----

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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 |   | NO | X |
|--------|-----|--------|----|---|

|   | YES |   | NO | X |
|--------|-----|--------|----|---|

|   | YES |   | NO | X |
|--------|-----|--------|----|---|

|   |   |   |   |   |
|--------|--------|--------|--------|--------|

| Large Accelerated Filer    |   | Accelerated Filer   |   |    Non-accelerated Filer   |   |   Smaller Reporting Company  | X |
|--------------------------------------|--------|-------------------------------|--------|------------------------------------------------|--------|----------------------------------------|---|

|   | YES |   | NO | X |
|--------|-----|--------|----|---|

----

|     | PART I                                                                                                                        | Page(s)   |
|----------|-------------------------------------------------------------------------------------------------------------------------------|-----------|
| Item 1.  | Business                                                                                                                      |   3  |
|     |                                                                                                                          |      |
| Item 1A. | Risk Factors                                                                                                                  |   8  |
|     |                                                                                                                          |      |
| Item 1B. | Unresolved Staff Comments                                                                                                     |   10 |
|     |                                                                                                                          |      |
| Item 2.  | Properties                                                                                                                    |   10 |
|     |                                                                                                                          |      |
| Item 3.  | Legal Proceedings                                                                                                             |   10 |
|     |                                                                                                                          |      |
|     | PART II                                                                                                                       |      |
| Item 4.  | Market Price for the Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities |   11 |
|     |                                                                                                                          |      |
| Item 5.  | Selected Financial Data                                                                                                       |   12 |
|     |                                                                                                                          |      |
| Item 6.  | Management’s Discussion and Analysis of Financial Condition and Results of Operation                                    |   12 |
|     |                                                                                                                          |      |
| Item 6A. | Quantitative and Qualitative Disclosures About Market Risk                                                                    |   15 |
|     |                                                                                                                          |      |
| Item 7.  | Financial Statements and Supplementary Data                                                                                   |   16 |
|     |                                                                                                                          |      |
| Item 8.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                          |   16 |
|     |                                                                                                                          |      |
| Item 8A. | Controls and Procedures                                                                                                       |   16 |
|     |                                                                                                                          |      |
| Item 8B. | Other Information                                                                                                             |   17 |
|     | PART III                                                                                                                      |      |
| Item 9.  | Directors and Executive Officers and Corporate Governance                                                                     |   18 |
|     |                                                                                                                          |      |
| Item 10. | Executive Compensation                                                                                                        |   18 |
|     |                                                                                                                          |      |
| Item 11. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                                |   18 |
|     |                                                                                                                          |      |
| Item 12. | Certain Relationships and Related Transactions, and Director Independence                                                     |   18 |
|     |                                                                                                                          |      |
| Item 13. | Principal Accounting Fees and Services                                                                                        |   18 |
|     |                                                                                                                          |      |
| Item 14. | Exhibits                                                                                                                      |   19 |
|     | PART IV                                                                                                                       |      |
| Item 15. | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                                               |   20 |

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

----

----

----

----

----

----

----

----

| ITEM 4. |  MARKET PRICE FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|-------------------------------------------------------------------------------------------------------------------------------------|

|           |   | Year 2010 |   |   | Year 2009 |   |
|----------------|--------|-----------|--------|--------|-----------|--------|
|           |   | High      |   |   | Low       |   |   | High |   |   | Low |   |
| First Quarter  |   | $         | 0.93   |   |      | $      | 0.59 |   |   | $ | 0.30 |   |   | $ | 0.17 |   |
| Second Quarter |   | $         | 1.08   |   |      | $      | 0.71 |   |   | $ | 0.69 |   |   | $ | 0.24 |   |
| Third Quarter  |   | $         | 1.06   |   |      | $      | 0.75 |   |   | $ | 0.90 |   |   | $ | 0.42 |   |
| Fourth Quarter |   | $         | 0.87   |   |      | $      | 0.62 |   |   | $ | 0.94 |   |   | $ | 0.55 |   |

----

| Equity Compensation Information                                  |   |
|------------------------------------------------------------------|--------|
| As of December 31, 2010                                          |   |
|                                                             |   |   |   |   |   |   |   |   |   |
|                                                             |   | 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 - |   |   | (1) |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|  Equity compensation plans not approved by security holders |   |   | 7,418,277 |   |   | $ | 0.69 |   |   | (1) |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                            |   |   | 7,418,277 |   |   | $ | 0.69 |   |   |   |   |

| ITEM 5. | SELECTED FINANCIAL DATA |
|---------|-------------------------|

|   | Not applicable. |
|--------|-----------------|

| ITEM 6. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

----

----

----

| ITEM 6A. |  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------|------------------------------------------------------------------|

