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| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|--------------------------------------------------------------------------------------|

| APPLIED MINERALS, INC.                                               |
|----------------------------------------------------------------------|
| (Exact name of registrant as specified in its charter)               |
| Delaware                                                             |   | 82-0096527 |
| (State or other jurisdiction of incorporation or organization)  |   | (I.R.S. Employer Identification No.)  |

| 110 Greene Street – Suite 1101, New York, NY |                                           | 10012      |
|----------------------------------------------------|------------------------------------------------|------------|
| (Address of principal executive offices)      |                                           | (Zip Code) |
|                                               | (800) 356-6463                                 |       |   |
|                                               | Issuer's telephone number, including area code |       |   |

|   | YES |   o | NO | x |
|--------|-----|----------|----|---|

|   | YES |   o | NO | x |
|--------|-----|----------|----|---|

|   | YES | x | NO |   o |
|--------|-----|---|----|----------|

|   | YES | x | NO |   o |
|--------|-----|---|----|----------|

|   |   |   |   | x |
|--------|--------|--------|--------|---|

| Large Accelerated Filer |   o | Accelerated Filer | x | Non-accelerated Filer |   o | Smaller Reporting Company |   o |
|-------------------------|----------|-------------------|---|-----------------------|----------|---------------------------|----------|

|   | YES |   o | NO | x |
|--------|-----|----------|----|---|

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|     | PART I                                                                                                                        | Page(s)          |
|----------|-------------------------------------------------------------------------------------------------------------------------------|------------------|
| Item 1.  | Business                                                                                                                      | 3                |
|     |                                                                                                                          |             |
| Item 1A. | Risk Factors                                                                                                                  | 11               |
|     |                                                                                                                          |             |
| Item 1B. | Unresolved Staff Comments                                                                                                     | 11               |
|     |                                                                                                                          |             |
| Item 2.  | Properties                                                                                                                    | 12               |
|     |                                                                                                                          |             |
| Item 3.  | Legal Proceedings                                                                                                             | 12               |
|     |                                                                                                                          |             |
| Item 4.  | Mine Safety Disclosures                                                                                                       | 12               |
|     |                                                                                                                          |             |
|     | PART II                                                                                                                       |             |
| Item 5.  | Market Price for the Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities | 13               |
|     |                                                                                                                          |             |
| Item 6.  | Selected Financial Data                                                                                                       | 15               |
|     |                                                                                                                          |             |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operation                                    | 15               |
|     |                                                                                                                          |             |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                                    | 19               |
|     |                                                                                                                          |             |
| Item 8.  | Financial Statements and Supplementary Data                                                                                   | 20               |
|     |                                                                                                                          |             |
| Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                          | 20               |
|     |                                                                                                                          |             |
| Item 9A. | Controls and Procedures                                                                                                       | 21               |
|     |                                                                                                                          |             |
| Item 9B. | Other Information                                                                                                             | 21               |
|     | PART III                                                                                                                      |             |
| Item 10. | Directors and Executive Officers and Corporate Governance                                                                     | 21               |
|     |                                                                                                                          |             |
| Item 11. | Executive Compensation                                                                                                        | 21               |
|     |                                                                                                                          |             |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                                | 21               |
|     |                                                                                                                          |             |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                                                     | 21               |
|     |                                                                                                                          |             |
| Item 14. | Principal Accounting Fees and Services                                                                                        | 21               |
|     |                                                                                                                          |             |
| Item 15. | Exhibits                                                                                                                      | 22               |
|     | PART IV                                                                                                                       |             |
| Item 16. | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                                               | F-1 – F-23 |

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|   | HISTORY AND DEVELOPMENT OF THE COMPANY |
|--------|----------------------------------------|

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| ·   | Cores from 80 boreholes drilled in 2003, 2005, 2006, 2009 and 2010, totaling 15,362 ft, were tested.  The average depth of the 80 boreholes drilled was 192 ft with a range of depths drilled from 50ft to 360 ft; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Western area of the property, drilled from 2003 to 2006, includes 44 boreholes totaling 9,448 ft covering an area of 6.33 acres. These boreholes were drilled in mainly altered quartz monzonite, which is an intrusive igneous rock with approximately equal parts of orthoclase and plagioclase feldspar. Quartz monzonite porphyry is often associated with copper mineralization in porphyry copper deposits; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Dragon Pit area of the property, drilled in 2009 and 2010, includes 36 boreholes totaling 5,914 ft and covering an area of 4.95 acres. The area is mainly iron ore and some altered monzanite on the periphery.   High levels of halloysite (up to 100% in some cases) are adjacent to the iron ore; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | To date over 500 samples of borehole material has been tested to determine mineralogy, particularly for halloysite, kaolinite, illite‐smectite levels and other properties; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Five waste piles, the product of previous clay mining activity, were drilled.  The waste piles cover 34.2 acres and have volume of 1.99 million cubic yards.  Following a detailed trenching campaign on the waste piles, fifty-two boreholes were drilled totaling 1,986 ft. The whole rock evaluation included chemical testing by XRF of 216 samples with 69 of these samples tested for their mineralogy by XRD.  To determine clay content, samples were processed to <45 μm and <5μm fractions and 185 samples were tested for their mineralogy by XRD and 133 samples for their chemistry by XRF; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An evaluation of the iron ore present in the Pit Area (4.95 acres) and elsewhere was carried out. Testing of aapproximately 100 samples was carried out to determine the quality of the iron ore; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A detailed evaluation of surface samples, from which some halloysite is now being mined from the open pit, was carried out. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

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| ·   | Dragonite–XR: An advanced reinforcing filler for polymers used at loadings of 20%-50% by weight and offering improved modulus, yield strength and HDT.  This product grade offers advantages compared to other reinforcing fillers for polymers such as glass fiber, mica, wollastonite or talc.  These include rentention of impact resistance, elongation to break, control over CTE and warpage, and lack of abrasiveness.  Flame retardance up to V0 level is also possible when Dragonite-XR is used alone or as a synergist. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Dragonite–HP:  A high performance additive for engineered thermoplastics, used at loadings of just 1-3 weight %, offering improvements in mechanical performance and cycle time reduction.  This product grade offers a drop-in solution for polymer applications needing mechanical improvements without the density penalty associated with traditional fillers. By using Dragonite-HP, customers can reduce their overall manufacturing and materials costs through cycle time improvements and thin-walling. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Dragonite–Pure White: Our highest purity Dragonite™ product meeting the strict specifications of applications including, but not limited to, cosmetics. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Dragonite–XO:  A high-grade iron ore from the Dragon Mine. A mixture of goethite, hematite, and an amorphous iron phase identified as ferrihydrite.  We expect Dragonite-Pure White to be used in pigments, as a sinter feed, as a fluxing agent, in lead smelting, as a smoke suppressor, and in environmental remediation applications. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ITEM 5. | MARKET PRICE FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|-------------------------------------------------------------------------------------------------------------------------------|

|           |   | Year 2011 |   |   | Year 2010 |   |
|----------------|--------|-----------|--------|--------|-----------|--------|
|           |   | High      |   |   | Low       |   |   | High |   |   | Low |   |
| First Quarter  |   | $         | 0.83   |   |      | $      | 0.71 |   |   | $ | 0.93 |   |   | $ | 0.59 |   |
| Second Quarter |   | $         | 1.78   |   |      | $      | 0.82 |   |   | $ | 1.08 |   |   | $ | 0.71 |   |
| Third Quarter  |   | $         | 2.10   |   |      | $      | 1.30 |   |   | $ | 1.06 |   |   | $ | 0.75 |   |
| Fourth Quarter |   | $         | 1.70   |   |      | $      | 1.07 |   |   | $ | 0.87 |   |   | $ | 0.62 |   |

----

| Equity Compensation Information                        |   |
|--------------------------------------------------------|--------|
| As of December 31, 2011                                |   |
|                                                   |   |   |   |   |   |   |   |   |   |
|                                                   |   | Number of securities to be issued upon exercise of outstanding options, warrants, and rights |   |   | Weighted-average exercise price of outstanding options, warrants and rights |   |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |   |
|                                                   |   | (a) |   |   | (b) |   |   | (c) |   |
| Equity compensation plans approved by security holders |   |   | - 0 - |   |   |   | - 0 - |   |   |   | -0- |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity compensation plans                              |   |   |   |   |   |   |   |   |   |   |   |   |
| not approved by security holders                       |   |   | 13,021,341 |   |   | $ | 0.85 |   |   |   | -0- |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   |   | 13,021,341 |   |   | $ | 0.85 |   |   |   |   |   |

|                              |   | Dec-06 |   |   | Dec-07 |   |   | Dec-08 |   |   | Dec-09 |   |   | Dec-10 |   |   | Dec-11 |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Applied Minerals, Inc.            |   | $      | 100    |   |   | $      | 54     |   |   | $      | 10     |   |   | $      | 39     |   |   | $      | 54 |   |   | $ | 86 |   |
| Russell Microcap ® Index     |   | $      | 100    |   |   | $      | 91     |   |   | $      | 55     |   |   | $      | 68     |   |   | $      | 88 |   |   | $ | 79 |   |
| S&P Metals & Mining Index |   | $      | 100    |   |   | $      | 142    |   |   | $      | 57     |   |   | $      | 108    |   |   | $      | 144 |   |   | $ | 104 |   |

