----

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

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

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

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

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

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

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

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

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

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

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|     | PART I                                                                                                                        | Page(s)          |
|----------|-------------------------------------------------------------------------------------------------------------------------------|------------------|
| Item 1.  | Business                                                                                                                      | 3                |
|     |                                                                                                                          |             |
| Item 1A. | Risk Factors                                                                                                                  | 10               |
|     |                                                                                                                          |             |
| Item 1B. | Unresolved Staff Comments                                                                                                     | 11               |
|     |                                                                                                                          |             |
| Item 2.  | Properties                                                                                                                    | 11               |
|     |                                                                                                                          |             |
| Item 3.  | Legal Proceedings                                                                                                             | 12               |
|     |                                                                                                                          |             |
| Item 4.  | Mine Safety Disclosures                                                                                                       | 12               |
|     |                                                                                                                          |             |
|     | PART II                                                                                                                       |             |
| Item 5.  | Market Price for the Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities | 12               |
|     |                                                                                                                          |             |
| Item 6.  | Selected Financial Data                                                                                                       | 15               |
|     |                                                                                                                          |             |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operation                                    | 15               |
|     |                                                                                                                          |             |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                                    | 19               |
|     |                                                                                                                          |             |
| Item 8.  | Financial Statements and Supplementary Data                                                                                   | 19               |
|     |                                                                                                                          |             |
| Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                          | 19               |
|     |                                                                                                                          |             |
| Item 9A. | Controls and Procedures                                                                                                       | 19               |
|     |                                                                                                                          |             |
| Item 9B. | Other Information                                                                                                             | 21               |
|     | PART III                                                                                                                      |             |
| Item 10. | Directors and Executive Officers and Corporate Governance                                                                     | 21               |
|     |                                                                                                                          |             |
| Item 11. | Executive Compensation                                                                                                        | 24               |
|     |                                                                                                                          |             |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                                | 28               |
|     |                                                                                                                          |             |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                                                     | 29               |
|     |                                                                                                                          |             |
| Item 14. | Principal Accounting Fees and Services                                                                                        | 30               |
|     |                                                                                                                          |             |
| Item 15. | Exhibits                                                                                                                      | 31               |
|     | PART IV                                                                                                                       |             |
| Item 16. | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                                               | F-1 – F-31 |

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

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

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

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

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

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

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

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

----

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

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

| ·   | Dragonite–Pure White: Highest purity Dragonite™ product - meeting the strict specifications of the cosmetics industry. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Dragonite–IO: High grade iron oxide product line from the Dragon Mine. Products include Goethite and Hematite grades for use in pigments and technical applications such as smoke suppression and remediation of arsenic and metal contamination. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

----

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

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

----

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

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

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

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----

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

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

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

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

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

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

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

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

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

----

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

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

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

| Name and Position with The Company | Age | Director 1 /Officer Since                                             | Principal Occupation                                       |
|------------------------------------|-----|-----------------------------------------------------------------------|------------------------------------------------------------|
| John F. Levy                       | 56  | Non-executive Chairman since August 2009, Director since January 2008 | CEO of Board Advisory                                      |
| Evan D. Stone                      | 40  | Director since August 2009                                            | Partner, Lee & Stone                                   |
| David A. Taft                      | 55  | Director since October 2008                                           | President, IBS Capital LLC                                 |
| Andre M. Zeitoun                   | 39  | Chief Executive Officer, President and Director since January 2009    | President, Chief Executive Officer and Director of Company |
| Christopher T. Carney              | 41  | Officer since February 2009                                           | Interim Chief Financial Officer of Company                 |
| William Gleeson                    | 68  | Officer since September 2011                                          | General Counsel                                            |

| (1)    | The directors are elected to serve until the next annual meeting of shareholders. Officers are appointed annually by the Board of Directors and serve at the pleasure of the Board. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

----

| ·    | $1.0 million management fee.  Under the Management Agreement, Material Advisors was required to pay all travel, entertainment, office and marketing expenses and all other ordinary and necessary business expenses incurred by the Material Advisors and the Management Personnel in connection with the performance of the Management Agreement (“Expenses”).  The cash compensation paid in 2010 was also $1.0 million.  Material Advisors paid approximately $440,500, and $468,000 for Expenses in 2010 and 2011, respectively. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | Options vesting in 12 monthly installments and expiring on January 1, 2019 to purchase 2,194,425 shares of common stock (equal to 3.6% and 2.8% of the outstanding shares on a fully diluted basis on December 30, 2008 and February 8, 2010, respectively).  The exercise price of the options was $.70.  When the Management Agreement was entered into on December 29, 2008 the closing market price of the common stock was $0.14 per share.  On February 7, 2010, the closing market price of the common stock was $0.69 per share. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                   |   |   |   |   |   |   | Option  | All Other |    |
|------------------------|--------|--------|--------|--------|--------|--------|---------|-----------|---------|
| Name and               |   |   | Salary |   | Bonus  |   | Awards  | Comp.     | Total   |
| Principal Position     | Year   |   | ($)    |   | ($)    |   | ($)(1)  | ($)(3)    | ($)     |
|                   |   |   |   |   |   |   |    |      |    |
| Andre M. Zeitoun,,     | 2011   |   | -0-    |   | -0-    |   | -0-     | - 0 -     | -0-     |
| CEO, Director (2)      | 2010   |   | -0-    |   | -0-    |   | -0-     | - 0 -     | -0-     |
| Christopher T. Carney, | 2011   |   | -0-    |   | -0-    |   | -0-     | - 0 -     | -0-     |
| Interim CFO (2)        | 2010   |   | -0-    |   | -0-    |   | -0-     | - 0 -     | -0-     |
| William Gleeson,       | 2011   |   | 58,333 |   | -0-    |   | 532,400 | 31,660    | 622,393 |
| General Counsel (3)    | 2010   |   | -0-    |   | -0-    |   | -0-     | - 0 -     | -0-     |

