through the sometimes very messy process of building the actual plant. As a
result, the role of the Project Director with this type of installation experience working
directly for the Company takes on additional importance. 

For example, construction on the
ground often results in required changes to the initial design. In addition, an
experienced eye can often identify potential operational problems at the installation
stage before they occur. This can permit real-time modifications. It also ensures that any
changes are thoroughly approved, done in the most cost-effective manner, and that their
implications are fully understood within the context of the larger Company goals. An
arms-length contractor may meet their contractual obligations, but that may not result in
the most effective plant installation. This can only be done by an internal Project
Director with a mandate for ensuring the plant meets all expectations, particularly those
that will affect the final products produced by the plant. 

The construction stage will also
include other forms of practical front-line experience. As an example, coordinating
equipment transportation, arrival, removal from trucks, and staging at the construction
site can be an extremely complicated process. To simply transport the equipment may
include arranging permits; escorts may be required; hydro lines may have to be moved; and
traffic blocked or rerouted. Upon arrival heavy mobile cranes may be required to remove
equipment from trucks, and these must be scheduled well in advance of the actual delivery. 

Finally, the Project Director will
play a critical role in identifying key members of the plant operation team. Some of these
must be hired early in the construction process to permit them to become completely
familiar with how the equipment was installed, operated and maintained. An experienced PD
with mineral processing experience can not only help train the team as it is developed,
but also guide the creation of standard operating procedures and manuals. 

PD Responsibilities  

Based on the preceding four areas,
the following is a brief summary of the Project Director’s key responsibilities: 

	•	Manage
the metallurgical testing phase of the project to ensure that all reports are produced on
a timely basis; all site testing is completed as required; lab testing is properly
reviewed and implemented; and that pilot plant testing results in a clear decision
framework for designing the plant. Where possible, this can also include assisting
Geostat in identifying a local driller to complete additional test holes if required.  

	•	Provide
key input into the mineral processing capabilities of the plant and equipment design
phase. This will include, but not be limited to, providing an initial, independent
internally-generated set of process flow diagrams. This will serve as the preliminary
outline for the process engineering firm engaged by the Company to create a full-blown
operation.  

	•	Assist
all members of the IDI team, as well as the external consultants and engineers in key
decision areas such as the projected capacity throughput of the plant, ie. 500, 1000, or
3,000 tons per day. This will also include advising the team on issues related to
graphite metallurgical specs, and their potential impact on final product
characteristics.  

	•	Make
all efforts to source the most cost-effective equipment available to the plant; arrange
to inspect and approve the purchase of the equipment; negotiate effective pricing;
arrange for the purchase of any ancillary equipment that may be required; arrange for
equipment transportation; and oversee staging and installation at the plant.  

	•	Where
required and possible, the PD will assist in the design and fabrication of dedicated
items of equipment for the plant. This will include identifying suitable fabricators,
arranging the best pricing possible on such fabrication, ensuring its timely completion
and delivery to the site.  

	•	During
plant construction, the PD will assist the project manager in implementing any real-time
changes that may be required to the equipment and process. The PD will also assist in
identifying suitable suppliers for everything from the actual mining operation to
construction of the plant itself.  

	•	The
PD will also assist in the identification and training of key plant operations personnel.
He will ensure that they have the best possible understanding of the installation of the
equipment, it operational characteristics, and the standard operating procedures that
will ultimately be implemented. This may include but not be limited to developed SOP’s
that will permit the plant to achieve ISO certification.  

	•	The
PD will communicate on a timely basis all progress, issues and developments to the senior
executive of the Company, the Board of Directors, and the Advisory Committee. This will
be done in conjunction with the efforts of other key members of the team including the
Chief Operating Officer.  

SCHEDULE
‘B” — STOCK OPTION GRANT AGREEMENT 

	1.  	GRANT
OF OPTION.  

        
      INDUSTRIAL
MINERALS, INC., a Delaware corporation (the “Company”), hereby grants as of
the five (5) milestone dates set out below (the “Grant Dates”) to the person
named below (the “Optionee”) and the Optionee hereby accepts, an option to
purchase the number of shares (the “Option Shares”) listed below of the
Company’s capital stock, at the price per share listed below, which option shall be
valid for a period of two (2) years calculated from the Grant Date in question, such
option to be exercisable in accordance with the terms and provisions specified in this
Stock Option Grant Agreement. 