----

| ITEM 8. |  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------------|

----

----

| ITEM 11. |  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------------|

----

| 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   | Compensation Agreement with Forbearing Shareholders                                                                                                                            |   |
| 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                     |   |

| 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 and October 26, 2009. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                    | Page        |
|---------------------------------------------------------------------------------------------------------|-------------|
|                                                                                                    |        |
| Report of Independent Registered Public Accounting Firm                                                 |   F 21 |
|                                                                                                    |        |
| Financial Statements:                                                                                   |        |
|                                                                                                    |        |
| Consolidated Balance Sheets as of December 31, 2010 and 2009                                            |   F 22 |
|                                                                                                    |        |
| Consolidated Statements of Operations and Comprehensive Loss for Years Ended December 31, 2010 and 2009 |   F 24 |
|                                                                                                    |        |
| Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2010 and 2009    |   F 27 |
|                                                                                                    |        |
| Consolidated Statements of Cash Flows for Years Ended December 31, 2010 and 2009                        |   F 28 |
|                                                                                                    |        |
| Notes to Consolidated Financial Statements                                                              |   F 29 |

----

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Company)                                                          |   |
| Consolidated Balance Sheets                                                             |   |
|                                                                                    |   |   |   |   |   |   |
|                                                                                    |   | December 31, |   |   | December 31, |   |
|                                                                                    |   | 2010 |   |   | 2009 |   |
|                                                                                    |   |   |   |   |   |   |
| Current Assets                                                                          |   |   |   |   |   |   |
| Cash and cash equivalents                                                               |   | $ | 1,642,340 |   |   | $ | 1,584,866 |   |
| Accounts receivable                                                                     |   |   | 61,275 |   |   |   | - 0 - |   |
| Mining supplies inventory                                                               |   |   | 3,503 |   |   |   | - 0 - |   |
| Investments – available for sale                                                  |   |   | - 0 - |   |   |   | 5,565 |   |
| Deposits and prepaids                                                                   |   |   | 178,738 |   |   |   | 145,542 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Current Assets                                                                    |   |   | 1,885,856 |   |   |   | 1,735,973 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Property and Equipment                                                                  |   |   |   |   |   |   |   |   |
| Land and tunnels                                                                        |   |   | 523,729 |   |   |   | 523,729 |   |
| Land improvements                                                                       |   |   | 164,758 |   |   |   | 94,029 |   |
| Buildings                                                                               |   |   | 432,997 |   |   |   | 445,197 |   |
| Mining equipment                                                                        |   |   | 588,523 |   |   |   | 432,670 |   |
| Milling equipment                                                                       |   |   | 333,483 |   |   |   | 98,047 |   |
| Laboratory equipment                                                                    |   |   | 67,728 |   |   |   | 67,728 |   |
| Office furniture and equipment                                                          |   |   | 27,419 |   |   |   | 37,522 |   |
| Vehicles                                                                                |   |   | 75,013 |   |   |   | 75,163 |   |
| Less:  Accumulated depreciation                                               |   |   | (481,364 | ) |   |   | (382,753 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Property and Equipment                                                            |   |   | 1,732,286 |   |   |   | 1,391,332 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Other Assets                                                                            |   |   |   |   |   |   |   |   |
| Assets from discontinued operations                                                     |   |   |   |   |   |   |   |   |
| being held for sale                                                                     |   |   | 450,042 |   |   |   | 878,003 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Other Assets                                                                      |   |   | 450,042 |   |   |   | 878,003 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                            |   | $ | 4,068,184 |   |   | $ | 4,005,308 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Mining Company)                                                   |   |
| Consolidated Balance Sheets                                                             |   |
|                                                                                    |   |   |   |   |   |   |
|                                                                                    |   | December 31, |   |   | December 31, |   |
|                                                                                    |   | 2010 |   |   | 2009 |   |
|                                                                                    |   |   |   |   |   |   |
| Current Liabilities                                                                     |   |   |   |   |   |   |
| Accounts payable and accrued liabilities                                                |   | $ | 266,139 |   |   | $ | 1,047,541 |   |
| Stock awards payable                                                                    |   |   | 80,000 |   |   |   | 203,000 |   |
| Current portion of notes payable                                                        |   |   | 206,209 |   |   |   | 72,762 |   |
| Current portion of leases payable                                                       |   |   | 167,956 |   |   |   | 15,690 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Current Liabilities                                                               |   |   | 720,304 |   |   |   | 1,338,993 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Long-Term Liabilities                                                                   |   |   |   |   |   |   |   |   |