| (1)    | This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2011 and 2010 fiscal years for the fair value of stock options granted to each of the individuals in 2011 and 2010 in accordance with SFAS 123R.  Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information, refer to Note 9 to the Notes to Consolidated Financial Statements found in Item 15, Part IV of this document. These amounts reflect the Company’s accounting expense for these awards, and do not correspond to the actual value that will be recognized by the named executive officers. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)    | Messrs. Zeitoun and Carney received no direct compensation from the Company.  Each is a partner of Material Advisors LLC, a consulting firm that provides managerial services to the Company pursuant to a Management Agreement (the “Agreement”) entered into on January 1, 2009 and extended through December 31, 2012.  Per the terms of the Agreement, Applied Minerals, Inc. pays Material Advisors, LLC a $1 million fee annually in exchange for management services provided by Material Advisors, LLC.  Applied Minerals, Inc. paid Material Advisors, LLC the $1 million management fee in both 2010 and 2011.  Upon entering the Agreement on January 1, 2009, Material Advisors, LLC was granted options to purchase 6,583,277 shares of common stock of Applied Minerals, Inc. at $0.70 per share with a ten-year term.  The options vest equally over 36 months starting on the effective date of the Management Agreement. A copy of the Management Agreement was filed as an 8-K on January 7, 2009.  The value of the options vested to Material Advisors in 2010 was $872,284.  Upon the extension of the Agreement on February 8, 2011, Material Advisors, LLC was granted options to purchase 2,904,653 shares of common stock of Applied Minerals, at $0.83 per share with a 10-year term.  The options vest equally over 12 months beginning on January 1, 2012. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)    | Mr. Gleeson’s employment began on September 15, 2011.  All other compensation includes the reimbursement of moving expenses ($28,100) and health insurance premiums ($3,560). |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name                                   | Grant date     | Estimated future payouts under non-equity incentive plan awards | Estimated future payouts under equity incentive plan awards | All other stock awards: Number of shares of stock or units  (#) | All other option awards: Number of securities underlying options  (#) | Exercise or base price of option awards  ($/Sh) | Grant date fair value of stock and option awards  ($) |
|----------------------------------------|----------------|-----------------------------------------------------------------|-------------------------------------------------------------|-----------------------------------------------------------------|-----------------------------------------------------------------------|-------------------------------------------------|-------------------------------------------------------|
| Threshold  ($)                         | Target  ($)    | Maximum  ($)                                                    | Threshold  (#)                                              | Target  (#)                                                     | Maximum  (#)                                                          |
| Andre M. Zeitoun, CEO (1)              |           |                                                            |                                                        |                                                            |                                                                  |                                            |                                                  |   |   - 0 - |   - 0 - |   - 0 - |
| Christopher T. Carney, Interim CFO (1) |           |                                                            |                                                        |                                                            |                                                                  |                                            |                                                  |   |    - 0 - |    - 0 - |    - 0 - |
| Willaim Gleeson, General Counsel       |   9-15-11 |                                                            |                                                        |                                                            |                                                                  |                                            |                                                  |   |   900,000 |   1.90 |  1,490,393 |

| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |
|----------------------------------------------|
| OPTION AWARDS                                |
| Name                                         | Grant Date | Number of Securities Underlying Unexercised Options:  Exercisable | Number of Securities Underlying Unexercised Options:  Unexercisable | Equity Incentive Plan Awards Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date |
|                                         |   |   |   |   |   |   |
| Andre Zeitoun (1)                            |   | - 0 - | - 0 - | - 0 - |   |   |
|                                         |   |   |   |   |   |   |
| Christopher T. Carney   (1)             |   |   - 0 - |   - 0 - |   - 0 - |   |   |
|                                         |   |   |   |   |   |   |
| William Gleeson                              | 8/18/2011 | 100,000 | 800,000 | - 0 - | $1.80 | 8/18/2021 |
|                                         |   |   |   |   |   |   |