----

| ITEM 6. | SELECTED FINANCIAL DATA |
|---------|-------------------------|

| Year Ended December 31 (in 000’s except per share data) |   | 2011 |     |   | 2010   |   |     | 2009   |   |   | 2008     |   |   | 2007 |     |
|---------------------------------------------------------------|--------|------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|--------|------|----------|
| Revenue                                                       |   | $    | 92.0     |   |   | $      | 0        |   |   | $      | 0        |   |   | $    | 0        |   |   | $ | 0 |   |
| Income (loss) from continuing operations                      |   | $    | (7,529.2 | )      |   | $      | (4,891.5 | )      |   | $      | (6,701.5 | )      |   | $    | (6,215.7 | ) |   | $ | (4,700.1 | ) |
| Net income (loss)                                             |   | $    | (7,534.9 | )      |   | $      | (4,767,7 | )      |   | $      | (6,766.2 | )      |   | $    | (5,420.4 | ) |   | $ | (1,681.7 | ) |
| Income (loss) from continuing operations - basic              |   | $    | (0.10    | )      |   | $      | (0.07    | )      |   | $      | (0.11    | )      |   | $    | (0.11    | ) |   | $ | (0.09 | ) |
| Net income (loss) - basic                                     |   | $    | (0.10    | )      |   | $      | (0.07    | )      |   | $      | (0.11    | )      |   | $    | (0.10    | ) |   | $ | (0.03 | ) |
| Income (loss) from continuing operations - diluted            |   | $    | (0.10    | )      |   | $      | (0.07    | )      |   | $      | (0.11    | )      |   | $    | (0.11    | ) |   | $ | (0.09 | ) |
| Net income (loss) - diluted                                   |   | $    | (0.10    | )      |   | $      | (0.07    | )      |   | $      | (0.11    | )      |   | $    | (0.10    | ) |   | $ | (0.03 | ) |
| Cash and equivalents                                          |   | $    | 10,170.5 |   |   | $      | 1,642.3  |   |   | $      | 1,584.9  |   |   | $    | 903.0    |   |   | $ | 1,210.6 |   |
| Total assets                                                  |   | $    | 12,874.8 |   |   | $      | 4,215.1  |   |   | $      | 4,005.3  |   |   | $    | 4,506.1  |   |   | $ | 6,271.6 |   |
| Long-term liabilities                                         |   | $    | 97.8     |   |   | $      | 5,055.0  |   |   | $      | 2,257.3  |   |   | $    | 1,357.9  |   |   | $ | 705.9 |   |
| Shareholders’ equity (deficit)                          |   | $    | 8,828.4  |   |   | $      | (1,561.3 | )      |   | $      | 310.6    |   |   | $    | 2,197.0  |   |   | $ | 4,517.0 |   |

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL |
|---------|---------------------------------------------------------|

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| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------|------------------------------------------------------------|

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| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------|

| ·   | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1.   | Certain controls over equity were not effective to ensure that all transactions involving equity were recorded in an accurate and timely fashion; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Certain controls were not effective to ensure that all expenses were accurately categorized; |
|----------------|----------------------------------------------------------------------------------------------|

| 3.   | The Company did not have adequate control over the recording and monitoring of purchase orders and accounts receivables; and |
|----------------|------------------------------------------------------------------------------------------------------------------------------|

| 4.   | Management determined there was an insufficient number of personnel with appropriate technical   accounting and SEC reporting expertise to perform a timely financial close process, adhere to certain control disciplines, and to evaluate and properly record certain non-routine and complex transactions. This resulted in audit adjustments, which are material in the aggregate and necessary to present the annual audited  financial statements in accordance with generally accepted accounting principles. In light of the actual audit adjustments required and the effect on the account balances and related disclosures in the financial statements management determined there is a more than a remote likelihood that material misstatement could occur and not be detected in the Company's interim or annual audited  financial statements. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.   | Management is conducting a search for a permanent Chief Accounting Officer who has particular experience remediating the inadequate controls exhibited by the Company; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Management hired a CPA firm in late 2011 to assume its bookkeeping function from its soon-to-be-closed Idaho office, which, we believe, will result in a significant improvement in the accurate and timely recording of transactions; and |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Management expects to hire additional accounting personnel as it grows its business and generates the cash flow necessary to make such hires. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------|

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| Exhibit |                                                                                                                                                                           |       |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Number  | Description of Exhibit                                                                                                                                                         |       |
| 3.1     | Articles of Incorporation, as amended                                                                                                                                          | (1)        |
| 3.2     | Bylaws, as amended                                                                                                                                                             | (2)        |
| 4.1     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued December 30, 2008                                                                   | (3)        |
| 4.2     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued April 7 – 9, 2009                                                             | (4)        |
| 4.3     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued May 1, 2009                                                                         | (5)        |
| 4.4     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued July 28, 2009                                                                       | (6)        |
| 4.5     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued October 26, 2009                                                                    | (7)        |
| 4.6     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued May 17, 2010                                                                        |  (8)  |
| 4.7     | Form on 10% PIK Election Convertible Note and related Registration Rights Agreement issued October 25, 2010                                                                    |  (9)  |
| 10.1    | Lyon Employment Agreement                                                                                                                                                      | (10)       |
| 10.2    | Amendment to Lyon Employment Agreement                                                                                                                                         | (11)       |
| 10.3    | Compensation arrangements of directors                                                                                                                                         | (12)       |
| 10.4    | Amendment to compensation arrangements of directors                                                                                                                            | (13)       |
| 10.5    | Compensation arrangements of director Taft                                                                                                                                     | (14)       |
| 10.6    | Consulting Agreement with Morris Weiss                                                                                                                                         | (15)       |
| 10.7    | Additional Consulting Agreement with Morris Weiss                                                                                                                              | (16)       |
| 10.8    | Ronald Price separation agreement                                                                                                                                              | (17)       |
| 10.9    | Agreement with Material Advisors LLC                                                                                                                                           | (18)       |
| 10.10   | Agreement for Appointment of Agent for the Sale of Assets with AAMCOR LLC                                                                                                      | (19)       |
| 10.11   | Settlement Agreement (“Class Action Settlement Agreement”) with the lead plaintiffs in the class action In Re Atlas Mining Company Securities Litigation           |  (20) |
| 10.12   | Settlement Agreement with William Jacobson                                                                                                                                     | (21)       |
| 10.13   | Settlement Agreement with Robert Dumont                                                                                                                                        | (22)       |
| 10.14   | Terms of private placements of securities                                                                                                                                      | (23)       |
| 10.15   | 2012 Management Agreement                                                                                                                                                      |       |
| 31.1    | Certification pursuant to Rule 13a-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer |       |
| 31.2    | Certification pursuant to Rule 13a-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer |       |
| 32.1    | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer                     |       |
| 32.2    | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer                     |       |
| 95      | Mine Safety Discloure                                                                                                                                                          |       |

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| 1)   | Incorporated by reference to exhibit 99.1 included in the Registrant's Current Report on Form 8-K, filed on November 3, 20009 |
|----------------|-------------------------------------------------------------------------------------------------------------------------------|

| 2)   | Incorporated by reference to exhibit 99.2 included in the Registrant's Current Report on Form 8-K filed November 3, 2009. |
|----------------|---------------------------------------------------------------------------------------------------------------------------|

| 3)   | Incorporated by reference to exhibits 99.2 and 99.3 included in the Registrant's Current Report on Form 8-K filed January 7, 2009. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------|

| 4)   | Incorporated by reference to exhibits 99.1 and 99.2 included in the Registrant's Current Report on Form 8-K filed April 10, 2009 |
|----------------|----------------------------------------------------------------------------------------------------------------------------------|

| 5)   | Incorporated by reference to exhibits 99.1 and 99.2 included in the Registrant's Current Report on Form 8-K filed May 4, 2009. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------|

| 6)   | Incorporated by reference to exhibits 99.1 and 99.2 included in the Registrant's Current Report on Form 8-K filed July 28, 2009. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------|

| 7)   | Incorporated by reference to exhibits 99.1 and 99.2 included in the Registrant's Current Report on Form 8-K filed October 26, 2009. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------|

| 8)   | Incorporated by reference to exhibits 99.1 and 99.2 included in the Registrant's Current Report on Form 8-K filed May 20, 2010. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------|