| Long-term portion of notes payable                                                      |   |   | 361,295 |   |   |   | - 0 - |   |
| Long-term portion of leases payable                                                     |   |   | 10,094 |   |   |   | 22,832 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Long-Term Liabilities                                                             |   |   | 371,389 |   |   |   | 22,832 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Other Liabilities                                                                       |   |   |   |   |   |   |   |   |
| Convertible debt (PIK Notes)                                                            |   |   | 4,683,624 |   |   |   | 2,236,667 |   |
| Amortizable discount (PIK Notes)                                                        |   |   | (146,939 | ) |   |   | (2,194 | ) |
| Liabilities from discontinued operations                                                |   |   | 1,152 |   |   |   | 98,406 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Other Liabilities                                                                 |   |   | 4,537,837 |   |   |   | 2,332,879 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                       |   |   | 5,629,530 |   |   |   | 3,694,704 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| 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, 69,704,393 and                                                       |   |   |   |   |   |   |   |   |
| 69,781,351 shares issued and outstanding                                                |   |   |   |   |   |   |   |   |
| at December 31, 2010 and 2009, respectively                                             |   |   | 69,704 |   |   |   | 69,781 |   |
| Additional paid-in capital – common stock                                         |   |   | 29,860,040 |   |   |   | 26,965,507 |   |
| Accumulated deficit prior to the exploration stage                                      |   |   | (20,009,496 | ) |   |   | (20,009,496 | ) |
| Accumulated deficit during the exploration stage                                        |   |   | (11,533,915 | ) |   |   | (6,766,200 | ) |
| Accumulated other comprehensive loss                                                    |   |   | - 0 - |   |   |   | (1,327 | ) |
| Total Applied Minerals, Inc.                                                            |   |   |   |   |   |   |   |   |
| stockholders’ equity (deficit)                                                    |   |   | (1,613,667 | ) |   |   | 258,265 |   |
| Noncontrolling interest                                                                 |   |   | 52,321 |   |   |   | 52,339 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Total Stockholders’ Equity (Deficit)                                              |   |   | (1,561,346 | ) |   |   | 310,604 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND                                                                   |   |   |   |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY (DEFICIT)                                                    |   | $ | 4,068,184 |   |   | $ | 4,005,308 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Company)                                                          |   |
| Consolidated Statements of Operations and Comprehensive Loss                            |   |
|                                                                                    |   |   |   |   |   |   |   | For the Period |   |
|                                                                                    |   |   |   |   |   |   |   | January 1, 2009 |   |
|                                                                                    |   |   |   |   |   |   |   | (Beginning of |   |
|                                                                                    |   |   |   |   |   |   |   | Exploration Stage) |   |
|                                                                                    |   | For the year ended |   |   | through |   |
|                                                                                    |   | December 31, |   |   | December 31, |   |
|                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |
| REVENUES                                                                                |   | $ | - 0 - |   |   | $ | - 0 - |   |   | $ | - 0 - |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| COST OF SALES                                                                           |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                                            |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING (INCOME) EXPENSES:                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Exploration costs                                                                       |   |   | 2,307,202 |   |   |   | 1,299,753 |   |   |   | 3,606,955 |   |
| General & administrative                                                            |   |   | 2,490,347 |   |   |   | 4,683,914 |   |   |   | 7,174,261 |   |
| Gain from disposition of land and equipment                                             |   |   | (3,113 | ) |   |   | (410 | ) |   |   | (3,523 | ) |
| Loss on impairment of equipment                                                         |   |   | 13,080 |   |   |   | 42,042 |   |   |   | 55,122 |   |
| Total Operating Expenses                                                                |   |   | 4,807,516 |   |   |   | 6,025,299 |   |   |   | 10,832,815 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Operating Loss                                                                      |   |   | (4,807,516 | ) |   |   | (6,025,299 | ) |   |   | (10,832,815 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                         |   |   | 957 |   |   |   | 448 |   |   |   | 1,405 |   |
| Interest expense                                                                        |   |   | (248,047 | ) |   |   | (310,554 | ) |   |   | (558,601 | ) |
| Sale of clay samples                                                                    |   |   | 4,943 |   |   |   | 6,000 |   |   |   | 10,943 |   |
| Refund of insurance premium                                                             |   |   | 6,370 |   |   |   | 13,786 |   |   |   | 20,156 |   |
| Loss on revaluation of stock awards                                                     |   |   | (22,000 | ) |   |   | (150,500 | ) |   |   | (172,500 | ) |
| Net proceeds (expenses) from legal settlement                                           |   |   | (292,238 | ) |   |   | 118,913 |   |   |   | (173,325 | ) |
| Amortization of deferred financing costs                                                |   |   | (3,061 | ) |   |   | - 0 - |   |   |   | (3,061 | ) |
| Amortization of convertible debt discount                                               |   |   | (2,194 | ) |   |   | (363,147 | ) |   |   | (365,341 | ) |
| Other income (expense)                                                                  |   |   | (7,241 | ) |   |   | 8,855 |   |   |   | 1,614 |   |
| Stock award forfeiture                                                                  |   |   | 145,000 |   |   |   | - 0 - |   |   |   | 145,000 |   |
| Gain on settlement of debt                                                              |   |   | 333,502 |   |   |   | - 0 - |   |   |   | 333,502 |   |