| (1)    | Messrs. Zeitoun and Carney have not been granted options directly by the Company. Each is a partner of Material Advisors LLC, a consulting firm that provides managerial services to the Company pursuant to a Management Agreement entered into on January 1, 2009 and effective for a two-year period.  Per the terms of the Management Agreement, the Company granted Material Advisors, LLC 6,583,277 options to purchase common stock at $0.70 per share with a ten-year term.  The options vest ratably over 36 months beginning on the effective date of the Management Agreement.  A copy of the Management Agreement was filed as an 8-K on January 7, 2009. Upon the extension of the Agreement on February 8, 2011, Material Advisors, LLC was granted options to purchase 2,904,653 shares of common stock of Applied Minerals, at $0.83 per share with a 10-year term.  The options vest equally over 12 months beginning on January 1, 2012.  Mr. Zeitoun owns 3,949,966 vested options (expiring in December 2018) with a strike price of $0.70, 968,218 vested options (expiring in February 2021) with a strike price of $0.83, and 774,574 unvested options (expiring in February 2021) with a strike price of $0.83.  Mr. Carney owns 1,316,655 vested options (expiring in December 2018) with a strike price of $0.70, 193,643 vested options (expiring in February 2021) with a strike price of $0.83, and 387,287 unvested options (expiring in February 2021) with a strike price of $0.83. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Director Compensation for the Year Ended December 31, 2011 |
|--------|------------------------------------------------------------|

| Name               |   | Fees Earned or Paid in Cash |   | Common Stock Awards |   |   Options Awards |   | Total ($) |
|--------------------|--------|-----------------------------|--------|---------------------|--------|-----------------------|--------|-----------|
|               |   |                        |   |                |   |                  |   |      |
| John Levy (2)      |   | $ 50,000                    |   | $ - 0 -             |   | $47,575               |   | $ 97,575  |
|               |   |                        |   |                |   |                  |   |      |
| Evan Stone (3) (4) |   | $ 20,000                    |   | $ 20,000            |   | $ 95,379              |   | $ 135,379 |
|               |   |                        |   |                |   |                  |   |      |
| David Taft         |   | $ 40,000                    |   | $ - 0 -             |   | $ - 0 -               |   | $ 40,000  |
|               |   |                        |   |                |   |                  |   |      |
| Andre Zeitoun      |   | $ - 0 -                     |   | $ - 0 -             |   | $ - 0 -               |   | $ - 0 -   |

| (1)    | Each director, except for the Chairman, is paid $10,000 at the beginning of each calendar quarter in cash, stock or a combination of both at the discretion of the director. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)    | John Levy, as Chairman of the Board of Directors of Applied Minerals, Inc. is paid $12,500 at the beginning of each calendar quarter.  During February 2011 he was awarded 100,000 5-year options to purchase shares of common stock at $0.83 per share.  The options began vesting monthly, on an equal  basis, beginning February 2011.  The value of Mr. Levy’s 91,667 vested options was $47,575 at December 31, 2011 based on the Black-Scholes Option Valuation model. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)    | Mr. Stone was issued 200,481 5-year options to purchase shares of common stock at $0.83 per share for his role as Chairman of an Executive Committee formed by the Company in February 2011.   The options began vesting monthly, on an equal basis, in February 2011.  The value of Mr. Stones 183,774 vested options was $95,379 at December 31, 2011 based on the Black-Scholes Option Valuation Model. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)    | For the year ended December 31, 2011, aggregate stock grants for director compensation were as follows: Stone – 19,205 shares. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------|

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

| ·    | 120,000,000 authorized shares of Common Stock; |
|---------------------|------------------------------------------------|

| ·    | 89,120,360 issued shares of Common Stock |
|---------------------|------------------------------------------|

| ·    | 107,636,701 issued shares of Common Stock, assuming the exercise of outstanding stock options and warrants |
|---------------------|------------------------------------------------------------------------------------------------------------|

|                                  |   | Number of Shares of    |   | Percentage of Common |
|---------------------------------------|--------|------------------------|--------|----------------------|
|                                  |   | Common Stock           |   | Stock Beneficially   |
| Name and Address (1)                  |   | Beneficially Owned (2) |   | Owned                |
|                                  |   |                   |   |                 |
| Andre Zeitoun (3) (4) (7)             |   | 5,903,479              |   | 6.3%                 |
| John Levy (4) (5)                     |   | 397,624                |   | *                    |
| David Taft (4) (8) (9)                |   | 22,339,053             |   | 25.1%                |
| Evan Stone (4) (6)                    |   | 285,561                |   | *                    |
| Christopher Carney (3) (7)            |   | 2,414,711              |   | 2.7%                 |
| William Gleeson (2) (3)               |   | 225,000                |   | *                    |
| All Officers and Directors as a Group |   | 31,565,428             |   | 32.9%                |
| IBS Capital, LLC                      |   | 22,339,053             |   | 25.1%                |
| Samlyn Capital, LLC (10) (11)         |   | 15,000,000             |   | 15.9%                |
| Material Advisors, LLC                |   | 7,793,549              |   | 8.3%                 |
|                                  |   |                   |   |                 |
| * Less than 1%                        |   |                   |   |                 |