			
	 	Optionee's Name  -
	A. John Carter 

	 		
	 	Total Number of Option Shares - 

	1,100,000  to be  awarded  in  tranches  as set  out  in the  following milestone Grant Dates:

	 		
	 	First Grant Date:
	50,000 shares when final construction of the mine plant
equipment is near (i.e. when the plant operates for the
first time).

	 		
	 	Second Grant Date:
	50,000 shares when construction of the
mine plant equipment is final (i.e. when a few thousand tons
of ore is correctly processed).

	 		
	 	Third Grant Date:
	100,000 shares on certificate of completion of construction.
	 		
	 	Fourth Grant Date:	800,000  shares  upon  succesful   audit  of
throughput quantity and quality to NI43-101 specifications

	 		
		Fifth Grant Date:	Bonus of 100,000 shares if  construction  of
mine  plant and  equipment  is 15% below  budget  and 20% less
man-days than the applicable timeline.

	 		
	 	Option Price Per Share:  	U.S.$0.20 per share
			

	2.  	EXERCISABILITY
OF OPTION.  

        
       This
option may be exercised for all or any portion of the Option Shares, except that this
option may not be exercised for a fraction of a share. This option may be exercised at any
time on or before the date which is two (2) years from the Grant Date set out above, after
which period this option shall no longer be of any force or effect. The grant and
acceptance of this option imposes no obligation on the Optionee to exercise it. Only the
Optionee can exercise the option granted by this Stock Option Grant Agreement. 

	3.  	PAYMENT
& METHOD OF EXERCISE.  

        
       The
option price shall be paid in cash or by cheque made payable to the Company. Subject to
the terms and conditions of this Stock Option Grant Agreement, this option may be
exercised by written notice sent by faxor by courier to the Company at its office.
Such notice shall shall be signed by the person or persons so exercising this option. Such
notice shall be accompanied by payment of the option purchase price of such Option Shares,
and the Company shall deliver a certificate or certificates representing such Option
Shares as soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so exercising this
option. 

	4.  	ADJUSTMENTS
FOR CHANGES IN CAPITAL STRUCTURE.  

        
      Any
change in the capital stock of the Company through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination or exchange of shares,
spin-off, split-up or other similar change in capitalization, shall affect this grant of
shares and the options shall be adjusted accordingly by reason thereof as to either the
number or option price of the Option Shares which are subject to this option. 

	5.  	NO
OBLIGATION TO CONTINUE RELATIONSHIP.  

        
      Neither
this Stock Option Grant Agreement nor the grant of this option imposes any obligation on
the Company to continue the Optionee in an existing business or employment relationship,
if any. 

	6.  	NOTICES.  

        
      All
notices hereunder shall be in writing and shall be deemed given when sent by fax or
courier if to the Optionee, at the address shown on the records of the Company, and if to
the Company, to the Company’s registered office. 

	7.  	SEVERABILITY.  

        
      The
invalidity, illegality or unenforceability of any provision of this Stock Option Grant
Agreement shall in no way affect the validity, legality or enforceability of any other
provision hereof. 

	8.  	SUCCESSORS
AND ASSIGNS.  

        
      This
Stock Option Grant Agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and permitted assigns, subject to the limitations
set forth in Section 4 above. 

	9.  	GOVERNING
LAW.  

        
      This
Stock Option Grant Agreement shall be governed by and interpreted in accordance with the
laws in force in the Province of Ontario. The Optionee shall only exercise the options set
out herein and trade or transfer the Option Shares in accordance with and subject to
applicable securities laws. 

        
      
In
witness whereof, the Company and the Optionee have caused this Stock Option Grant
Agreement to be executed as of July 1, 2007. 

		
	Accepted by the Optionee:

/s/ John A. Carter 

Mr. John A. Carter 
	Accepted by and for the Company:

/s/ David Wodar

David Wodar President 

300643.1

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