| Total Other Expenses                                                                    |   |   | (84,009 | ) |   |   | (676,199 | ) |   |   | (760,208 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from exploration stage, before income taxes                                        |   |   | (4,891,525 | ) |   |   | (6,701,498 | ) |   |   | (11,593,023 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision (benefit) for income taxes                                                    |   |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss from Exploration Stage                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Before Discontinued Operations                                                          |   |   | (4,891,525 | ) |   |   | (6,701,498 | ) |   |   | (11,593,023 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) from discontinued operations                                          |   |   | 123,828 |   |   |   | (64,674 | ) |   |   | 59,154 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss from exploration stage after discontinued operations                           |   |   | (4,767,697 | ) |   |   | (6,766,172 | ) |   |   | (11,533,869 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:  Net income attributable to the noncontrolling interest                 |   |   | (18 | ) |   |   | (28 | ) |   |   | (46 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss Attributable to Applied Minerals, Inc.                                         |   | $ | (4,767,715 | ) |   | $ | (6,766,200 | ) |   | $ | (11,533,915 | ) |
|                                                                                    |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Company)                                                          |   |
| Consolidated Statements of Operations and Comprehensive Loss                            |   |
|                                                                                    |   |   |   |   |   |   |
|                                                                                    |   | For the year ended |   |
|                                                                                    |   | December 31, |   |
|                                                                                    |   | 2010 |   |   | 2009 |   |
|                                                                                    |   |   |   |   |   |   |
| Earnings Per Share Information (Basic and Diluted):                                     |   |   |   |   |   |   |
| Net loss per share before discontinued operations                                       |   |   |   |   |   |   |
| attributable to Applied Minerals, Inc. common                                           |   |   |   |   |   |   |
| shareholders                                                                            |   | $ | (0.07 | ) |   | $ | (0.11 | ) |
| Discontinued operations attributable to Applied                                         |   |   |   |   |   |   |   |   |
| Minerals, Inc. common shareholders                                                      |   |   | - 0 - |   |   |   | - 0 - |   |
| Net Loss Per Share Attributable to Applied Minerals, Inc.                               |   |   |   |   |   |   |   |   |
| common shareholders                                                                     |   | $ | (0.07 | ) |   | $ | (0.11 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding, basic and diluted                                  |   |   | 68,396,770 |   |   |   | 60,665,785 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Company)                                                          |   |
| Consolidated Statements of Operations and Comprehensive Loss                            |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   | For the Period |   |
|                                                                                    |   |   |   |   | January 1, 2009 |   |
|                                                                                    |   |   |   |   | (Beginning of |   |
|                                                                                    |   |   |   |   | Exploration Stage) |   |
|                                                                                    |   | For the year ended |   |   | Through |   |
|                                                                                    |   | December 31, |   |   | December 31, |   |
|                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                |   | $ | (4,767,715 | ) |   | $ | (6,766,200 | ) |   | $ | (11,533,915 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Gain:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in Market Value of Investments                                                   |   |   | 1,327 |   |   |   | (1,327 | ) |   |   | - 0 - |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Comprehensive Loss                                                                  |   | $ | (4,766,338 | ) |   | $ | (6,767,527 | ) |   | $ | (11,533,915 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Company)                                                          |   |
| Consolidated Statements Of Stockholders’ Equity (Deficit)                         |   |
| For the years ended December 31, 2010 and 2009                                          |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   | Common Stock |   |   | Accumulated |   |   | Accumulated |   |   | Other |   |   |   |   |   | Total |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   | Deficit |   |   | Deficit |   |   | Compre- |   |   | Non- |   |   | Stock- |   |
|                                                                                    |   |   |   |   |   |   |   | Additional |   |   | Prior to |   |   | During |   |   | hensive |   |   | Control- |   |   | holders’ |   |
|                                                                                    |   |   |   |   |   |   |   | Paid-In |   |   | Exploration |   |   | Exploration |   |   | Income |   |   | ling |   |   | 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 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 un-                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| realized 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 and other services                                                       |   |   | 81,911 |   |   |   | 82 |   |   |   | 64,997 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 30,000 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock for conversion                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of debt including                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accrued interest                                                                        |   |   | 2,457,500 |   |   |   | 2,458 |   |   |   | 2,341,464 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 2,343,922 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of stock                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options and warrants                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| issued to directors                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and consultants                                                                         |   |   | -- |   |   |   | -- |   |   |   | 334,669 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 334,669 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued to                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related parties relating                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to forbearance                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| agreement                                                                               |   |   | 427,714 |   |   |   | 428 |   |   |   | 320,358 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 320,786 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |   | $ | 29,860,040 |   |   | $ | (20,009,496 | ) |   | $ | (11,533,915 | ) |   | $ | - 0 - |   |   | $ | 52,321 |   |   | $ | (1,561,346 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

