---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 20-F

[   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended July 31, 2016

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-15490

QUARTZ MOUNTAIN RESOURCES LTD.(Exact name of Registrant as specified in its charter)

BRITISH COLUMBIA, CANADA(Jurisdiction of
incorporation or organization)

15th Floor, 1040 West Georgia StreetVancouver,
British Columbia, Canada, V6E 4H1(Address of principal executive
offices)

Trevor Thomas, Corporate SecretaryFacsimile No.:
604-681-274115th Floor, 1040 West Georgia StreetVancouver, British Columbia, Canada, V6E 4H1(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact
Person)

Securities registered or to be registered pursuant to Section
12(b) of the Act.

|Title of Each Class: | Name of each exchange on which registered
|-------------------- | -----------------------------------------
|Not applicable       | Not applicable                           

Securities registered or to be registered pursuant to Section
12(g) of the Act

Common shares, no par value

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report:

29,299,513 common shares as of July 31,
2016

Indicate by check mark if the Registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
[   ]     No [X]

1

---

If this report is an annual or transition report, indicate by
check mark if the Registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.

Yes [  
]     No [X]

Indicate by check mark whether Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]     No
[   ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).

Yes [   ]     No [   ]

Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer or non-accelerated filer. See definition
of "accelerated filer" and "large accelerated filer" in Rule 126-2 of the
Exchange Act.

Large Accelerated Filer [   ]
    Accelerated Filer [   ]
    Non-Accelerated Filer [X]


Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

U.S. GAAP [   ]
    International Financial Reporting Standards
      as issued     [X]
    Other [   ]by the International Accounting Standards
      Board


If "Other" has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant
has elected to follow.

Item 17 [   ]     Item
18 [   ]

If this is an annual report, indicate by check mark whether the
Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes [   ]     No [X]

2

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|GENERAL       |                                          | 5                                                            
|------------- | ---------------------------------------- | -------------------------------------------------------------
|              | CURRENCY
      AND MEASUREMENT           | 7                                                            
|              | NOTE
      ON FORWARD LOOKING STATEMENTS | 7                                                            
|ITEM
      1  |                                          | IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS  
|ITEM
      2  |                                          | OFFER
      STATISTICS AND EXPECTED TIMETABLE                
|ITEM
      3  |                                          | KEY
      INFORMATION                                        
|              | A.                                       | SELECTED
      FINANCIAL DATA                                
|              | B.                                       | CAPITALIZATION
      AND INDEBTEDNESS                        
|              | C.                                       | REASONS
      FOR THE OFFER AND USE OF PROCEEDS              
|              | D.                                       | RISK
      FACTORS                                           
|ITEM
      4  |                                          | INFORMATION
      ON THE COMPANY                             
|              | A.                                       | HISTORY
      AND DEVELOPMENT OF THE COMPANY                 
|              | B.                                       | BUSINESS
      OVERVIEW                                      
|              | C.                                       | MINERAL
      PROPERTIES AND EXPLORATION ACTIVITIES AND PLANS
|              | D.                                       | ORGANIZATIONAL
      STRUCTURE                               
|              | E.                                       | PROPERTY,
      PLANT AND EQUIPMENT                          
|              | F.                                       | CURRENCY                                                     
|ITEM
      4A |                                          | UNRESOLVED
      STAFF COMMENTS                              
|ITEM
      5  |                                          | OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS           
|              | OVERVIEW                                 | 18                                                           
|              | A.                                       | OPERATING
      RESULTS                                      
|              | B.                                       | LIQUIDITY
      AND CAPITAL RESOURCES                        
|              | C.                                       | RESEARCH
      EXPENDITURES                                  
|              | D.                                       | TREND
      INFORMATION                                      
|              | E.                                       | OFF
       BALANCE SHEET ARRANGEMENTS                       
|              | F.                                       | TABULAR
      DISCLOSURE OF CONTRACTUAL OBLIGATIONS          
|              | G.                                       | SAFE
      HARBOR                                            
|ITEM
      6  |                                          | DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES             
|              | A.                                       | DIRECTORS
      AND SENIOR MANAGEMENT                        
|              | B.                                       | COMPENSATION                                                 
|              | C.                                       | BOARD
      PRACTICES                                        
|              | D.                                       | EMPLOYEES                                                    
|              | E.                                       | SHARE
      OWNERSHIP                                        
|ITEM
      7  |                                          | MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS      
|              | A.                                       | MAJOR
      SHAREHOLDERS                                     
|              | B.                                       | RELATED
      PARTY TRANSACTIONS                             
|              | C.                                       | INTERESTS
      OF EXPERTS AND COUNSEL                       
|ITEM
      8  |                                          | FINANCIAL
      INFORMATION                                  
|              | A.                                       | CONSOLIDATED
      STATEMENTS AND OTHER FINANCIAL INFORMATION
|              | B.                                       | SIGNIFICANT
      CHANGES                                    
|ITEM
      9  |                                          | THE
      OFFER AND LISTING                                  
|              | A.                                       | OFFER
      AND LISTING DETAILS                              
|              | B.                                       | PLAN
      OF DISTRIBUTION                                   
|              | C.                                       | MARKETS                                                      

