NOTE 9 - OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status of the warrants outstanding and exercisable at September 30, 2016 is presented below:

		Warrants Outstanding and Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
$	1.15		461,340		4.58	$	1.15
$	0.25		3,283,283		4.75	$	0.25
			3,744,623		4.73	$	0.36

No warrants were issued during 2015. The intrinsic value of the outstanding warrants at September 30, 2016 was $0.

Outstanding Stock Options

On November 20, 2012, the shareholders of the Company approved the adoption of the Applied Minerals, Inc. 2012 Long-Term Incentive Plan (“LTIP”) and the Short-Term Incentive Plan (“STIP”) and the performance criteria used in setting performance goals for awards intended to be performance-based. Under the LTIP, 8,900,000 shares are authorized for issuance. The STIP does not refer to a particular number of shares under the LTIP, but would use the shares authorized in the LTIP for issuance under the STIP. On May 11, 2016, the Board of Directors approved the adoption of the 2016 Long-Term Incentive Plan (“2016 LTIP”). Under the 2016 LTIP 2,000,000 shares are authorized for issuance. The CEO, the CFO, and named executive officers, and directors, among others are eligible to participate in the LTIP, STIP and 2016 LTIP. Prior to the adoption of the LTIP, STIP and 2016 LTIP, stock options were granted under individual arrangements between the Company and the grantees, and approved by the Board of Directors.

The fair value of each of the Company's stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model that uses the assumptions noted in the table below. Expected volatility is based on an average of historical volatility of the Company's common stock. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon U.S. Treasury Bond on the date the award is granted with a maturity equal to the expected term of the award.

The significant assumptions relating to the valuation of the Company's options issued during the three months ended September 30, 2016 and 2015 were as follows on a weighted average basis:

	2016			2015
Dividend Yield		0	%		0	%
Expected Life (years)		5.0			5.35
Expected Volatility		65.5	%		65.5	%
Risk Free Interest Rate		1.20	%		1.84	%

A summary of the status and changes of the options granted under stock option plans and other agreements for the nine months ended September 30, 2016 is as follows:

			Weighted		Weighted
			Average		Average Remaining
	Shares		Exercise Price		Contractual Life *

Outstanding at beginning of period		18,048,827	$	1.00		5.12
Issued		3,521,488		0.25		4.62
Exercised		- 0 -		- 0 -		- 0 -
Forfeited		- 0 -		- 0 -		- 0 -
Outstanding at end of period		21,570,315	$	0.87		4.78
Exercisable at end of period		20,159,472	$	0.90		4.55

* Measured in years

During the nine months ended September 30, 2016, the Company granted 3,521,488 options to purchase the Company’s common stock with a weighted average exercise price of $0.25 and the following vesting schedule.

	Vesting Information
Shares	Frequency	Begin Date	End Date

250,000	Quarterly	01/01/2016	10/01/2016
158,206	Immediately	01/05/2016	01/05/2016
43,885	Immediately	01/06/2016	01/06/2016
32,415	Immediately	01/09/2016	01/09/2016
81,522	Annually	01/19/2017	01/19/2018
81,395	Annually	01/27/2017	01/27/2018
80,000	Annually	01/28/2017	01/28/2018
144,815	Annually	01/29/2017	01/29/2018
35,595	Annually	02/01/2017	02/01/2018
1,763,655	Immediately	05/11/2016	05/11/2016
350,000	Immediately	08/01/2016	08/01/2016
500,000	Monthly	08/15/2016	07/15/2016

The weighted-average grant-date fair value of options granted during the first three quarters of 2016 was $0.197.

Compensation expense of $145,832 and $93,750 has been recognized for the vested options for the three months ended September 30, 2016 and 2015, respectively, and $558,055 and $301,597 for the nine months ended September 30, 2016 and 2015, respectively. The aggregate intrinsic value of the outstanding options at September 30, 2016 was $0. At September 30, 2016, $206,638 of unamortized compensation expense for unvested options are expected to be recognized over the next 1.02 years on a weighted average basis.