| APPLIED MINERALS, INC. AND SUBSIDIARY                                                   |   |
|-----------------------------------------------------------------------------------------|--------|
| (An Exploration Stage Company)                                                          |   |
| Consolidated Statements of Cash Flows                                                   |   |
|                                                                                    |   |   |   |   | For the Period |   |
|                                                                                    |   |   |   |   | January 1, 2009 |   |
|                                                                                    |   |   |   |   | (Beginning of |   |
|                                                                                    |   |   |   |   | Exploration |   |
|                                                                                    |   |   |   |   | Stage) |   |
|                                                                                    |   | For the year ended |   |   | Through |   |
|                                                                                    |   | December 31, |   |   | December 31, |   |
|                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |
| Cash flows from operating activities:                                                   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                |   | $ | (4,767,715 | ) |   | $ | (6,766,200 | ) |   | $ | (11,533,915 | ) |
| Adjustments to reconcile net loss to                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| net cash used in operations:                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                            |   |   | 162,859 |   |   |   | 123,733 |   |   |   | 286,592 |   |
| Amortization of deferred financing costs                                                |   |   | 3,061 |   |   |   | - 0 - |   |   |   | 3,061 |   |
| Amortization of discount – PIK Notes                                              |   |   | 2,194 |   |   |   | 363,147 |   |   |   | 367,535 |   |
| Issuance of PIK Notes in payment of interest                                            |   |   | 238,399 |   |   |   | 282,587 |   |   |   | 520,986 |   |
| Stock issued for director fees and consulting services                                  |   |   | 65,079 |   |   |   | - 0 - |   |   |   | 82,329 |   |
| Fair value of warrants and options issued to consultants and directors                  |   |   | 334,669 |   |   |   | 401,234 |   |   |   | 735,903 |   |
| Loss on revaluation of stock awards                                                     |   |   | 22,000 |   |   |   | 150,500 |   |   |   | 172,500 |   |
| Gain on disposition of equipment                                                        |   |   | (3,113 | ) |   |   | (410 | ) |   |   | (3,523 | ) |
| Loss on impairment of assets                                                            |   |   | 19,977 |   |   |   | 42,042 |   |   |   | 62,019 |   |
| Gain on forfeiture of stock award                                                       |   |   | (145,000 | ) |   |   | - 0 - |   |   |   | (145,000 | ) |
| Change in operating assets and liabilities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (Increase) Decrease in:                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                     |   |   | (61,275 | ) |   |   | 44 |   |   |   | (61,231 | ) |
| Mining supplies inventory                                                               |   |   | (3,503 | ) |   |   | - 0 - |   |   |   | (3,503 | ) |
| Deposits and prepaids                                                                   |   |   | (33,196 | ) |   |   | 136,764 |   |   |   | 103,568 |   |
| Increase (Decrease) in:                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                                   |   |   | (134,476 | ) |   |   | 305,656 |   |   |   | 171,181 |   |
| Net cash used by discontinued operations                                                |   |   | 118,011 |   |   |   | 486,680 |   |   |   | 604,691 |   |
| Net cash used in operating activities                                                   |   |   | (4,182,029 | ) |   |   | (4,454,779 | ) |   |   | (8,636,808 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases of land improvements                                                          |   |   | (70,729 | ) |   |   | (2,194 | ) |   |   | (72,923 | ) |
| Purchases of equipment and vehicles                                                     |   |   | (60,104 | ) |   |   | (122,580 | ) |   |   | (182,624 | ) |
| Proceeds from the sale of assets                                                        |   |   | 150,000 |   |   |   | - 0 - |   |   |   | 150,000 |   |
| Net cash provided by discontinued operations                                            |   |   | 2,500 |   |   |   | 432,170 |   |   |   | 434,670 |   |
| Net cash provided by used in investing activities                                       |   |   | 21,667 |   |   |   | 307,396 |   |   |   | 329,063 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments on notes payable                                                               |   |   | (145,418 | ) |   |   | (167,203 | ) |   |   | (312,621 | ) |
| Payments on leases payable                                                              |   |   | (131,746 | ) |   |   | (121,247 | ) |   |   | (252,993 | ) |
| Proceeds from insurance settlement                                                      |   |   | 115,000 |   |   |   | - 0 - |   |   |   | 115,000 |   |
| Proceeds from notes payable                                                             |   |   | - 0 - |   |   |   | 124,129 |   |   |   | 124,129 |   |
| Proceeds from PIK notes payable                                                         |   |   | 4,550,000 |   |   |   | 5,050,000 |   |   |   | 9,600,000 |   |
| Payments for the forfeiture of stock                                                    |   |   | (170,000 | ) |   |   | - 0 - |   |   |   | (170,000 | ) |
| Net cash used by discontinued operations                                                |   |   | - 0 - |   |   |   | (56,431 | ) |   |   | (56,431 | ) |
| Net cash provided by financing activities                                               |   |   | 4,217,836 |   |   |   | 4,829,248 |   |   |   | 9,047,084 |   |
| Net increase in cash                                                                    |   |   | 57,474 |   |   |   | 681,865 |   |   |   | 739,339 |   |
| Cash and cash equivalents at beginning of period                                        |   |   | 1,584,866 |   |   |   | 903,001 |   |   |   | 903,001 |   |
| Cash and cash equivalents at end of period                                              |   | $ | 1,642,340 |   |   | $ | 1,584,866 |   |   | $ | 1,642,340 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Paid For:                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                |   | $ | 10,893 |   |   | $ | 17,587 |   |   | $ | 28,480 |   |
| Income Taxes                                                                            |   | $ | 550 |   |   | $ | - 0 - |   |   | $ | 550 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Disclosure of Non-Cash Investing                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| and Financing Activities:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of debt and accrued interest to common stock                                 |   | $ | 2,457,500 |   |   | $ | 4,095,921 |   |   | $ | 6,553,421 |   |
| Equipment financed on lease                                                             |   | $ | 197,000 |   |   | $ | - 0 - |   |   | $ | 197,000 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