3

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|               | D.                                                         | SELLING
      SHAREHOLDERS                                                         | 38
|-------------- | ---------------------------------------------------------- | ---------------------------------------------------------------------------------- | --
|               | E.                                                         | DILUTION                                                                           | 39
|               | F.                                                         | EXPENSES
      OF THE ISSUE                                                        | 39
|ITEM
      10  |                                                            | ADDITIONAL
      INFORMATION                                                       | 39
|               | A.                                                         | SHARE
      CAPITAL                                                                | 39
|               | B.                                                         | MEMORANDUM
      AND ARTICLES OF ASSOCIATION                                       | 39
|               | C.                                                         | MATERIAL
      CONTRACTS                                                           | 41
|               | D.                                                         | EXCHANGE
      CONTROLS                                                            | 41
|               | E.                                                         | TAXATION                                                                           | 42
|               | F.                                                         | DIVIDENDS
      AND PAYING AGENTS                                                  | 50
|               | G.                                                         | STATEMENT
      BY EXPERTS                                                         | 50
|               | H.                                                         | DOCUMENTS
      ON DISPLAY                                                         | 50
|               | I.                                                         | SUBSIDIARY
      INFORMATION                                                       | 50
|ITEM
      11  |                                                            | QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 50
|               | A.                                                         | TRANSACTION
      RISK AND CURRENCY RISK MANAGEMENT                                | 50
|               | B.                                                         | EXCHANGE
      RATE SENSITIVITY                                                    | 50
|               | C.                                                         | INTEREST
      RATE RISK AND EQUITY PRICE RISK                                     | 50
|               | D.                                                         | COMMODITY
      PRICE RISK                                                         | 50
|ITEM
      12  |                                                            | DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 50
|ITEM
      13  |                                                            | DEFAULTS,
      DIVIDEND ARREARAGES AND DELINQUENCIES                              | 51
|ITEM
      14  |                                                            | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF PROCEEDS | 51
|ITEM
      15  |                                                            | CONTROLS
      AND PROCEDURES                                                      | 51
|               | A.                                                         | DISCLOSURE
      CONTROLS AND PROCEDURES                                           | 51
|               | B.                                                         | MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER
      FINANCIAL REPORTING      | 51
|               | CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING | 52                                                                                
|               | LIMITATIONS
      OF CONTROLS AND PROCEDURES               | 52                                                                                
|ITEM
      16  |                                                            | [RESERVED]                                                                         | 52
|ITEM
      16A |                                                            | AUDIT
      COMMITTEE FINANCIAL EXPERT                                             | 52
|ITEM
      16B |                                                            | CODE
      OF ETHICS                                                               | 52
|ITEM
      16C |                                                            | PRINCIPAL
      ACCOUNTANT FEES AND SERVICES                                       | 53
|ITEM
      16D |                                                            | EXEMPTIONS
      FROM LISTING STANDARDS FOR AUDIT COMMITTEES                       | 53
|ITEM
      16E |                                                            | PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       | 53
|ITEM
      16F |                                                            | CHANGE
      IN REGISTRANT'S CERTIFYING ACCOUNTANT                                 | 54
|ITEM
      16G |                                                            | CORPORATE
      GOVERNANCE                                                         | 54
|ITEM
      16H |                                                            | MINE
      SAFETY DISCLOSURE                                                       | 54
|ITEM
      17  |                                                            | FINANCIAL
      STATEMENTS                                                         | 54
|ITEM
      18  |                                                            | FINANCIAL
      STATEMENTS                                                         | 54
|ITEM
      19  |                                                            | EXHIBITS                                                                           | 54