| 9)   | Incorporated by reference to exhibits 99.1 and 99.2 included in the Registrant's Current Report on Form 8-K filed October 28, 2010. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------|

| 10)   | Incorporated by reference to exhibit 99.1 included in the Registrant's Current Report on Form 8-K filed on July 3, 2008 |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

| 11)   | Incorporated by reference to Item 8.01included in the Registrant's Current Report on Form 8-K filed on October 2, 2008 |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| 12)   | Incorporated by reference to Item 5.02 (ii) and (iii) included in the Registrant's Current Report on Form 8-K filed on January 17, 2008 |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| 13)   | Incorporated by reference to Item 8.01 included in the Registrant's Current Report on Form 8-K filed on October 2, 2008 |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

| 14)   | Incorporated by reference to Item 5.02 included in the Registrant's Current Report on Form 8-K filed on October 22, 2008 |
|-----------------|--------------------------------------------------------------------------------------------------------------------------|

| 15)   | Incorporated by reference to exhibit 99.4 included in the Registrant's Current Report on Form 8-K filed on May 4, 2009 |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| 16)   | Incorporated by reference to Item 5.02 included in the Registrant's Current Report on Form 8-K filed on May 4, 2009. |
|-----------------|----------------------------------------------------------------------------------------------------------------------|

| 17)   | Incorporated by reference to exhibit 10.11 in the Registrant’s Form 10-K filed on July 28, 2009 |
|-----------------|-------------------------------------------------------------------------------------------------------|

| 18)   | Incorporated by reference to exhibit 99.1 included in the Registrant's Current Report on Form 8-K filed on January 7, 2009 |
|-----------------|----------------------------------------------------------------------------------------------------------------------------|

| 19)   | Incorporated by reference to exhibit 10.13 in the Registrant’s Form 10-K filed on July 28, 2009 |
|-----------------|-------------------------------------------------------------------------------------------------------|

| 20)   | Incorporated by reference to exhibit 10.14 in the Registrant’s Form 10-K filed on July 28, 2009 |
|-----------------|-------------------------------------------------------------------------------------------------------|

| 21)   | Incorporated by reference to exhibit 10.15 in the Registrant’s Form 10-K filed on July 28, 2009 |
|-----------------|-------------------------------------------------------------------------------------------------------|

| 22)   | Incorporated by reference to exhibit 10.16 in the Registrant’s Form 10-K filed on July 28, 2009 |
|-----------------|-------------------------------------------------------------------------------------------------------|

| 23)   | Incorporated by reference to Items 3.02, 8.01, 8.01,2.03, 2.03, 2.03 and 2.03 included in the Registrant's Current Reports on Form 8-K filed on January 16, 2009, May 29, 2008, September 29, 2008, January 7, 2009, April 10, 2009, May 4, 2009, October 26, 2009, May 20, 2010, October 28, 2010, March 31, 2011, April 18, 2011, June 27, 2011, and December 27, 2011. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                              | Page                         |
|-------------------------------------------------------------------------------------------------------------------|------------------------------|
| Report of Independent Registered Public Accounting Firm                                                           | F-2                          |
|                                                                                                              |                         |
| Financial Statements:                                                                                             |                         |
|                                                                                                              |                         |
|  Consolidated Balance Sheets at December 31, 2011 and 2010                                                   | F-3 – F-4              |
|                                                                                                              |                         |
| Consolidated Statements of Operations and Comprehensive Loss for Years Ended December 31, 2011, 2010, and 2009    | F-5  – F-7        |
|                                                                                                              |                         |
|  Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2011, 2010, and 2009 | F8                           |
|                                                                                                              |                         |
|  Consolidated Statements of Cash Flows for Years Ended December 31, 2011, 2010, and 2009                     | F-9 – F-10             |
|                                                                                                              |                         |
|  Notes to Consolidated Financial Statements                                                                  | F-11  – F-23 |

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| APPLIED MINERALS, INC.                                                                              |   |
|-----------------------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                                                               |   |
| BALANCE SHEETS                                                                                      |   |
|                                                                                                |   |
|                                                                                                |   | December 31, |   |   | December 31, |   |
|                                                                                                |   | 2011 |   |   | 2010 |   |
|                                                                                                |   |   |   |   |   |   |
| Current Assets                                                                                      |   |   |   |   |   |   |
| Cash and cash equivalents                                                                           |   | $ | 10,170,536 |   |   | $ | 1,642,340 |   |
| Accounts receivable, net of allowance of $11,938 and $0 at December 31, 2011 and 2010, respectively |   |   | 20,464 |   |   |   | 61,275 |   |
| Mining supplies inventory                                                                           |   |   | -0- |   |   |   | 3,503 |   |
| Deposits and prepaid expenses                                                                       |   |   | 333,447 |   |   |   | 178,738 |   |
| Total Current Assets                                                                                |   |   | 10,524,447 |   |   |   | 1,885,856 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| Property and Equipment                                                                              |   |   |   |   |   |   |   |   |
| Land and tunnels                                                                                    |   |   | 500,000 |   |   |   | 523,729 |   |
| Land improvements                                                                                   |   |   | 164,758 |   |   |   | 164,758 |   |
| Buildings                                                                                           |   |   | 455,906 |   |   |   | 432,997 |   |
| Mining equipment                                                                                    |   |   | 975,164 |   |   |   | 588,523 |   |
| Milling equipment                                                                                   |   |   | 336,146 |   |   |   | 333,483 |   |
| Laboratory equipment                                                                                |   |   | 67,728 |   |   |   | 67,728 |   |
| Office furniture and equipment                                                                      |   |   | 34,643 |   |   |   | 27,419 |   |
| Vehicles                                                                                            |   |   | 100,800 |   |   |   | 75,013 |   |
| Less:  Accumulated Depreciation                                                           |   |   | (729,969 | ) |   |   | (481,364 | ) |
| Total Property and Equipment                                                                        |   |   | 1,905,176 |   |   |   | 1,732,286 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| Other Assets                                                                                        |   |   |   |   |   |   |   |   |
| Assets held for sale                                                                                |   |   | 445,180 |   |   |   | 450,042 |   |
| Deferred financing cost                                                                             |   |   | -0- |   |   |   | 146,939 |   |
| Total Other Assets                                                                                  |   |   | 445,180 |   |   |   | 596,981 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                        |   | $ | 12,874,803 |   |   | $ | 4,215,123 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these financial statements.                          |   |

----

| APPLIED MINERALS, INC.                                                     |   |
|----------------------------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                                      |   |
| BALANCE SHEETS                                                             |   |
|                                                                       |   |
|                                                                       |   | December 31, |   |   | December 31, |   |
|                                                                       |   | 2011 |   |   | 2010 |   |
|                                                                       |   |   |   |   |   |   |
| Current Liabilities                                                        |   |   |   |   |   |   |
| Accounts payable and accrued liabilities                                   |   | $ | 291,142 |   |   | $ | 266,139 |   |
| Liabilities from discontinued operations                                   |   |   | -0- |   |   |   | 1,152 |   |
| Stock awards payable                                                       |   |   | 127,000 |   |   |   | 80,000 |   |
| Current portion of notes payable                                           |   |   | 165,375 |   |   |   | 206,209 |   |
| Current portion of leases payable                                          |   |   | 10,094 |   |   |   | 167,956 |   |
|     Warrant derivative                                 |   |   | 3,355,000 |   |   |   | -0- |   |
| Total Current Liabilities                                                  |   |   | 3,948,611 |   |   |   | 721,456 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Long-Term Liabilities                                                      |   |   |   |   |   |   |   |   |
| Long-term portion of notes payable                                         |   |   | -0- |   |   |   | 361,295 |   |
| Long-term portion of leases payable                                        |   |   | 97,769 |   |   |   | 10,094 |   |
| Convertible debt (PIK Notes)                                               |   |   | -0- |   |   |   | 4,683,624 |   |
| Total Long-Term Liabilities                                                |   |   | 97,769 |   |   |   | 5,055,013 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                          |   |   | 4,046,380 |   |   |   | 5,776,469 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Commitments and Contingencies                                              |   |   | -0- |   |   |   | - 0 - |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Stockholders’ Equity (Deficit)                                       |   |   |   |   |   |   |   |   |
| Preferred stock, $0.001 par value, 10,000,000                              |   |   |   |   |   |   |   |   |
| shares authorized, noncumulative, nonvoting,                               |   |   |   |   |   |   |   |   |
| nonconvertible, none issued or outstanding                                 |   |   | -0- |   |   |   | - 0 - |   |
| Common stock, $0.001 par value, 120,000,000                                |   |   |   |   |   |   |   |   |
| shares authorized, 89,119,405 and 69,704,393                               |   |   |   |   |   |   |   |   |
| shares issued and outstanding at December 31, 2011                         |   |   |   |   |   |   |   |   |
| and December 31, 2010, respectively                                        |   |   | 89,120 |   |   |   | 69,704 |   |
| Additional paid-in capital                                                 |   |   | 47,765,350 |   |   |   | 29,860,041 |   |
| Accumulated deficit prior to the exploration stage                         |   |   | (20,009,496 | ) |   |   | (20,009,496 | ) |
| Accumulated deficit during the exploration stage                           |   |   | (19,016,551 | ) |   |   | (11,533,915 | ) |
| Total Applied Minerals, Inc.                                               |   |   |   |   |   |   |   |   |
| stockholders’ equity (deficit)                                       |   |   | 8,828,423 |   |   |   | (1,613,666 | ) |
| Non-controlling interest                                                   |   |   | -0- |   |   |   | 52,320 |   |
| Total Stockholders’ Equity (Deficit)                                 |   |   | 8,828,423 |   |   |   | (1,561,346 | ) |
|                                                                       |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND                                                      |   |   |   |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY (DEFICIT)                                       |   | $ | 12,874,803 |   |   | $ | 4,215,123 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these financial statements. |   |