----

|                                  |   | Net Loss    |       |   | Shares        |   |       | Per-Share |   |
|---------------------------------------|--------|-------------|------------|--------|---------------|--------|------------|-----------|--------|
|                                  |   | (Numerator) |       |   | (Denominator) |   |       | Amount    |   |
|                                  |   |        |       |   |          |   |       |      |   |
| 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 | ) |

| ·   | Level 1 – quoted prices in active markets for identical assets and liabilities. |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 – unobservable inputs. |
|--------------------|--------------------------------------|

----

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

----

|                                      |   | December 31, |    |
|-------------------------------------------|--------|--------------|---------|
|                                      |   | 2010         |    |   | 2009 |   |
| Property and equipment                    |   | $            | 450,042 |   |   | $ | 878,003 |   |
| Total assets from discontinued operations |   | $            | 450,042 |   |   | $ | 878,003 |   |

----

|                                           |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|
|                                           |   | 2010         |   |   | 2009 |   |
| Accounts payable and accrued liabilities       |   | $            | 1,152  |   |   | $ | 7,650 |   |
| Leases payable                                 |   |         | - 0 -  |   |   |   | 90,756 |   |
| Total liabilities from discontinued operations |   | $            | 1,152  |   |   | $ | 98,406 |   |

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

----

|                                                                                                                                                                                        |   | December 31, |     |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|----------|--------|--------------|--------|
|                                                                                                                                                                                        |   | 2010         |     |   | 2009         |   |
|                                                                                                                                                                                        |   |         |     |   |         |   |
| Note payable to legal firm due in monthly installments including interest at 10%.  The note matures in March 2014.                                                                |   | $            | 497,699  |   |         | $      | - 0 - |   |
|                                                                                                                                                                                        |   |         |     |   |         |   |   |   |
| Note payable to two insurance companies due in monthly installments, including interest at 3% and 5.90%, respectively.  The notes mature in July 2011 and May 2010, respectively. |   |         | 69,805   |   |         |   | 72,762 |   |
|                                                                                                                                                                                        |   |         |     |   |         |   |   |   |
| Total Notes Payable                                                                                                                                                                         |   |         | 567,504  |   |         |   | 72,762 |   |
| Less:  Current Portion                                                                                                                                                            |   |         | (206,209 | )      |         |   | (72,762 | ) |
|                                                                                                                                                                                        |   |         |     |   |         |   |   |   |
| Total Long-Term Liabilities                                                                                                                                                                 |   | $            | 361,295  |   |         | $      | - 0 - |   |