4

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GENERAL

In this Annual Report on Form 20-F, all references to "we", the
"Company" or "Quartz Mountain" refer to Quartz Mountain Resources Ltd. and its
consolidated subsidiary.

The Company uses the Canadian dollar as its reporting currency.
All references in this document to "dollars" or "$" are expressed in Canadian
dollars, unless otherwise indicated. See also Item 3  "Key
Information" for more detailed currency and conversion information.

Except as noted, the information set forth in this Annual
Report is as of October 3rd, 2016, and all information included in
this document should only be considered correct as of such date.

Certain terms used herein are defined as follows:

Mineral Reserve
    Securities and Exchange Commission Industry Guide 7
      "Description of Property by Issuers Engaged or to be Engaged in
      Significant Mining Operations" (under the United States Securities
      Exchange Act of 1934, as amended) defines a 'reserve' as that part of a
      mineral deposit which could be economically and legally extracted or
      produced at the time of the reserve determination. Reserves consist of:(1) Proven (Measured) Reserves. Reserves for which: (a) quantity is
      computed from dimensions revealed in outcrops, trenches, workings or drill
      holes; grade and/or quality are computed from the results of detailed
      sampling; and (b) the sites for inspection, sampling and measurement are
      spaced so closely and the geologic character is so well defined that size,
      shape, depth and mineral content of reserves are well-established.
      (2) Probable (Indicated) Reserves. Reserves for which quantity and
      grade and/or quality are computed from information similar to that used
      for proven (measured) reserves, but the sites for inspection, sampling and
      measurement are farther apart or are otherwise less adequately spaced. The
      degree of assurance, although lower than that for proven (measured)
      reserves, is high enough to assume continuity between points of
      observation.
      As a reporting issuer under the Securities Acts of British Columbia and
      Alberta, the Company is subject to National Instrument 43-101 "Standards
      of Disclosure for Mineral Projects" of the Canadian Securities
      Administrators. Securities and Exchange Commission Industry Guide 7, as
      interpreted by Securities and Exchange Commission Staff, applies standards
      that are different from those prescribed by National Instrument 43-101 in
      order to classify mineralization as a reserve. In particular, Mineral
      Reserves under National Instrument 43-101 are defined as the economically
      mineable part of a Measured and/or Indicated Mineral Resource. It includes
      diluting materials and allowances for losses, which may occur when the
      material is mined or extracted and is defined by studies at
      Pre-Feasibility or Feasibility level as appropriate that include
      application of Modifying Factors, which are considerations used to convert
      Mineral Resources to Mineral Reserves and include, but are not restricted
      to, mining, processing, metallurgical, infrastructure, economic,
      marketing, legal, environmental, social and governmental factors. Such
      studies demonstrate that, at the time of reporting, extraction could
      reasonably be justified. The reference point at which Mineral Reserves are
      defined, usually the point where the ore is delivered to the processing
      plant, must be stated. It is important that, in all situations where the
      reference point is different, such as for a saleable product, a clarifying
      statement is included to ensure that the reader is fully informed as to
      what is being reported. The public disclosure of a Mineral Reserve must be
      demonstrated by a Pre- Feasibility Study or Feasibility Study.
      Under the standards of the Securities and Exchange Commission,
      mineralization may not be classified as a "reserve" unless the
      determination has been made that the mineralization could be economically
      and legally produced or extracted at the time the reserve
  determination is made. Among other things, all
      necessary permits would be required to be in hand or issued imminently in
      order to classify mineralized material as reserves under Securities and
      Exchange Commission Industry Guide 7. Accordingly, mineral reserve
      estimates established in accordance with National Instrument 43-101 may
      not qualify as "reserves" under SEC standards. The Company does not
      currently have any mineral deposits that have been classified as reserves.