----

| APPLIED MINERALS, INC.                                                          |   |
|---------------------------------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                                           |   |
| STATEMENTS OF OPERATIONS                                                        |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   | For the Period |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   | January 1, 2009 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   | (Beginning of |   |
|                                                                            |   |   |   |   |   |   |   | Exploration |   |
|                                                                            |   | For the year ended |   |   | Stage) through |   |
|                                                                            |   | December 31, |   |   | December 31, |   |
|                                                                            |   | 2011 |   |   | 2010 |   |   | 2009 |   |   | 2011 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| REVENUES                                                                        |   | $ | 92,952 |   |   | $ | - 0 - |   |   | $ | - 0 - |   |   | $ | 92,952 |   |
| COST OF SALES                                                                   |   |   | 80,578 |   |   |   | - 0 - |   |   |   | - 0 - |   |   |   | 80,578 |   |
| Gross Profit                                                                    |   |   | 12,374 |   |   |   | - 0 - |   |   |   | - 0 - |   |   |   | 12,374 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING (INCOME)                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES:                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exploration costs                                                               |   |   | 2,919,306 |   |   |   | 2,307,202 |   |   |   | 1,299,753 |   |   |   | 6,526,261 |   |
| General and administrative                                                      |   |   | 4,261,175 |   |   |   | 2,490,347 |   |   |   | 4,683,914 |   |   |   | 11,435,436 |   |
| (Gain) loss from disposition                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of land and equipment                                                           |   |   | (1,000 | ) |   |   | (3,113 | ) |   |   | (410 | ) |   |   | (4,523 | ) |
| Loss on impairment of                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equipment                                                                       |   |   | -0- |   |   |   | 13,080 |   |   |   | 42,042 |   |   |   | 55,122 |   |
| Total Operating Expenses                                                        |   |   | 7,179,481 |   |   |   | 4,807,516 |   |   |   | 6,025,299 |   |   |   | 18,012,296 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Operating Loss                                                              |   |   | (7,167,107 | ) |   |   | (4,807,516 | ) |   |   | (6,025,299 | ) |   |   | (17,999,922 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                 |   |   | 1,176 |   |   |   | 957 |   |   |   | 448 |   |   |   | 2,581 |   |
| Interest expense                                                                |   |   | (387,684 | ) |   |   | (248,047 | ) |   |   | (310,554 | ) |   |   | (946,285 | ) |
| Sale of clay samples                                                            |   |   | -0- |   |   |   | 4,943 |   |   |   | 6,000 |   |   |   | 10,943 |   |
| Refund of insurance premium                                                     |   |   | -0- |   |   |   | 6,370 |   |   |   | 13,786 |   |   |   | 20,156 |   |
| Gain on stock award forfeiture Gain(loss) on revaluation  of warrants |   |   | -0-225,000 |   |   |   | 145,000-0- |   |   |   | -0--0- |   |   |   | 145,000225,000 |   |
| Gain (loss) on revaluation                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of stock awards                                                                 |   |   | (47,000 | ) |   |   | (22,000 | ) |   |   | (150,500 | ) |   |   | (219,500 | ) |
| Net proceeds (expenses)                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| from legal settlement                                                           |   |   | -0- |   |   |   | (292,238 | ) |   |   | 118,913 |   |   |   | (173,325 | ) |
| Amortization of deferred                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| financing costs                                                                 |   |   | (146,939 | ) |   |   | (3,061 | ) |   |   | -0- |   |   |   | (150,000 | ) |
| Amortization of convertible                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| debt discount                                                                   |   |   | -0- |   |   |   | (2,194 | ) |   |   | (363,147 | ) |   |   | (365,341 | ) |
| Gain on settlement of debt                                                      |   |   | 101,380 |   |   |   | 333,502 |   |   |   | -0- |   |   |   | 434,882 |   |
| Other income (expense)                                                          |   |   | (3,370 | ) |   |   | (7,241 | ) |   |   | 8,855 |   |   |   | (1,802 | ) |
| Total Other Income (Expense)                                                    |   |   | (257,437 | ) |   |   | (84,009 | ) |   |   | (676,199 | ) |   |   | (1,017,691 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from exploration stage,                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| before income taxes                                                             |   |   | (7,424,544 | ) |   |   | (4,891,525 | ) |   |   | (6,701,498 | ) |   |   | (19,017,613 | ) |
| Provision (benefit) for                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income taxes                                                                    |   |   | -0- |   |   |   | - 0 - |   |   |   | - 0 - |   |   |   | -0- |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss from Exploration Stage                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Before Discontinued Operations                                                  |   |   | (7,424,544 | ) |   |   | (4,891,525 | ) |   |   | (6,701,498 | ) |   |   | (19,017,613 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) from                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| discontinued operations                                                         |   |   | (5,772 | ) |   |   | 123,828 |   |   |   | (64,674 | ) |   |   | 53,382 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss from exploration stage                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| after discontinued operations                                                   |   |   | (7,430,316 | ) |   |   | (4,767,697 | ) |   |   | (6,766,172 | ) |   |   | (18,964,231 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to non-controlling                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   interest                                                            |   |   | (52,320 | ) |   |   | -0- |   |   |   | -0- |   |   |   | (52,320 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss Attributable to                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Applied Minerals, Inc.                                                          |   | $ | (7,482,636 | ) |   | $ | (4,767,715 | ) |   | $ | (6,766,172 | ) |   | $ | (19,016,551 | ) |
|                                                                            |   |
| The accompanying notes are an integral part of these financial statements.      |   |

----

| APPLIED MINERALS, INC.                                |   |
|-------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                 |   |
| STATEMENTS OF OPERATIONS(continued)                   |   |
|                                                  |   | For the year ended |   |
|                                                  |   | December 31, |   |
|                                                  |   | 2011 |   |   | 2010 |   |   | 2009 |   |
|                                                  |   |   |   |   |   |   |   |   |   |
| Earnings Per Share Information (Basic and Diluted):   |   |   |   |   |   |   |   |   |   |
| Net loss per share before discontinued operations     |   | $ | (0.10 | ) |   | $ | (0.07 | ) |   | $ | (0.011 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|      Discontinued operations |   |   | -0- |   |   |   | - 0 - |   |   |   | - 0 - |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss Per Share                                    |   | $ | (0.10 | ) |   | $ | (0.07 | ) |   | $ | (0.11 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (basic and diluted)                                   |   |   | 74,568,658 |   |   |   | 68,396,770 |   |   |   | 60,665,785 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                 |   |               |       |   |           |   |       |        |   |   | For the Period  |   |
|--------------------------------------------------------------------------------------|--------|--------------------|------------|--------|----------------|--------|------------|-------------|--------|--------|-----------------|--------|
|                                                                                 |   |               |       |   |           |   |       |        |   |   | January 1, 2009 |   |
|                                                                                 |   |               |       |   |           |   |       |        |   |   | (Beginning of   |   |
|                                                                                 |   |               |       |   |           |   |       | Exploration |   |
|                                                                                 |   | For the year ended |       |   | Stage) through |   |
|                                                                                 |   | December 31,       |       |   | December 31,   |   |
|                                                                                 |   | 2011               |       |   | 2010           |   |       | 2009        |   |   | 2011            |   |
|                                                                                 |   |               |       |   |           |   |       |        |   |   |            |   |
| Net Loss                                                                             |   | $                  | (7,482,636 | )      |           | $      | (4,767,715 | )           |   | $      | (6,766,200      | )      |   | $ | (19,016,551 | ) |
|                                                                                 |   |               |       |   |           |   |       |        |   |   |            |   |   |   |   |   |
| Change in Market Value of        Investments |   |               | -0-        |   |           |   | 1,327      |        |   |   | (1,327          | )      |   |   | -0- |   |
|                                                                                 |   |               |       |   |           |   |       |        |   |   |            |   |   |   |   |   |
| Net Comprehensive Loss                                                               |   | $                  | (7,534,956 | )      |           | $      | (4,766,388 | )           |   | $      | (6,767,527      | )      |   | $ | (19,016,551 | ) |
|                                                                                 |   |               |       |   |           |   |       |        |   |   |            |   |   |   |   |   |
|                                                                                 |   |               |       |   |           |   |       |        |   |   |            |   |   |   |   |   |