| (1)    | Unless otherwise indicated, the address of the persons named in this column is c/o Applied Minerals, Inc., 110 Greene Street, Suite 1101, New York, NY 10012. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)    | Included in this calculation are shares deemed beneficially owned by virtue of the individual’s right to acquire them within 60 days of the date of this report that would be required to be reported pursuant to Rule 13d-3 of the Securities Exchange Act of 1934.  Except as noted below, all shares are owned directly and the person has sole voting power. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)    | Executive Officer. |
|------------------|--------------------|

| (4)    | Director. |
|------------------|-----------|

| (5)    | Mr. Levy’s holdings include options to purchase 301,667 shares of common stock between $.070 and $1.00 per share.  The term of Mr. Levy’s options is 5 years. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)    | Mr. Stone’s holdings include options to purchase 200,481 shares of common stock at $0.83 per share.  The term of the options is 5 years. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)    | Number of shares includes 4,676,129 shares issuable to Andre Zeitoun and 1,558,711 shares issuable to Christopher Carney on the exercise of options that have vested or will vest within 60 days of April 26, 2012.  Shares issuable through the exercise of these options are attributed to the respective ownership interests in Material Advisors, LLC of Mr. Zeitoun and Mr. Carney. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8)    | Mr. Taft is the president of IBS Capital LLC.  He has beneficial ownership of shares owned by funds of which IBS Capital LLC is the general partner or investment manager, having sole voting and investment power. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9)    | IBS Capital, LLC, One International Place, Boston, Massachusetts 02110, is the beneficial owner of shares held by funds it manages by virtue of the right to vote and dispose of the securities.  One fund, The IBS Turnaround Fund (QP) (A Limited Partnership), owned 12,724,747 shares (14.2% of shares outstanding) at April 26, 2012.  Another fund, The IBS Turnaround Fund (A Limited Partnership), owned 5,692,712 shares (6.4% of outstanding shares) at April 26, 2012.  Another fund, The IBS Opportunity Fund, Ltd, owned 3,921,594 shares (4.4% of outstanding shares) at April 26, 2012. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (10)    | Samlyn Capital, LLC, 500 Park Avenue, 2nd Floor, New York, N.Y.  10022, is the beneficial owner of shares held by funds it manages by virtue of the right to vote and dispose of the securities. One fund, Samlyn Onshore Fund, L.P., owned, at April 26, 2012, 3,850,000 shares and a warrant to purchase 1,925,000 shares of common stock for $2.00 per share.  Another fund, Samlyn Offshore Master Fund, Ltd., owned, at April 26, 2012, 6,150,000 shares of common stock and a warrant to purchase 3,075,000 shares of common stock for $2.00 per share.  The ownership of Samlyn Onshore Fund, L.P. is 6.1% adjusted for the dilutive effect of the options issued to Samlyn Onshore Fund, L.P. and Samlyn Offshore Master Fund, Ltd. The ownership of Samlyn Offshore Master Fund, Ltd. is 9.8% adjusted for the dilutive effect of the options issued to Samlyn Onshore Fund, L.P. and Samlyn Offshore Master Fund, Ltd. |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11)    | Robert Pohly is the president of Samlyn Capital, LLC. He has beneficial ownership of shares owned by funds of which IBS Capital LLC is the general partner or investment manager, having sole voting and investment power. |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Date of Purchase |   | The IBS Turnaround Fund (QP) (A Limited Partnership) |   | The IBS Turnaround Fund (A Limited Partnership) |   | The IBS Opportunity Fund, Ltd. |   | Price Per Share |
|------------------|--------|------------------------------------------------------|--------|-------------------------------------------------|--------|--------------------------------|--------|-----------------|
|             |   |                                                 |   |                                            |   |                           |   |            |
| March 28, 2011   |   | 1,385,000                                            |   | 459,000                                         |   | 656,000                        |   | $ 0.80          |
| June 27, 2011    |   | 706,000                                              |   | 205,000                                         |   | 338,750                        |   | $ 1.60          |

----

|               |   | PMB Helin Donovan, LLC |
|--------------------|--------|------------------------|
|               |   | December 31, 2011      |   | December 31, 2010 |
|               |   |                   |   |   |
| Audit Fees         |   | $ 90,000               |   | $ 126,000 |
| Audit-Related Fees |   | - 0 -                  |   | - 0 - |
| Tax Fees (1)       |   | 8,000                  |   | 40,000 |
| All Other Fees (2) |   | - 0 -                  |   | - 0 - |
|               |   |                   |   |   |
| Total              |   | $ 98,000               |   | $ 166,000 |

| (1)    | Tax fees represent the aggregate fees paid for professional services, principally including fees for tax compliance and tax advice. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| (2)    | All other fees represent the aggregate fees paid for products and services that are not included in the “Audit fees,” “Audi-related fees,” and “Tax fees” sections.  The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the principal registered public accounting firm’s independence. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