| 2011                |   | $      | 206,209 |   |
|---------------------|--------|--------|---------|--------|
| 2012                |   |   | 150,832 |   |
| 2013                |   |   | 166,776 |   |
| 2014                |   |   | 43,687  |   |
| Total Note Payments |   | $      | 567,504 |   |

| 2011                                          |   | $      | 174,498  |   |
|-----------------------------------------------|--------|--------|----------|--------|
| 2012                                          |   |   | 11,933   |   |
| Total Minimum Lease Payments                  |   |   | 186,431  |   |
| Less:  Amount Representing Interest |   |   | (8,381   | )      |
| Present Value of Net Minimum Lease Payments   |   |   | 178,050  |   |
| Current Net Minimum Lease Payments            |   |   | (167,956 | )      |
| Long-Term Net Minimum Lease Payments          |   | $      | 10,094   |   |

|                                      |   | December 31, |    |
|-------------------------------------------|--------|--------------|---------|
| Classes of Property                       |   | 2010         |    |   | 2009 |   |
| Milling Equipment                         |   | $            | 162,052 |   |   | $ | 95,362 |   |
| Mining Equipment                          |   |         | 197,000 |   |   |   | - 0 - |   |
| Less:  Accumulated Depreciation |   |         | (73,409 | ) |   |   | (37,879 | ) |
| Total assets under capital lease          |   | $            | 285,643 |   |   | $ | 57,483 |   |

----

----

|                               |   | December 31, 2010 |    |   | December 31, 2009 |   |
|------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                               |   |              |    |   | Weighted          |   |   |   |   |   | Weighted |   |
|                               |   |              |    |   | Average           |   |   |   |   |   | Average |   |
|                               |   | Shares            |    |   | Exercise Price    |   |   | Shares |   |   | Exercise Price |   |
|                               |   |              |    |   |              |   |   |   |   |   |   |   |
| Outstanding at beginning of period |   |              | 260,000 |   |              | $      | 0.75 |   |   |   | - 0 - |   |   | $ | - 0 - |   |
| Issued                             |   |              | 320,187 |   |              |   | 0.80 |   |   |   | 260,000 |   |   |   | 0.75 |   |
| Exercised                          |   |              | - 0 -   |   |              |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Forfeited                          |   |              | - 0 -   |   |              |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Expired                            |   |              | - 0 -   |   |              |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Outstanding at end of period       |   |              | 580,187 |   |              | $      | 0.78 |   |   |   | 260,000 |   |   | $ | 0.75 |   |
| Exercisable at end of period       |   |              | 580,187 |   |              | $      | 0.78 |   |   |   | 235,000 |   |   | $ | 0.75 |   |

----

|     |   |   | Warrants Outstanding |   |             | Warrants Exercisable |             |
|----------|--------|--------|----------------------|--------|------------------|----------------------|------------------|
|     |   |   |                 |   | Weighted Average |                 |             |   |   |   |   |   |   |   |
| Exercise |   |   | Number               |   | Remaining        |                 | Weighted Average |   |   | Number |   |   | Weighted Average |   |
| Price    |   |   | Outstanding          |   | Contractual Life |                 | Exercise Price   |   |   | Exercisable |   |   | Exercise Price |   |
| $        | 0.80   |   |                 |   | 140,187          |                 | 4.75 years       |   | $ | 0.80 |   |   |   | 140,187 |   |   | $ | 0.80 |   |
| $        | 0.35   |   |                 |   | 100,000          |                 | 3.25 years       |   | $ | 0.35 |   |   |   | 100,000 |   |   | $ | 0.35 |   |
| $        | 1.00   |   |                 |   | 340,000          |                 | 3.75 years       |   | $ | 1.00 |   |   |   | 340,000 |   |   | $ | 1.00 |   |
|     |   |   |                 |   | 580,187          |                 |             |   |   |   |   |   |   | 580,187 |   |   |   |   |   |

|                    | 2010    | 2009              |
|-------------------------|---------|-------------------|
| Dividend Yield          | 0%      | 0%                |
| Expected Life           | 5 years | 1 – 5 years |
| Expected Volatility     | 120%    | 100%              |
| Risk-Free Interest Rate | 0.4%    | 1.68%             |