----

|                                       |   |   |       |   |  Common Stock |   |   |       |   |   | Accumulated      |   |   | Accumulated    |        |   | Other         |   |   |        |   |   | Total               |   |
|--------------------------------------------|--------|--------|------------|--------|--------------------|--------|--------|------------|--------|--------|------------------|--------|--------|----------------|-------------|--------|---------------|--------|--------|-------------|--------|--------|---------------------|--------|
|                                       |   |   |       |   |               |   |   | Additional |   |   | Deficit Prior to |   |   | Deficit During |        |   | Comprehensive |   |   | Non-        |   |   | Stockholders’ |   |
|                                       |   |   |       |   |               |   |   | Paid-In    |   |   | Exploration      |   |   | Exploration    |        |   | Income        |   |   | Controlling |   |   | Equity              |   |
|                                       |   | Shares |       |   | Amount             |   |   | Capital    |   |   | Stage            |   |   | Stage          |        |   | (Loss)        |   |   | Interest    |   |   | (Deficit)           |   |
| Beginning Balance, January 1, 2009         |   |   | 59,215,628 |   |               | $      | 59,216 |       |   | $      | 22,096,327       |   |   | $              | (20,009,496 | )      |          | $      | - 0 -  |        |   | $      | (1,466              | )      |   | $ | 52,415 |   |   | $ | 2,196,996 |   |
|                                       |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Shares issued for directors fees           |   |   | 78,497     |   |               |   | 78     |       |   |   | 17,172           |   |   |           | --          |   |          |   | --     |        |   |   | --                  |   |   |   | -- |   |   |   | 17,250 |   |
|                                       |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Issuance of of common stock for conversion |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| of debt including accrued interest         |   |   | 10,487,226 |   |               |   | 10,487 |       |   |   | 4,085,434        |   |   |           | --          |   |          |   | --     |        |   |   | --                  |   |   |   | -- |   |   |   | 4,095,921 |   |
|                                       |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Amortization of convertible debt discount  |   |   | --         |   |               |   | --     |       |   |   | 365,341          |   |   |           | --          |   |          |   | --     |        |   |   | --                  |   |   |   | -- |   |   |   | 365,341 |   |
|                                       |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Fair value of stock options and warrants   |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| issued to directors and consultants        |   |   | --         |   |               |   | --     |       |   |   | 401,234          |   |   |           | --          |   |          |   | --     |        |   |   | --                  |   |   |   | -- |   |   |   | 401,234 |   |
|                                       |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Net change in unrealized gain on           |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| available for sale securities              |   |   | --         |   |               |   | --     |       |   |   | --               |   |   |           | --          |   |          |   | --     |        |   |   | 139                 |   |   |   | -- |   |   |   | 139 |   |
|                                       |   |   |       |   |               |   |   |       |   |   |             |   |   |           |        |   |          |   |   |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Change in non-controlling interest         |   |   | --         |   |               |   | --     |       |   |   | --               |   |   |           | --          |   |          |   | --     |        |   |   | --                  |   |   |   | (77 | ) |   |   | (77 | ) |

|  Net Loss                                |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   | (6,766,200)  |   |   |   |   |   |   |   |   |   |   |   | (6,766,200)  |   |
|-----------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|-------------|--------|--------|--------|-------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|
| Balance, December 31, 2009                    |   |   | 69,781,351 |   |   | $      | 69,781 |   |   | $      | 26,965,508 |   |   | $      | (20,009,496 | )      |   | $      | (6,766,200        | )      |   | $      | (1,327 | )      |   | $      | 52,338 |   |   | $      | 310,604           |   |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| Shares issued for directors fees              |   |   | 81,911     |   |   |   | 82     |   |   |   | 64,997     |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | --     |   |   |   | 65,079            |   |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
|  Issuance of common stock for conversion |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| of debt including accrued interest            |   |   | 2,457,500  |   |   |   | 2,458  |   |   |   | 2,341,464  |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | --     |   |   |   | 2,343,922         |   |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| Shares issued to related                      |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| parties relatingto forbearance agreement      |   |   | 427,714    |   |   |   | 428    |   |   |   | 320,358    |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | --     |   |   |   | 320,786           |   |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| Fair value of stock options and warrants      |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| issued to directors and consultants           |   |   | --         |   |   |   | --     |   |   |   | 334,669    |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | --     |   |   |   | 334,669           |   |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| Shares canceled from                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| forfeiture agreed upon in legal settlement    |   |   | (3,044,083 | )      |   |   | (3,045 | )      |   |   | (166,955   | )      |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | --     |   |   |   | (170,000          | )      |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| Change in non-controlling interest            |   |   | --         |   |   |   | --     |   |   |   | --         |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | (18    | )      |   |   | (18               | )      |
|                                          |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |              |   |
| Net Loss                                      |   |   | --         |   |   |   | --     |   |   |   | --         |   |   |   | --          |   |   |   | (4,767,715        | )      |   |   | 1,327  |   |   |   | --     |   |   |   | (4,766,388        | )      |
| Balance, December 31, 2010                    |   |   | 69,704,393 |   |   |   | 69,704 |   |   |   | 29,860,041 |   |   |   | (20,009,496 | )      |   |   | (11,533,915       | )      |   |   | --     |   |   |   | 52,320 |   |   |   | (1,561,346        | )      |

|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |
|------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|-------------|--------|--------|--------|-------------------|--------|--------|--------|--------|--------|
| Shares issued for                        |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| directors fees and other services        |   |   | 97,612     |   |   |   | 98     |   |   |   | 118,301    |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | -- |   |   |   | 118,399 |   |
|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for conversion  |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of debt including accrued interest       |   |   | 5,019,895  |   |   |   | 5,020  |   |   |   | 5,014,875  |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | -- |   |   |   | 5,019,895 |   |
|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of stock options and warrants |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| issued to directors and consultants      |   |   | --         |   |   |   | --     |   |   |   | 2,181,394  |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | -- |   |   |   | 2,181,394 |   |
|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for                        |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cashless option and warrant exercise     |   |   | 47,505     |   |   |   | 48     |   |   |   | (48        | )      |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | -- |   |   |   | -- |   |
|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for cash                   |   |   | 14,250,000 |   |   |   | 14,250 |   |   |   | 10,590,787 |   |   |   | --          |   |   |   | --                |   |   |   | --     |   |   |   | -- |   |   |   | 10,605,037 |   |
|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impairment of consolidation              |   |   | --         |   |   |   | --     |   |   |   | --         |   |   |   | --          |   |   |   |              |   |   |   | --     |   |   |   | (52,320 | ) |   |   | (52,320 | ) |
|                                     |   |   |       |   |   |   |   |   |   |   |       |   |   |   |        |   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                 |   |   | --         |   |   |   | --     |   |   |   | --         |   |   |   | --          |   |   |   | (7,482,636)  |   |   |   | --     |   |   |   | -- |   |   |   | (7,482,636 | ) |
| Balance, December 31, 2011               |   |   | 89,119,405 |   |   | $      | 89,120 |   |   | $      | 47,765,350 |   |   | $      | (20,009,496 | )      |   | $      | (19,016,551       | )      |   | $      | - 0 -  |   |   | $ | -0- |   |   | $ | 8,828,423 |   |