----

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

----

|                                                                                                    | Page                  |
|---------------------------------------------------------------------------------------------------------|-----------------------|
| Report of Independent Registered Public Accounting Firm                                                 | F-1                   |
|                                                                                                    |                  |
| Financial Statements:                                                                                   |                  |
|                                                                                                    |                  |
| Balance Sheets at December 31, 2011 and 2010                                                            | F-3 – F-4       |
|                                                                                                    |                  |
|  Statements of Operations and Comprehensive Loss for Years Ended December 31, 2011, 2010, and 2009 |  F-5 – F-7 |
|                                                                                                    |                  |
| Statements of Shareholders’ Equity for the Years Ended December 31, 2011, 2010, and 2009          | F8                    |
|                                                                                                    |                  |
| Statements of Cash Flows for Years Ended December 31, 2011, 2010, and 2009                              | F-9 – F-10      |
|                                                                                                    |                  |
|  Notes to Financial Statements                                                                     | F-11 – F-23     |

----

----

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

----

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

----

| APPLIED MINERALS, INC.                                                     |
|----------------------------------------------------------------------------|
| (An Exploration Stage Mining Company)                                      |
| STATEMENTS OF OPERATIONS                                                   |
|                                                                       |   |   |   |   |   |   | For the Period |
|                                                                       |   |   |   |   |   |   | January 1, 2009 |
|                                                                       |   |   |   |   |   |   | (Beginning of |
|                                                                       |   |   | Exploration |
|                                                                       | For the year ended |   | Stage) through |
|                                                                       | December 31, |   | December 31, |
|                                                                       | 2011 |   | 2010 |   | 2009 |   | 2011 |
|                                                                       |   |   |   |   |   |   |   |
| REVENUES                                                                   | $ 92,952 |   | $ - 0 - |   | $ - 0 - |   | $92,952 |
| COST OF SALES                                                              | 80,578 |   | - 0 - |   | - 0 - |   | 80,578 |
| Gross Profit                                                               | 12,374 |   | - 0 - |   | - 0 - |   | 12,374 |
|                                                                       |   |   |   |   |   |   |   |
| OPERATING (INCOME)                                                         |   |   |   |   |   |   |   |
| EXPENSES:                                                                  |   |   |   |   |   |   |   |
| Exploration costs                                                          | 2,919,306 |   | 2,307,202 |   | 1,299,753 |   | 6,526,261 |
| General and administrative                                                 | 4,261,175 |   | 2,490,347 |   | 4,683,914 |   | 11,435,436 |
| (Gain) loss from disposition                                               |   |   |   |   |   |   |   |
| of land and equipment                                                      | (1,000) |   | (3,113) |   | (410) |   | (4,523) |
| Loss on impairment of equipment                                            | -0- |   | 13,080 |   | 42,042 |   | 55,122 |
| Total Operating Expenses                                                   | 7,179,481 |   | 4,807,516 |   | 6,025,299 |   | 18,012,296 |
|                                                                       |   |   |   |   |   |   |   |
| Net Operating Loss                                                         | (7,167,107) |   | (4,807,516) |   | (6,025,299) |   | (17,999,922) |
|                                                                       |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                    |   |   |   |   |   |   |   |
| Interest income                                                            | 1,176 |   | 957 |   | 448 |   | 2,581 |
| Interest expense                                                           | (387,684) |   |   (248,047) |   |   (310,554) |   | (946,285) |
| Sale of clay samples                                                       | -0- |   | 4,943 |   | 6,000 |   | 10,943 |
| Refund of insurance premium                                                | -0- |   | 6,370 |   | 13,786 |   | 20,156 |
| Gain on stock award forfeiture                                             | -0- |   | 145,000 |   | -0- |   | 145,000 |
| Gain(loss) on revaluation of warrants                                      | 225,000 |   | -0- |   | -0- |   | 225,000 |
| Gain (loss) on revaluation                                                 |   |   |   |   |   |   |   |
| of stock awards                                                            | (47,000) |   | (22,000) |   | (150,500) |   | (219,500) |
| Net proceeds (expenses)                                                    |   |   |   |   |   |   |   |
| from legal settlement                                                      | -0- |   | (292,238) |   | 118,913 |   | (173,325) |
| Amortization of deferred                                                   |   |   |   |   |   |   |   |
| financing costs                                                            | (146,939) |   | (3,061) |   | -0- |   | (150,000) |
| Amortization of convertible                                                |   |   |   |   |   |   |   |
| debt discount                                                              | -0- |   | (2,194) |   | (363,147) |   | (365,341) |
| Gain on settlement of debt                                                 | 101,380 |   | 333,502 |   | -0- |   | 434,882 |
| Other income (expense)                                                     | (3,370) |   | (7,241) |   | 8,855 |   | (1,802) |
| Total Other Income (Expense)                                               | (257,437) |   | (84,009) |   | (676,199) |   | (1,017,691) |
|                                                                       |   |   |   |   |   |   |   |
| Loss from exploration stage,                                               |   |   |   |   |   |   |   |
| before income taxes                                                        | (7,424,544) |   | (4,891,525) |   | (6,701,498) |   | (19,017,613) |
| Provision  (benefit) for income taxes                                 | -0- |   | - 0 - |   | - 0 - |   | -0- |
|                                                                       |   |   |   |   |   |   |   |
| Net Loss from Exploration Stage                                            |   |   |   |   |   |   |   |
| Before Discontinued Operations                                             | (7,424,544) |   | (4,891,525) |   | (6,701,498) |   | (19,017,613) |
|                                                                       |   |   |   |   |   |   |   |
| Net income (loss) from                                                     |   |   |   |   |   |   |   |
| discontinued operations                                                    | (5,772) |   | 123,828 |   | (64,674) |   | 53,382 |
|                                                                       |   |   |   |   |   |   |   |
| Net loss from exploration stage                                            |   |   |   |   |   |   |   |
| after discontinued operations                                              | (7,430,316) |   | (4,767,697) |   | (6,766,172) |   | (18,964,230) |
|                                                                       |   |   |   |   |   |   |   |
| Net income attributable to non-                                            |   |   |   |   |   |   |   |
|   controlling interest                                           | (52,320) |   | -0- |   | -0- |   | (52,320) |
|                                                                       |   |   |   |   |   |   |   |
| Net Loss Attributable to                                                   |   |   |   |   |   |   |   |
| Applied Minerals, Inc.                                                     | $ (7,482,636) |   | $ (4,767,697) |   | $ (6,766,172) |   | $ (19,016,551) |
|                                                                       |
| The accompanying notes are an integral part of these financial statements. |

