Industrial Minerals, Inc. Receives Letter Of Intent From SGL Carbon LLC.

MANKATO, Minn. -- Industrial Minerals, Inc. (OTCBB:IDSM) (the "Company") is pleased to announce that it has received a letter of intent from SGL Carbon LLC regarding future potential purchases of natural graphite.

The Letter of Intent states that SGL Carbon LLC, a U.S. subsidiary of SGL Carbon AG (NYSE:SGG) has the potential to purchase up to 2,500 metric tons per year of the Company's plus fifty mesh flake graphite pending the ability of the Company to produce material that adheres to SGL's specifications and meets a price per metric tonne that is acceptable to SGL's business unit production requirements and market demands.

The Letter of Intent was the result of a site visit by representatives of SGL Carbon LLC to the Company's Bissett Creek mine in Ontario, Canada in May of 2006. The purpose of the visit was to establish a more formal relationship between the companies and to allow SGL representatives to inspect the Company's ability to produce graphite, to review quality control procedures, and to advise and assist the Company in its future production of graphite.

SGL Carbon has received two samples totaling five tonnes of plus fifty mesh flake graphite, with four tonnes shipped in June of 2006, from the Company.

The Letter of Intent holds no binding obligations to either party unless or until the parties reach a final agreement on all terms and conditions and execute a formal written contract.

About Industrial Minerals, Inc.

Industrial Minerals Inc. through its wholly owned subsidiary Industrial Minerals Canada Inc., headquartered in Toronto, Ontario, Canada, owns 100% of the undivided interest in the Bissett Creek Graphite patented mineral lease, containing a resource of 640,000 tonnes of flake graphite on approximately 10% of the patented mineral lease that has been drilled to date. The property is comprised of 28 patented claims covering an area of approximately 504 hectares (1,245 acres). It has been the subject of substantial earlier exploration drilling, trenching and metallurgical test work by KHD Canada, Kilborn Engineering, Pincock Alan and Holt and Cominco Engineering Services. The property is located in Maria Township in the Province of Ontario, Canada. The property is one of the largest and purest natural flake graphite deposits in the world. The Company is poised to become the leading producer of large flake crystalline graphite in North America and a prominent market participant internationally.

About SGL Carbon AG

SGL Carbon is one of the world's leading manufacturers of products made of carbon, graphite and composite materials for industrial and aerospace applications. The company is organized into three global business units. Its carbon and graphite unit manufactures and markets certain carbon and graphite products, such as carbon electrodes, cathodes, and furnace linings. The company's specialties unit manufactures and markets graphite products for specific applications in a range of industries, such as energy, semiconductor, tool manufacturing, ferrous/non ferrous metallurgy, chemical, automotive, mechanical engineering, and high temperature processes. Its SGL Technologies unit manufactures carbon fibers; aerospace and industrial composites; expanded graphite products, including yarns and fabrics; carbon ceramic brake discs; and fuel cell components. SGL Carbon is headquartered in Wiesbaden, Germany.

This news release contains forward-looking statements that involve a number of risks and uncertainties. These statements are based on current expectations and actual results may differ materially from these expectations. Among the factors that could cause actual results to differ are the risk factors listed in the Company's most recent SEC filings.