----

| APPLIED MINERALS, INC.                                                           |   |
|----------------------------------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                                            |   |
| STATEMENTS OF CASH FLOWS                                                         |   |
|                                                                             |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   | For the Period |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   | January 1, 2009 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   | (Beginning of |   |
|                                                                             |   | For the year ended |   |   | Exploration Stage) |   |
|                                                                             |   | December 31, |   |   | through |   |
|                                                                             |   | 2011 |   |   | 2010 |   |   | 2009 |   |   | December 31, 2011 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                         |   | $ | (7,482,636 | ) |   | $ | (4,767,697 | ) |   | $ | (6,766,172 | ) |   | $ | (19,016,551 | ) |
| Adjustments to reconcile net loss to                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net cash used in operations:                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                     |   |   | 248,605 |   |   |   | 162,859 |   |   |   | 123,733 |   |   |   | 535,197 |   |
| Amortization of deferred financing costs                                         |   |   | 146,939 |   |   |   | 3,061 |   |   |   | -0- |   |   |   | 150,000 |   |
| Amortization of discount – PIK Notes                                       |   |   | -0- |   |   |   | 2,194 |   |   |   | 365,340 |   |   |   | 367,534 |   |
| Issuance of PIK Notes in payment of interest                                     |   |   | 342,884 |   |   |   | 238,399 |   |   |   | 282,587 |   |   |   | 863,870 |   |
| Stock issued for director and consulting services                                |   |   | 118,436 |   |   |   | 65,079 |   |   |   | 17,250 |   |   |   | 200,765 |   |
| Fair value of warrants and options                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| issued to consultants and directors                                              |   |   | 2,181,394 |   |   |   | 334,669 |   |   |   | 401,234 |   |   |   | 2,917,297 |   |
| Gain on revaluation of stock warrants                                            |   |   | (225,000 | ) |   |   | -0- |   |   |   | -0- |   |   |   | (225,000 | ) |
| Loss on revaluation of stock awards                                              |   |   | 47,000 |   |   |   | 22,000 |   |   |   | 150,500 |   |   |   | 219,500 |   |
| Gain on stock award forfeiture                                                   |   |   | -0- |   |   |   | (145,000 | ) |   |   | -0- |   |   |   | (145,000 | ) |
| (Gain) Loss on disposition of assets                                             |   |   | (1,000 | ) |   |   | (3,113 | ) |   |   | (410 | ) |   |   | (4,523 | ) |
| Gain on settlement of debts                                                      |   |   | (101,380 | ) |   |   | (333,502) |   |   |   | -0- |   |   |   | (434,882) | ) |
| Other non-cash expense (income)                                                  |   |   | (28,587 | ) |   |   | -0- |   |   |   | -0- |   |   |   | (28,587 | ) |
| Provision for doubtful accounts                                                  |   |   | 11,938 |   |   |   | -0- |   |   |   | -0- |   |   |   | 11,938 |   |
| Loss on impairment of assets                                                     |   |   | 4,862 |   |   |   | 19,977 |   |   |   | 42,042 |   |   |   | 66,881 |   |
| Change in operating assets and liabilities:                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Increase) Decrease in:                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                              |   |   | 28,873 |   |   |   | (61,275 | ) |   |   | 44 |   |   |   | (32,358 | ) |
| Mining supplies inventory                                                        |   |   | 3,503 |   |   |   | (3,503 | ) |   |   | -0- |   |   |   | -0- |   |
| Deposits and prepaid expenses                                                    |   |   | (12,801 | ) |   |   | (33,196 | ) |   |   | 136,764 |   |   |   | 90,767 |   |
| Increase (Decrease) in:                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                            |   |   | 18,387 |   |   |   | 199,026 |   |   |   | 305,656 |   |   |   | 523,069 |   |
| Net cash used by discontinued operations                                         |   |   | (1,152 | ) |   |   | 118,011 |   |   |   | 486,680 |   |   |   | 603,585 |   |
| Net cash used by operating activities                                            |   |   | (4,699,735 | ) |   |   | (4,182,011 | ) |   |   | (4,454,752 | ) |   |   | (13,336,498 | ) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases of land improvements                                                   |   |   | -0- |   |   |   | (70,729 | ) |   |   | (2,194 | ) |   |   | (72,923 | ) |
| Purchases of equipment and vehicles                                              |   |   | (271,387 | ) |   |   | (60,104 | ) |   |   | (122,580 | ) |   |   | (454,071 | ) |
| Proceeds from sale of assets                                                     |   |   | 1,000 |   |   |   | 150,000 |   |   |   | -0- |   |   |   | 151,000 |   |
| Net cash provided by discontinued operations                                     |   |   | -0- |   |   |   | 2,500 |   |   |   | 432,170 |   |   |   | 434,670 |   |
| Net cash provided by investing activities                                        |   |   | (270,387 | ) |   |   | 21,667 |   |   |   | 307,396 |   |   |   | 58,676 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments on notes payable                                                        |   |   | (518,726 | ) |   |   | (145,418 | ) |   |   | (167,203 | ) |   |   | (831,347 | ) |
| Payments on leases payable                                                       |   |   | (167,956 | ) |   |   | (131,764 | ) |   |   | (121,274 | ) |   |   | (420,994 | ) |
| Proceeds from insurance settlement                                               |   |   | -0- |   |   |   | 115,000 |   |   |   | -0- |   |   |   | 115,000 |   |
| Proceeds from notes payable                                                      |   |   | -0- |   |   |   | - 0 - |   |   |   | 124,129 |   |   |   | 124,129 |   |
| Proceeds from PIK notes payable                                                  |   |   | -0- |   |   |   | 4,550,000 |   |   |   | 5,050,000 |   |   |   | 9,600,000 |   |
| Net proceeds from sale of common stock                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  with attached warrant                                                      |   |   | 14,185,000 |   |   |   | -0- |   |   |   | -0- |   |   |   | 14,185,000 |   |
| Payments for forfeiture of stock                                                 |   |   | -0- |   |   |   | (170,000 | ) |   |   | -0- |   |   |   | (170,000 | ) |
| Net cash used by discontinued operations                                         |   |   | -0- |   |   |   | -0- |   |   |   | (56,431 | ) |   |   | (56,431 | ) |
| Net cash provided by financing activities                                        |   |   | 13,498,318 |   |   |   | 4,217,818 |   |   |   | 4,829,221 |   |   |   | 22,545,357 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                  |   |   | 8,528,196 |   |   |   | 57,474 |   |   |   | 681,865 |   |   |   | 9,267,535 |   |
| Cash and cash equivalents at beginning of period                                 |   |   | 1,642,340 |   |   |   | 1,584,866 |   |   |   | 903,001 |   |   |   | 903,001 |   |
| Cash and cash equivalents at end of period                                       |   | $ | 10,170,536 |   |   | $ | 1,642,340 |   |   | $ | 1,584,866 |   |   | $ | 10,170,536 |   |
| The accompanying notes are an integral part of these  financial statements. |   |

----

| APPLIED MINERALS, INC.                                                     |   |
|----------------------------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                                      |   |
| STATEMENTS OF CASH FLOWS                                                   |   |
| (Continued)                                                                |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   | For the Period |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   | January 1, 2009 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   | (Beginning of |   |
|                                                                       |   | For the year ended |   |   | Exploration Stage) |   |
|                                                                       |   | December 31, |   |   | through |   |
|                                                                       |   | 2011 |   |   | 2010 |   |   | 2009 |   |   | December 31, 2011 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Paid For:                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                   |   | $ | 58,056 |   |   | $ | 10,893 |   |   | $ | 17,587 |   |   | $ | 86,536 |   |
| Income Taxes                                                               |   | $ | 1,465 |   |   | $ | 550 |   |   | $ | -0- |   |   | $ | 2,015 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Disclosure of Non-Cash                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investing and Financing Activities:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of debt and                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accrued interest to common stock                                           |   | $ | 5,019,895 |   |   | $ | 2,343,922 |   |   | $ | 4,095,921 |   |   | $ | 11,459,738 |   |
| Equipment financed on lease                                                |   | $ | -0- |   |   | $ | 197,000 |   |   | $ | -0- |   |   | $ | 197,000 |   |
| Prepaid insurance financed                                                 |   | $ | 141,908 |   |   | $ | -0- |   |   | $ | -0- |   |   | $ | 141,908 |   |
| Equipment financed with note payable                                       |   | $ | 173,838 |   |   | $ | -0- |   |   | $ | -0- |   |   | $ | 173,838 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these financial statements. |   |

----

----

|                                    | Estimated         |
|-----------------------------------------|-------------------|
|                                    | Useful Life       |
| Building                                | 30 years          |
| Mining equipment                        | 2 – 7 years |
| Office and shop furniture and equipment | 3 – 7 years |
| Vehicles                                | 5 years           |

|   | Recent Accounting Pronouncements |
|--------|----------------------------------|