5

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Mineral Resource
    National Instrument 43-101 Standards of Disclosure for Mineral
      Projects issued by the Canadian Securities Administrators defines a
      mineral Resources as a concentration or occurrence of solid material of
      economic interest in or on the Earths crust in such form, grade or
      quality and quantity that there are reasonable prospects for eventual
      economic extraction. The location, quantity, grade or quality, continuity
      and other geological characteristics of a Mineral Resource are known,
      estimated or interpreted from specific geological evidence and knowledge,
      including sampling. Mineral Resources are sub-divided, in order of
      increasing geological confidence, into Inferred, Indicated and Measured
      categories. An Inferred Mineral Resource has a lower level of confidence
      that that applied to an Indicated Mineral Resource, and an Indicated
      Mineral resources has a lower level of confidence than that applied to a
      Measured Mineral Resource.
      (1) An Inferred Mineral Resource is that part of a Mineral Resource for
      which quantity and grade or quality are estimated on the basis of limited
      geological evidence and sampling. Geological evidence is sufficient to
      imply but not verify geological and grade or quality continuity. It has a
      lower level of confidence than that applying to an Indicated Mineral
      Resource and must not be converted to a Mineral Reserve. It is reasonably
      expected that the majority of Inferred Mineral Resources could be upgraded
      to Indicated Mineral Resources with continued exploration.
      (2) An Indicated Mineral Resource is that part of a Mineral Resource
      for which quantity, grade or quality, densities, shape and physical
      characteristics are estimated with sufficient confidence to allow the
      application of Modifying Factors in sufficient detail to support mine
      planning and evaluation of the economic viability of the deposit.
      Geological evidence is derived from adequately detailed and reliable
      exploration, sampling and testing and is sufficient to assume geological
      and grade or quality continuity between points of observation. It has a
      lower level of confidence than that applying to a Measured Mineral
      Resource and may only be converted to a Probable Mineral Reserve.
      (3) A Measured Mineral Resource is that part of a Mineral Resource for
      which quantity, grade or quality, densities, shape, and physical
      characteristics are estimated with confidence sufficient to allow the
      application of Modifying Factors to support detailed mine planning and
      final evaluation of the economic viability of the deposit. Geological
      evidence is derived from detailed and reliable exploration, sampling and
      testing and is sufficient to confirm geological and grade or quality
      continuity between points of observation. It has a higher level of
      confidence than that applying to either an Indicated Mineral Resource or
      an Inferred Mineral Resource. It may be converted to a Proven Mineral
      Reserve or to a Probable Mineral Reserve.
      Industry Guide 7  "Description of Property by Issuers Engaged or to be
      Engaged in Significant Mining Operations" of the Securities and Exchange
      Commission does not define or recognize resources. In addition, disclosure
      of resources using "contained ounces" is permitted under Canadian
      regulations; however, the Securities and Exchange Commission only permits
      issuers to report mineralization that does not qualify as a reserve as in
      place tonnage and grade without reference to unit measures. As used in
      this Form 20-F, "resources" are as defined in National Instrument 43-101.
      For the above reasons, information in the Company's publicly-available
  documents containing descriptions of the Company's mineral deposits  may not be comparable to similar information
      made public by U.S. companies subject to the reporting and disclosure
      requirements under the United States federal securities laws and the rules
      and regulations thereunder.