|                               |   | December 31, 2010 |      |   | December 31, 2009 |   |
|------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                               |   |              |      |   | Weighted          |   |   |   |   |   | Weighted |   |
|                               |   |              |      |   | Average           |   |   |   |   |   | Average |   |
|                               |   | Shares            |      |   | Exercise Price    |   |   | Shares |   |   | Exercise Price |   |
|                               |   |              |      |   |              |   |   |   |   |   |   |   |
| Outstanding at beginning of period |   |              | 7,533,277 |   |              | $      | 0.70 |   |   |   | 625,000 |   |   | $ | 0.70 |   |
| Granted                            |   |              | 60,000    |   |              |   | 1.00 |   |   |   | 6,908,277 |   |   |   | 0.70 |   |
| Exercised                          |   |              | - 0 -     |   |              |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Forfeited                          |   |              | - 0 -     |   |              |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Expired                            |   |              | - 0 -     |   |              |   | - 0 - |   |   |   | - 0 - |   |   |   | - 0 - |   |
| Outstanding at end of period       |   |              | 7,593,277 |   |              | $      | 0.70 |   |   |   | 7,533,277 |   |   | $ | 0.70 |   |
| Exercisable at end of period       |   |              | 5,353,851 |   |              | $      | 0.70 |   |   |   | 2,975,675 |   |   | $ | 0.70 |   |

|           |         |   | Options Outstanding |   |        | Options Exercisable |       |
|----------------|--------------|--------|---------------------|--------|-------------|---------------------|------------|
|           |         |   |                |   | Weighted    |                |       |   |   |   |   |   |   |   |
|           |         |   |                |   | Average     |                | Weighted   |   |   |   |   |   | Weighted |   |
|           |         |   |                |   | Remaining   |                | Average    |   |   |   |   |   | Average |   |
| Range of       |         |   | Number              |   | Contractual |                | Exercise   |   |   | Number |   |   | Exercise |   |
| Exercise Price |         |   | Outstanding         |   | Life        |                | Price      |   |   | Exercisable |   |   | Price |   |
| $              | 0.65 - $0.71 |   |                |   | 75,000      |                | 2.5 years  |   | $ | 0.69 |   |   |   | 75,000 |   |   | $ | 0.69 |   |
| $              | 0.70         |   |                |   | 7,358,277   |                | 2.5 years  |   | $ | 0.70 |   |   |   | 5,163,851 |   |   | $ | 0.70 |   |
| $              | 0.90         |   |                |   | 100,000     |                | 3.75 years |   | $ | 0.90 |   |   |   | 100,000 |   |   | $ | 0.90 |   |
| $              | 1.00         |   |                |   | 60,000      |                | 4.75 years |   | $ | 1.00 |   |   |   | 15,000 |   |   | $ | 1.00 |   |
|           |         |   |                |   | 7,593,277   |                |       |   |   |   |   |   |   | 5,353,851 |   |   |   |   |   |

----

|                          |   | December 31, 2010 |       |   | December 31, 2009 |   |
|-------------------------------|--------|-------------------|------------|--------|-------------------|--------|
| Expected federal tax benefit  |   | $                 | (1,668,700 | )      |              | $      | (2,368,170 | ) |
| State and local taxes         |   |              | (600,732   | )      |              |   | (852,541 | ) |
| Non-deductible expenses       |   |              | 334,669    |   |              |   | 1,014,879 |   |
| Change in valuation allowance |   |              | 1,934,762  |   |              |   | 3,220,711 |   |
| Income tax expense            |   | $                 | - 0 -      |   |              | $      | - 0 - |   |

|                             |   | December 31, 2010 |        |   | December 31, 2009 |   |
|----------------------------------|--------|-------------------|-------------|--------|-------------------|--------|
| Net Operating Loss Carryforwards |   | $                 | (11,138,782 | )      |              | $      | (9,204,020 | ) |
| Total gross deferred tax assets  |   |              | 11,138,782  |   |              |   | 9,204,020 |   |
| Valuation allowance              |   |              | (11,138,782 | )      |              |   | (9,204,020 | ) |
| Net deferred tax assets          |   | $                 | - 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           |
|-------------------|--------|----------|--------|----------------|
|              |   |     |   |           |
| /s/ JOHN F. LEVY  |   | Director |   | April 15, 2011 |
| John F. Levy      |   |     |   |           |
|              |   |     |   |           |
| /s/ DAVID TAFT    |   | Director |   | April 15, 2011 |
| David Taft        |   |     |   |           |
|              |   |     |   |           |
| /s/ ANDRE ZEITOUN |   | Director |   | April 15, 2011 |
| Andre Zeitoun     |   |     |   |           |
|              |   |     |   |           |
| /s/ EVAN STONE    |   | Director |   | April 15, 2011 |
| Evan Stone        |   |     |   |           |

----