----

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

----

| APPLIED MINERALS, INC.                          |
|-------------------------------------------------|
| (An Exploration Stage Mining Company)           |
| STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
|                                            |
|                                            |
|                                            |   |   |   |   |   |   |   | For the Period |
|                                            |   |   |   |   |   |   |   | January 1, 2009 |
|                                            |   |   |   |   |   |   |   | (Beginning of |
|                                            |   |   |   |   |   | Exploration |
|                                            |   | For the year ended |   | Stage) through |
|                                            |   | December 31, |   | December 31, |
|                                            |   | 2011 |   | 2010 |   | 2009 |   | 2011 |
|                                            |   |   |   |   |   |   |   |   |
|                                            | Net Loss | $ (7,482,636) |   | $ (4,767,715) |   | $ (6,766,200) |   | $(19,016,551) |
|                                            |   |   |   |   |   |   |   |   |
|                                            | Change in Market Value of Investments | -0- |   | 1,327 |   | (1,327) |   | -0- |
|                                            |   |   |   |   |   |   |   |   |
|                                            |   |   |   |   |   |   |   |   |
|                                            | Net Comprehensive Loss | $ (7,534,956) |   | $ (4,766,388) |   | $ (6,767,527) |   | $ (19,016,551) |
|                                            |   |   |   |   |   |   |   |   |
|                                            |   |   |   |   |   |   |   |   |
|                                            | The accompanying notes are an integral part of these financial statements. |