----

|                                      |   | December 31, |    |   | December 31, |   |
|-------------------------------------------|--------|--------------|---------|--------|--------------|--------|
|                                      |   | 2011         |    |   | 2010         |   |
| Property and equipment                    |   | $            | 445,180 |   |         | $      | 450,042 |   |
| Total assets from discontinued operations |   | $            | 445,180 |   |         | $      | 450,042 |   |

|                                           |   | December 31, |   |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|--------|--------------|--------|
|                                           |   | 2011         |   |   | 2010         |   |
| Accounts payable and accrued liabilities       |   | $            | - 0 -  |   |         | $      | 1,152 |   |
| Leases Payable                                 |   |         | - 0 -  |   |         |   | - 0 - |   |
| Total liabilities from discontinued operations |   | $            | - 0 -  |   |         | $      | 1,152 |   |

|                                           |   | Year ended December 31, |   |
|------------------------------------------------|--------|-------------------------|--------|
|                                           |   | 2011                    |   |   | 2010 |   |   | 2009 |   |
| Revenues from discontinued operations          |   | $                       | - 0 -  |   |   | $ | - 0 - |   |   | $ | - 0 - |   |
| Cost of goods sold                             |   |                    | - 0 -  |   |   |   | - 0 - |   |   |   | - 0 - |   |
| General and administrative expenses            |   |                    | (910   | ) |   |   | (12,962 | ) |   |   | (36,354 | ) |
| Payment of prior year income taxes             |   |                    | -0-    |   |   |   | (550 | ) |   |   | - 0 - |   |
| Collection of previously recorded bad debt     |   |                    | -0-    |   |   |   | 234,524 |   |   |   | 202,365 |   |
| Gain on settlement of debts                    |   |                    | -0-    |   |   |   | 27,192 |   |   |   | - 0 - |   |
| Gain (Loss) on disposal of assets              |   |                    | -0-    |   |   |   | 2,500 |   |   |   | (148,138 | ) |
| Loss on impairment of assets                   |   |                    | (4,862 | ) |   |   | (126,876 | ) |   |   | (82,547 | ) |
| Income (loss) from discontinued operations     |   |                    | (5,772 | ) |   |   | 123,828 |   |   |   | (64,674 | ) |
| Income tax liability                           |   |                    | - 0 -  |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Net income (loss) from discontinued operations |   | $                       | (5,772 | ) |   | $ | 123,828 |   |   | $ | (64,674 | ) |

----

|                                                                                                                                                                                       |   | December 31, |     |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|----------|--------|--------------|--------|
|                                                                                                                                                                                       |   | 2011         |     |   | 2010         |   |
|                                                                                                                                                                                       |   |         |     |   |         |   |
| Note payable to legal firm due in monthly installments including interest at 10%.  Debt was settled on December 30, 2011. (See Note 11)                                          |   | $            | -0-      |   |         | $      | 497,699 |   |
|                                                                                                                                                                                       |   |         |     |   |         |   |   |   |
| Note payable to an insurance company due in monthly installments, including interest at 3%.  The note matures in July 2012.                                                      |   |         | 110,648  |   |         |   | 69,805 |   |
|                                                                                                                                                                                       |   |         |     |   |         |   |   |   |
| Note payable to a company for equipment due in monthly installments, including implied interest of 9.34%.  The note matures in July 2014.                                        |   |         | 152,496  |   |         |   | -0- |   |
|                                                                                                                                                                                       |   |         |     |   |         |   |   |   |
| Convertible debt (PIK Notes), net of applicable discounts, payable to multiple note holders, at an annual interest rate of 10%.  The notes mature in December 2018. (See Note 7) |   |         | -0-      |   |         |   | 4,683,624 |   |
|                                                                                                                                                                                       |   |         |     |   |         |   |   |   |
| Total Notes Payable                                                                                                                                                                        |   |         | 263,144  |   |         |   | 5,251,128 |   |
| Less:  Current Portion                                                                                                                                                           |   |         | (165,375 | )      |         |   | (206,209 | ) |
|                                                                                                                                                                                       |   |         |     |   |         |   |   |   |
| Total Long-Term Liabilities                                                                                                                                                                |   | $            | 97,769   |   |         | $      | 5,044,919 |   |

| 2012                |   | $      | 165,375 |   |
|---------------------|--------|--------|---------|--------|
| 2013                |   |   | 60,063  |   |
| 2014                |   |   | 37,706  |   |
| Thereafter          |   |   | -0-     |   |
| Total Notes Payable |   | $      | 263,144 |   |

----

| 2012                                          |   | $      | 11,932 |   |
|-----------------------------------------------|--------|--------|--------|--------|
| Less:  Amount Representing Interest |   |   | (205   | )      |
| Present Value of Net Minimum Lease Payments   |   | $      | 11,727 |   |

|                                      |   | December 31, |    |
|-------------------------------------------|--------|--------------|---------|
| Classes of Property                       |   | 2011         |    |   | 2010 |   |
| Milling Equipment                         |   | $            | 95,363  |   |   | $ | 162,052 |   |
| Mining Equipment                          |   |         | -0-     |   |   |   | 197,000 |   |
| Less:  Accumulated Depreciation |   |         | (66,282 | ) |   |   | (73,409 | ) |
| Total assets under capital lease          |   | $            | 29,081  |   |   | $ | 285,643 |   |

| ·   | Level 1 – Quoted prices in active markets for identical assets and liabilities; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | Level 3 – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   |                                |    |                            |   |    |      |   |   |   |    |   |   |   |      |   |   |   |    |   |
|-----------------------------------------|--------|-------------------------------------|---------|---------------------------------|--------|---------|-----------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|
|                                    |   | Fair value measurement using inputs |    | Carrying amount at December 31, |
| Financial instruments                   |   | Level 1                             |    | Level 2                         |   | Level 3 |      | 2011   |   | 2010   |
| Liabilities:                            |   |                                |    |                            |   |    |      |   |   |   |    |   |   |   |      |   |   |   |    |   |
| Stock awards payable                    |   | $                                   | — |                            |   | $       | 127,000   |   |   | $      | — |   |   | $      | 127,000   |   |   | $      | 80,000  |   |
| Derivative instruments — Warrants |   | $                                   | — |                            |   | $       | 3,355,000 |   |   | $      | — |   |   | $      | 3,355,000 |   |   | $      | — |   |
| Total                                   |   | $                                   | — |                            |   | $       | 3,355,000 |   |   | $      | — |   |   | $      | 3,355,000 |   |   | $      | — |   |

|                                            |   | Fair value measurement using inputs |   |
|-------------------------------------------------|--------|-------------------------------------|--------|
|                                            |   | December 31, 2011                   |   |   | December 22, 2011 |   |
|                                            |   |                                |   |   |   |   |
| Market price and estimated fair value of stock: |   | $                                   | 1.27   |   |   | $ | 1.33 |   |
| Exercise price:                                 |   | $                                   | 2.00   |   |   | $ | 2.00 |   |
| Expected term (years):                          |   |                                | 5      |   |   |   | 5 |   |
| Dividend yield                                  |   | $                                   | -0-    |   |   | $ | -0- |   |
| Expected volatility:                            |   |                                | 77     | % |   |   | 77 | % |
| Risk-free interest rate:                        |   |                                | .90    | % |   |   | .90 | % |

----

----

----

|           |   |   | Warrants Outstanding |   |                                        | Warrants Exercisable |                            |
|----------------|--------|--------|----------------------|--------|---------------------------------------------|----------------------|---------------------------------|
| Exercise Price |   |   | Number Outstanding   |   | Weighted Average Remaining Contractual Life |                 | Weighted Average Exercise Price |   |   | Number Exercisable |   |   | Weighted Average Exercise Price |   |
| $              | 0.35   |   |                 |   | 90,000                                      |                 | 2.25 years                      |   | $ | 0.35 |   |   |   | 90,000 |   |   | $ | 0.35 |   |
| $              | 0.78   |   |                 |   | 213,402                                     |                 | 4.08 years                      |   | $ | 0.78 |   |   |   | 213,402 |   |   | $ | 0.78 |   |
| $              | 0.80   |   |                 |   | 264,668                                     |                 | 3.87 years                      |   | $ | 0.80 |   |   |   | 264,668 |   |   | $ | 0.80 |   |
| $              | 1.00   |   |                 |   | 340,000                                     |                 | 2.75 years                      |   | $ | 1.00 |   |   |   | 340,000 |   |   | $ | 1.00 |   |
| $              | 1.15   |   |                 |   | 461,340                                     |                 | 9.33 years                      |   | $ | 1.15 |   |   |   | 346,005 |   |   | $ | 1.15 |   |
| $              | 2.00   |   |                 |   | 5,054,367                                   |                 | 4.97 years                      |   | $ | 2.00 |   |   |   | 5,022,655 |   |   | $ | 2.00 |   |
|           |   |   |                 |   | 6,423,777                                   |                 |                            |   |   |   |   |   |   | 6,276,730 |   |   |   |   |   |

