Correspondence
INDUSTRIAL MINERALS, INC
346 Waverly Street
Ottawa, Ontario
K2P 0W5
Tel: 613-288-4288
Tel: 604-970-0901
e-mail: robertdinning@gmail.com
February 5, 2009
United States Securities and Exchange Commission
Division of Corporate Finance
100F Street, N.E.
Washington D.C. 20549 - 7010
Attention Mark A. Wojciechowski - Staff Accountant
Re: Industrial Minerals, Inc., SEC file No. 0-30651
Letter of October 28, 2008 Regarding Previous Filings
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We have reviewed your comments of October 28, 2008 and respond in the same order
as presented in your letter.
1. The requested representations are at the end of this response letter.
2. Management Discussion and Analysis
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Yes we shall revise our disclosures and insert the following in an amended
Form 10-KSB to be filed after the staff's review of the proposed revisions:
"In the summer of 2007, the Company undertook an independent validation
drilling program that permitted the development of independent assay
results and has also provided material to carry out metallurgical testing
and validation.
Six (6) vertical NQ size diamond drill holes were drilled in the eastern
part of the deposit for a total of 246.43 meters (808.5 ft) around the
location of Pit #1. The last drill hole (DDH-07-06) was drilled in an area
of the property previously named "Pencil Zone". Drilling was carried out by
George Downing Estate Drilling Ltd from August 1 to August 9, 2007.
In addition to the independent drill program, the Company retained Geostat
Systems International Inc, to prepare its technical report. Geostat Systems
International Inc is an engineering consulting company specializing in
geostatistics, orebody modeling, resource estimation, exploration,
prefeasibility, production and reclamation stage services. Founded in 1981,
it is now a subsidiary of SGS Minerals Services, a worldwide consulting
concern with 50,000 employees throughout the world.
Geostat as part of their mandate with the Company provided the following
services:
Independent sampling;
Independent laboratory test to validate grade, flake, % recovery, and size
distribution; Independent diamond drilling and sampling of six holes;
Differential GPS survey of the new holes and a sector of the topography;
Metallurgical testing and assaying at the Centre de Formation
Professionnelle of Val d'Or and at the COREM facilities in Quebec City
Quebec.
Geostat carried out tests on graphite gneiss rock samples taken from the
Pit #1 location. A second battery of tests were performed at Ortech, in
Mississauga Ontario, with assays at Activation Laboratories Ltd (Actlab) in
Ontario to further validate additional parameters. The samples came from
parts of the witness core samples housed at the mine site.
These additional tests have allowed Geostat to conclude that large flakes
where present evenly in the various grades and locations drilled in 2007.
The actual proven graphite carbon recovery is in the 95% range. The actual
flake size distribution before optimization shows approximately 40% in the
+48 mesh size, 30% in the 35 to 48 mesh size and 30% in the smaller than 48
mesh fraction.
3. Contractual Obligations and Other Long-Term Liabilities
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We shall revise our disclosures and insert the following in an amended Form
10-KSB
Payments due by period
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Contractual Obligations Total Less than 1-3 3-5 More than 5
1 year years years years
- --------------------------- ------- ----------- ------- ----- -----------
Long Term Debt 897,607 406,607 (1) 161,000 230,000 (2)
Capital Lease 0 0 0 0 0
Operating Lease 0 0 0 0 0
Purchase 0 0 0 0 0
Other Long Term Liabilities 0 0 0 0 0
Total 897,607 406,607 (1) 161,000 0 230,000 (2)
(1) Unsecured debt without note or interest
(2) Reclamation deposit with the Province of Ontario
4. Controls and Procedures
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We shall revise our disclosures and insert the following in an amended Form
10-KSB
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's ("SEC") rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. Internal controls are procedures that are designed with the
objective of providing reasonable assurance that (1) our transactions are
properly authorized, recorded and reported: and (2) our assets are
safeguarded against unauthorized or improper use, to permit the preparation
of our consolidated financial statements in conformity with United States
generally accepted accounting principles.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15(e) and
15d-15(e). Based upon the foregoing, our Chief Executive Officer and our
Chief Financial Officer originally concluded that our disclosure controls
and procedures are effective to ensure that the information required to be
disclosed by us in this Report was recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
instruction for Form 10-KSB. However while management reported on the
effectiveness of its Disclosure Controls and Procedures to the board of
directors, the Company was also required by regulation to include the
report on the effectiveness of Disclosure Controls and Procedures in its
original filing of the Annual Report on Form 10-KSB. The Company failed to
include the report and as a result, management has revised its conclusion
on Disclosure Controls and Procedures that its controls were not effective
at December 31, 2007 with respect to the requirement of including the
report in the Form 10-KSB.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal controls over financial
reporting during the period covered by this report that have materially
affected or are reasonably likely to materially affect our internal
controls over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all errors and all fraud. This is because a
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within our company have been detected.
Report of Management on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting for the company. Internal control
over financial reporting is a process to provide reasonable assurance
regarding the reliability of our financial reporting for external purposes
in accordance with accounting principles generally accepted in the United
States of America. Internal control over financial reporting includes
maintaining records that in reasonable detail accurately and fairly reflect
our transactions; providing reasonable assurance that transactions are
recorded as necessary for preparation of our financial statements;
providing reasonable assurance that receipts and expenditures of company
assets are made in accordance with management authorization; and providing
reasonable assurance that unauthorized acquisition, use or disposition of
company assets that could have a material effect on our financial
statements would be prevented or detected on a timely basis. Because of its
inherent limitations, internal control over financial reporting is not
intended to provide absolute assurance that a misstatement of our financial
statements would be prevented or detected.
In connection with the preparation of this Annual Report on Form 10-KSB for
the year ended December 31, 2007, management, with the participation of our
Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our internal controls over financial reporting, pursuant
to Rule 13a-15 under the Exchange Act. Our Chief Executive Officer and
Chief Financial Officer concluded and reported to the Board of Directors
that the design and operation of our internal controls and procedures were
effective as of December 31, 2007.
There were no significant changes in our internal controls over financial
reporting that occurred during the fourth fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.
5. As set forth above, I confirm the required 308-T(b) information will be
included in the amendment.
6. Form Type
The Company confirms that it has evaluated our quarterly filings to
determine that all required material information required for a Form 10-Q
has in fact been included on the Form 10QSB that was filed.
7. The Company did confirm that it did adopt the provisions of SFAS 123(R) and
your comments are so noted.
8. The exact form certification will be filed with the amendment.
9. Engineering Comments
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You have requested that in our comments 13 through 18 that we also include
historical graphite prices over the last 5 years. Please note that there is
no published graphite price list, unlike other commodities like gold,
silver, copper, and nickel. The prices are determined by direct negotiation
with prospective customers and are not made public.
Representations
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As President and Chief Executive Officer of Industrial Minerals, Inc., (the
"Registrant") I hereby acknowledge the following:
The Registrant is responsible for the adequacy and accuracy of the
disclosure in the filing;
Staff comments or changes to the disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to the
filing; and
The Registrant may not assert staff comments as a defense in any initiated
by the Commission or any person under the federal securities laws of the
United States.
Sincerely,
INDUSTRIAL MINERALS, INC.
By: /s/ Robert Dinning
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Robert Dinning President and
Chief Executive Officer