----

| APPLIED MINERALS, INC.                                                                  |
|-----------------------------------------------------------------------------------------|
| (An Exploration Stage Mining Company)                                                   |
| Statements of Stockholders’ Equity (Deficit)                                      |
| For the years ended December 31, 2011, 2010, and 2009                                   |
|                                                                                    |
|                                                                                    |   |   |   |   |   |   | Accumulated |   | Accumulated |   | Other |   |   |   | Total |
|                                                                                    | Common Stock |   | 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 unrealized gain                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| on available for sale securities                                                        | -- |   | -- |   | -- |   | -- |   | -- |   | 139 |   | -- |   | 139 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in non-controlling interest                                                      | -- |   | -- |   | -- |   | -- |   | -- |   | -- |   | (77) |   | (77) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                |   |   |   |   |   |   |   |   | (6,766,172) |   |   |   |   |   | (6,766,172) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                                              | 69,781,351 |   | 69,781 |   | 26,965,508 |   | (20,009,496) |   | (6,766,200) |   | (1,327) |   | 52,338 |   | 310,604 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for directors fees                                                        | 81,911 |   | 82 |   | 64,997 |   | -- |   | -- |   | -- |   | -- |   | 65,079 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| conversion of debt including                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accrued interest                                                                        | 2,457,500 |   | 2,458 |   | 2,341,464 |   | -- |   | -- |   | -- |   | -- |   | 2,343,922 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of stock options and                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| warrants issued to directors                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and consultants                                                                         | -- |   | -- |   | 334,669 |   | -- |   | -- |   | -- |   | -- |   | 334,669 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares canceled from forfeiture                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| agreed upon in legal settlement                                                         | (3,044,083) |   | (3,045) |   | (166,955) |   | -- |   | -- |   | -- |   | -- |   | (170,000) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in non-controlling interest                                                      | -- |   | -- |   | -- |   | -- |   | -- |   | -- |   | (18) |   | (18) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                | -- |   | -- |   | -- |   | -- |   | (4,767,715) |   | 1,327 |   | -- |   | (4,766,388) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                                              | 69,704,393 |   | 69,704 |   | 29,860,041 |   | (20,009,496) |   | (11,533,915) |   | -- |   | 52,320 |   | (1,561,346) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued to related parties                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related to forbearance agreement                                                        | 427,714 |   | 428 |   | 320,358 |   | -- |   | -- |   | -- |   | -- |   | 320,786 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for directors fees                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and other services                                                                      | 97,612 |   | 98 |   | 118,301 |   | -- |   | -- |   | -- |   | -- |   | 118,399 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| conversion of debt including                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accrued interest                                                                        | 5,019,895 |   | 5,020 |   | 5,014,875 |   | -- |   | -- |   | -- |   | -- |   | 5,019,895 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of stock options and                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| warrants issued to directors                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and consultants                                                                         | -- |   | -- |   | 2,181,394 |   | -- |   | -- |   | -- |   | -- |   | 2,181,394 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for cashless option                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and warrant exercise                                                                    | 47,505 |   | 48 |   | (48) |   | -- |   | -- |   | -- |   | -- |   | -- |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares issued for cash                                                                  | 14,250,000 |   | 14,250 |   | 10,590,787 |   | -- |   | -- |   | -- |   | -- |   | 10,605,037 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impairment of consolidation                                                             | -- |   | -- |   | -- |   | -- |   |   |   | -- |   | (52,320) |   | (52,320) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                | -- |   | -- |   | -- |   | -- |   | (7,482,636) |   | -- |   | -- |   | (7,482,636) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2011                                                              | 89,119,405 |   | $ 89,120 |   | $ 47,765,350 |   | $ (20,009,496) |   | $ (19,016,551) |   | $ - 0 - |   | $ -0- |   | $ 8,828,423 |
| The accompanying notes are an integral part of these consolidated financial statements. |

