PNW Capital to Acquire Industrial Minerals Incorporated

    LITTLETON, Colo.--Feb. 13, 2002--PNW Capital (OTCBB:PNWW) announced today that it has finalized an agreement to acquire at least 90% of the outstanding privately held shares of Industrial Minerals Incorporated of East Aurora, New York, in an all stock transaction.
    PNW Capital will issue 31.5 million of its common shares to complete the transaction. PNW Capital will have issued and outstanding upon completion of the acquisition 32.5 million shares of common stock.

    About Industrial Minerals Incorporated

    Industrial Minerals owns 100% of the undivided interest in the Bissett Creek Graphite patented mineral lease located in Maria Township in Southern Ontario, Canada. 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. Industrial Minerals also holds the rights to produce graphite using a patented dry production process.

    About the Graphite Market

    Short-term growth projections (Pg. 36-47, Industrial Minerals Magazine, Nov. 2000) indicate a 25% increase in demand for graphite used in high-technology applications. An increase of 80,000 new tonnes annually is projected for electrodes and conductive separators in fuel cells being developed for the automotive sector. Other growth areas in the graphite markets, amounting to 20,000 new tonnes annually, include the use of flake graphite in magnesia and alumina refractories and its use in the lithium ion battery. According to the U.S. Geological Survey, there are approximately 200 U.S. firms, primarily in the Northeastern and Great Lakes regions, that use graphite for a wide range of applications, including high-temperature lubricants, brushes for electrical motors, friction materials, and battery and fuel cells.
    For more information about PNW Capital, Inc., call Dan Silva, 303/412-2469; for information about Industrial Minerals Incorporated, call John Melnyk, 416/999-3188.

    Disclaimer: Statements, which are not historical facts, are forward-looking statements. The Company, through its management, makes forward-looking public statements concerning its expected future operations, performance and other developments. Such forward-looking statements are necessarily estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. It is impossible to identify all such factors. Factors which could cause actual results to differ materially from those estimated by the Company include, but are not limited to, government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition and other factors which may be identified from time to time in the Company's public announcements.