----

|                    | 2011               |
|-------------------------|--------------------|
|                    |               |
| Dividend Yield          | 0%                 |
| Expected Life           | 5 – 10 years |
| Expected Volatility     | 77% - 100%         |
| Risk Free Interest Rate | .90% - 2.96%       |

|                               |   | December 31, 2011 |      |   | December 31, 2010 |   |   | December 31, 2009 |   |
|------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|--------|-------------------|--------|
|                               |   |              |      |   | Weighted          |   |   |              |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                               |   |              |      |   | Average           |   |   |              |   |   | Average |   |   |   |   |   | Average |   |
|                               |   | Shares            |      |   | Exercise Price    |   |   | Shares            |   |   | Exercise Price |   |   | Shares |   |   | Exercise Price |   |
|                               |   |              |      |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Outstanding at beginning of period |   |              | 580,187   |   |              | $      | 0.78   |              |   |   | 260,000 |   |   | $ | 0.75 |   |   |   | - 0 - |   |   | $ | - 0 - |   |
| Issued                             |   |              | 5,853,590 |   |              |   | 1.86   |              |   |   | 320,187 |   |   |   | 0.80 |   |   |   | 260,000 |   |   |   | 0.75 |   |
| Exercised                          |   |              | (10,000   | )      |              | $      | (.35   | )                 |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Forfeited                          |   |              | - 0 -     |   |              |   | - 0 -  |              |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Expired                            |   |              | - 0 -     |   |              |   | - 0 -  |              |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Outstanding at end of period       |   |              | 6,423,777 |   |              | $      | 1.77   |              |   |   | 580,187 |   |   | $ | 0.78 |   |   |   | 260,000 |   |   | $ | 0.75 |   |
| Exercisable at end of period       |   |              | 6,276,730 |   |              | $      | 1.79   |              |   |   | 580,187 |   |   | $ | 0.78 |   |   |   | 235,000 |   |   | $ | 0.75 |   |

|                    | 2011               |   | 2010    |   | 2009        |
|-------------------------|--------------------|--------|---------|--------|-------------|
|                    |               |   |    |   |        |
| Dividend Yield          | 0%                 |   | 0%      |   | 0%          |
| Expected Life           | 5 – 10 years |   | 5 years |   | 1 - 5 years |
| Expected Volatility     | 81% - 105%         |   | 120%    |   | 100%        |
| Risk Free Interest Rate | 2.02 – 3.75% |   | 0.4%    |   | 1.68%       |

|                             |   | Shares |       |   | Weighted Average Exercise Price |   |
|----------------------------------|--------|--------|------------|--------|---------------------------------|--------|
| Outstanding at December 31, 2010 |   |   | 7,593,277  |   |                            | $      | 0.70 |   |
| Granted                          |   |   | 4,105,134  |   |                            | $      | 1.06 |   |
| Exercised                        |   |   | (100,000   | )      |                            | $      | 0.90 |   |
| Forfeited                        |   |   | - 0 -      |   |                            |   | - 0 - |   |
| Expired                          |   |   | - 0 -      |   |                            |   | - 0 - |   |
| Outstanding at December 31, 2011 |   |   | 11,598,411 |   |                            | $      | - 0 - |   |
| Exercisable at December 31, 2011 |   |   | 7,951,420  |   |                            |   |   |   |

|      |   | Vesting Information |
|-----------|--------|---------------------|
| Shares    |   | Frequency           |   | Begin Date |   | End Date |
|      |   |                |   |   |   |   |
| 300,481   |   | Quarterly           |   | March 1, 2011 |   | February 28, 2012 |
| 2,904,653 |   | Monthly             |   | January 1, 2012 |   | December 31, 2012 |
| 900,000   |   | Monthly             |   | September 15, 2011 |   | September 14, 2014 |

----

|           |       |   | Options Outstanding |   |                                        | Options Exercisable |                            |
|----------------|------------|--------|---------------------|--------|---------------------------------------------|---------------------|---------------------------------|
| Exercise Price |       |   | Number Outstanding  |   | Weighted Average Remaining Contractual Life |                | Weighted Average Exercise Price |   |   | Number Exercisable |   |   | Weighted Average Exercise Price |   |
| $              | 0.65-$0.71 |   |                |   | 75,000                                      |                | 2.50 years                      |   | $ | 0.69 |   |   |   | 75,000 |   |   | $ | 0.69 |   |
| $              | 0.70       |   |                |   | 7,358,277                                   |                | 7.75 years                      |   | $ | 0.70 |   |   |   | 7,358,275 |   |   | $ | 0.70 |   |
| $              | 0.83       |   |                |   | 3,205,134                                   |                | 4.25 years                      |   | $ | 0.83 |   |   |   | 358,145 |   |   | $ | 0.83 |   |
| $              | 1.00       |   |                |   | 60,000                                      |                | 4.50 years                      |   | $ | 1.00 |   |   |   | 60,000 |   |   | $ | 1.00 |   |
| $              | 1.90       |   |                |   | 900,000                                     |                | 9.75 years                      |   | $ | 1.90 |   |   |   | 100,000 |   |   | $ | 1.90 |   |
|           |       |   |                |   | 11,598,411                                  |                |                            |   |   |   |   |   |   | 7,951,420 |   |   |   |   |   |

|                                  |   | Net Loss    |       |   | Shares        |   |       | Per-Share |   |
|---------------------------------------|--------|-------------|------------|--------|---------------|--------|------------|-----------|--------|
|                                  |   | (Numerator) |       |   | (Denominator) |   |       | Amount    |   |
|                                  |   |        |       |   |          |   |       |      |   |
| For the year ended December 31, 2011: |   |        |       |   |          |   |       |      |   |
| Basic EPS                             |   |        |       |   |          |   |       |      |   |
| Net loss to common shareholders       |   | $           | (7,534,956 | )      |          |   | 74,568,658 |      |   | $ | (0.10 | ) |
|                                  |   |        |       |   |          |   |       |      |   |   |   |   |
| For the year ended December 31, 2010: |   |        |       |   |          |   |       |      |   |   |   |   |
| Basic EPS                             |   |        |       |   |          |   |       |      |   |   |   |   |
| Net loss to common shareholders       |   | $           | (4,767,715 | )      |          |   | 68,396,770 |      |   | $ | (0.07 | ) |
|                                  |   |        |       |   |          |   |       |      |   |   |   |   |
| For the year ended December 31, 2009: |   |        |       |   |          |   |       |      |   |   |   |   |
| Basic EPS                             |   |        |       |   |          |   |       |      |   |   |   |   |
| Net loss to common shareholders       |   | $           | (6,766,200 | )      |          |   | 60,665,785 |      |   | $ | (0.11 | ) |

----

|                          |   | December 31, 2011 |       |   | December 31, 2010 |   |       | December 31, 2009 |   |
|-------------------------------|--------|-------------------|------------|--------|-------------------|--------|------------|-------------------|--------|
| Expected federal tax benefit  |   |              | (2,637,229 | )      |              | $      | (1,668,700 | )                 |   | $ | (2,368,170 | ) |
| State and local taxes         |   |              | (949,403   | )      |              |   | (600,732   | )                 |   |   | (852,541 | ) |
| Non-deductible expenses       |   |              | 2,181,396  |   |              |   | 334,669    |              |   |   | 1,041,879 |   |
| Change in valuation allowance |   |              | 1,405,236  |   |              |   | 1,934,767  |              |   |   | 3,220,711 |   |
| Income tax expense            |   | $                 | -          |   |              | $      | -          |              |   | $ | - |   |

|                             |   | December 31, 2011 |        |   | December 31, 2010 |   |        | December 31, 2009 |   |
|----------------------------------|--------|-------------------|-------------|--------|-------------------|--------|-------------|-------------------|--------|
| Net Operating Loss Carryforwards |   | $                 | (12,544,019 | )      |              | $      | (11,138,782 | )                 |   | $ | (9,204,020 | ) |
| Total gross deferred tax assets  |   |              | 12,544,019  |   |              |   | 11,138,782  |              |   |   | 9,204,020 |   |
| Valuation allowance              |   |              | (12,544,019 | )      |              |   | (11,138,782 | )                 |   |   | (9,204,020 | ) |
| Net deferred tax assets          |   | $                 | - 0 -       |   |              | $      | - 0 -       |              |   | $ | - 0 - |   |

----

----

----

|   |   | APPLIED MINERALS INC            |   |
|--------|--------|---------------------------------|--------|
|   |   |                            |   |
|   | By:    | /s/ ANDRE ZEITOUN               |   |
|   |   | Andre Zeitoun                   |   |
|   |   | Chief Executive Officer         |   |
|   |   |                            |   |
|   | By:    | /s/ CHRISTOPHER T. CARNEY       |   |
|   |   | Christopher T. Carney           |   |
|   |   | Interim Chief Financial Officer |   |

| Signature     | Title    | Date           |
|---------------|----------|----------------|
|          |     |           |
| JOHN F. LEVY  | Director | March 15, 2011 |
| John F. Levy  |     |           |
|          |     |           |
| DAVID TAFT    | Director | March 15, 2011 |
| David Taft    |     |           |
|          |     |           |
| ANDRE ZEITOUN | Director | March 15, 2011 |
| Andre Zeitoun |     |           |
|          |     |           |
| EVAN STONE    | Director | March 15, 2011 |
| Evan Stone    |     |           |

----