----

| APPLIED MINERALS, INC.                                                     |
|----------------------------------------------------------------------------|
| (An Exploration Stage Mining Company)                                      |
| STATEMENTS OF CASH FLOWS                                                   |
|                                                                       |   |   |
|                                                                       |   |   |   |   |   |   |   | For the Period |
|                                                                       |   |   |   |   |   |   |   | January 1, 2009 |
|                                                                       |   |   |   |   |   |   |   | (Beginning of |
|                                                                       |   | For the year ended |   | Exploration Stage) |
|                                                                       |   | December 31, |   | through |
|                                                                       |   | 2011 |   | 2010 |   | 2009 |   | December 31, 2011 |
|                                                                       |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                      |   |   |   |   |   |   |   |   |
| Net loss                                                                   |   | $ (7,482,636) |   | $ (4,767,697) |   | $ (6,766,172) |   | $ (19,016,551) |
| Adjustments to reconcile net loss to                                       |   |   |   |   |   |   |   |   |
| net cash used in operations:                                               |   |   |   |   |   |   |   |   |
| Depreciation                                                               |   | 248,605 |   | 162,859 |   | 123,733 |   | 535,197 |
| Amortization of deferred financing costs                                   |   | 146,939 |   | 3,061 |   | -0- |   | 150,000 |
| Amortization of discount – PIK Notes                                 |   | -0- |   | 2,194 |   | 365,340 |   | 367,534 |
| Issuance of PIK Notes in payment of interest                               |   | 342,884 |   | 238,399 |   | 282,587 |   | 863,870 |
| Stock issued for director and consulting services                          |   | 118,436 |   | 65,079 |   | 17,250 |   | 200,765 |
| Fair value of warrants and options                                         |   |   |   |   |   |   |   |   |
| issued to consultants and directors                                        |   | 2,181,394 |   | 334,669 |   | 401,234 |   | 2,917,297 |
| Gain on revaluation of stock warrants                                      |   | (225,000) |   | -0- |   | -0- |   | (225,000) |
| Loss on revaluation of stock awards                                        |   | 47,000 |   | 22,000 |   | 150,500 |   | 219,500 |
| Gain on stock award forfeiture                                             |   | -0- |   | (145,000) |   | -0- |   | (145,000) |
| (Gain) Loss on disposition of assets                                       |   | (1,000) |   | (3,113) |   | (410) |   | (4,523) |
| Gain on settlement of debts                                                |   | (101,380) |   | -0- |   | -0- |   | (101,380) |
| Other non-cash expense (income)                                            |   | (28,587) |   | -0- |   | -0- |   | (28,587) |
| Provision for doubtful accounts                                            |   | 11,938 |   | -0- |   | -0- |   | 11,938 |
| Loss on impairment of assets                                               |   | 4,862 |   | 19,977 |   | 42,042 |   | 66,881 |
| Change in operating assets and liabilities:                                |   |   |   |   |   |   |   |   |
| (Increase) Decrease in:                                                    |   |   |   |   |   |   |   |   |
| Accounts receivable                                                        |   | 28,873 |   | (61,275) |   | 44 |   | (32,358) |
| Mining supplies inventory                                                  |   | 3,503 |   | (3,503) |   | -0- |   | -0- |
| Deposits and prepaid expenses                                              |   | (12,801) |   | (33,196) |   | 136,764 |   |  90,767) |
| Increase (Decrease) in:                                                    |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                      |   | 18,387 |   | (134,476) |   | 305,656 |   | 189,567 |
| Net cash used by discontinued operations                                   |   | (1,152) |   | 118,011 |   | 486,680 |   | 603,585 |
| Net cash used by operating activities                                      |   | (4,699,735) |   | (4,182,011) |   | (4,454,752) |   | (13,336,498) |
|                                                                       |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                      |   |   |   |   |   |   |   |   |
| Purchases of land improvements                                             |   | -0- |   | (70,729) |   | (2,194) |   | (72,923) |
| Purchases of equipment and vehicles                                        |   | (271,387) |   | (60,104) |   | (122,580) |   | (454,071) |
| Proceeds from sale of assets                                               |   | 1,000 |   | 150,000 |   | -0- |   | 151,000 |
| Net cash provided by discontinued operations                               |   | -0- |   | 2,500 |   | 432,170 |   | 434,670 |
| Net cash provided by investing activities                                  |   | (270,387) |   | 21,667 |   | 307,396 |   | 58,676 |
|                                                                       |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                      |   |   |   |   |   |   |   |   |
| Payments on notes payable                                                  |   | (518,726) |   | (145,418) |   | (167,203) |   | (831,347) |
| Payments on leases payable                                                 |   | (167,956) |   | (131,764) |   | (121,274) |   | (420,994) |
| Proceeds from insurance settlement                                         |   | -0- |   | 115,000 |   | -0- |   | 115,000 |
| Proceeds from notes payable                                                |   | -0- |   | - 0 - |   | 124,129 |   | 124,129 |
| Proceeds from PIK notes payable                                            |   | -0- |   | 4,550,000 |   | 5,050,000 |   | 9,600,000 |
| Net proceeds from sale of common stock                                     |   |   |   |   |   |   |   |   |
|  with attached warrant                                                |   | 14,185,000 |   | -0- |   | -0- |   | 14,185,000 |
| Payments for forfeiture of stock                                           |   | -0- |   | (170,000) |   | -0- |   | (170,000) |
| Net cash used by discontinued operations                                   |   | -0- |   | -0- |   | (56,431) |   | (56,431) |
| Net cash provided by financing activities                                  |   | 13,498,318 |   | 4,217,818 |   | 4,829,221 |   | 22,545,357 |
|                                                                       |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                            |   | 8,528,196 |   | 57,474 |   | 681,865 |   | 9,267,535 |
| Cash and cash equivalents at beginning of period                           |   | 1,642,340 |   | 1,584,866 |   | 903,001 |   | 903,001 |
| Cash and cash equivalents at end of period                                 |   | $ 10,170,536 |   | $ 1,642,340 |   | $ 1,584,866 |   | $ 10,170,536 |
|                                                                       |
| The accompanying notes are an integral part of these financial statements. |

----

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

----

----

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

----

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

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

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

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

----

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

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

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

----

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

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

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

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

|                              | Fair value measurement using inputs |   | Carrying amount at December 31, |
|-----------------------------------|-------------------------------------|--------|---------------------------------|
|                              | Level 1                             |   | Level 2                         |   | Level 3 |   | 2011 |   | 2010 |
|                              |                                |   |                            |   |   |   |   |   |   |
| Financial instruments:            |                                |   |                            |   |   |   |   |   |   |
| Liabilities                       |                                |   |                            |   |   |   |   |   |   |
| Stock awards payable              | $ - 0 -                             |   | $ 127,000                       |   | $ - 0 - |   | $ 127,000 |   | $ 80,000 |
| Derivative instruments - Warrants | - 0 -                               |   | 3,355,000                       |   | - 0 - |   | 3,355,000 |   | - 0 - |
| Total                             | $ - 0 -                             |   | $ 3,482,000                     |   | $ - 0 - |   | $ 3,482,000 |   | $ 80,000 |

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

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

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

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

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

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

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

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

----

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

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

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

----

----

----

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|   |   | 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 26, 2012 |
| John F. Levy      |     |           |
|              |     |           |
| /s/ DAVID TAFT    | Director | April 26, 2012 |
| David Taft        |     |           |
|              |     |           |
| /s/ ANDRE ZEITOUN | Director | April 26, 2012 |
| Andre Zeitoun     |     |           |
|              |     |           |
| /s/ EVAN STONE    | Director | April 26, 2012 |
| Evan Stone        |     |           |

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