6

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Mineral Symbols
    As  arsenic; Au  gold; Ag  silver; Cu 
      copper; Fe  iron; Hg  mercury; Mo  molybdenum; Na  sodium; Ni 
      nickel; O  oxygen; Pd - palladium; Pt  platinum; Pb  lead; S  sulphur;
      Sb  antimony; Zn  zinc.Net Smelter Return (NSR)
    Monies received for concentrate delivered to a
      smelter net of metallurgical recovery losses, transportation costs,
  smelter treatment-refining charges and penalty charges.


CURRENCY AND MEASUREMENT

All currency amounts in this Annual Report are stated in
Canadian dollars unless otherwise indicated. Conversion of metric units into
imperial equivalents is as follows:

Metric
      Units
    Multiply by
    Imperial Unitshectares
    2.471
    =
      acresmeters
    3.281
    = feetkilometers
    0.621
    =
      miles (5,280 feet)grams
    0.032
    = troy
      ouncestonnes
    1.102
    =
      short tons (2,000 lbs)grams per tonne
    0.029
    = troy
      ounces per ton


NOTE ON FORWARD LOOKING STATEMENTS

This Annual Report on Form 20-F contains statements that
constitute "forward-looking statements". Any statements that are not statements
of historical facts may be deemed to be forward-looking statements. These
statements appear in a number of different places in this Annual Report and, in
some cases, can be identified by words such as "anticipates", "estimates",
"projects", "expects", "intends", "believes", "plans", or their negatives or
other comparable words. The forward-looking statements, including the statements
contained in Item 3D "Risk Factors", Item 4B "Business
Overview",Item 5 "Operating and Financial Review and
Prospects" and Item 11 "Quantitative and Qualitative Disclosures About
Market Risk", involve known and unknown risks, uncertainties and other
factors which may cause the Company's actual results, performance or
achievements to be materially different from any future results, performance or
achievements that may be expressed or implied by such statements.
Forward-looking statements include statements regarding the outlook for the
Company's future operations, plans and timing for the Company's exploration
programs, statements about future market conditions, supply and demand
conditions, forecasts of future costs and expenditures, the outcome of legal
proceedings, and other expectations, intentions and plans that are not
historical facts.

You are cautioned that forward-looking statements are not
guarantees. The risks and uncertainties that could cause the Company's actual
results to differ materially from those expressed or implied by the
forward-looking statements include:

| | changes in general economic and business
      conditions, including commodity prices, costs associated with mineral
      exploration and development, changes in interest rates and the
      availability of financing on reasonable terms;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                               
| | natural phenomena, including geological and
      meteorological phenomena;                                                                                                                                                                   
|  |                                                                                                                                                                                                                                               
| | actions by government authorities, including
      changes in government regulation and permitting requirements;                                                                                                                              
|  |                                                                                                                                                                                                                                               
| | uncertainties associated with legal
      proceedings;                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                               
| | future decisions by management in response to
      changing conditions;                                                                                                                                                                      

7

---

| | the Company's ability to execute prospective
      business plans; and   
|- | -------------------------------------------------------------------------
|  |                                                                          
| | misjudgments in the course of preparing
      forward-looking statements.

The Company advises you that these cautionary remarks expressly
qualify, in their entirety, all forward-looking statements attributable to
Quartz Mountain or persons acting on the Company's behalf. The Company assumes
no obligation to update the Company's forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors affecting
such statements. You should carefully review the cautionary statements and risk
factors contained in this and other documents that the Company files from time
to time with the Securities and Exchange Commission.

|ITEM 1 | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
      ADVISERS
|------ | -----------------------------------------------------------

Not applicable for an annual report.

|ITEM 2 | OFFER STATISTICS AND EXPECTED TIMETABLE
|------ | ---------------------------------------

Not applicable for an annual report.

|ITEM 3 | KEY INFORMATION
|------ | ---------------

|A. | SELECTED FINANCIAL DATA
|-- | -----------------------

The following tables summarize selected financial data for the
Company (stated in Canadian dollars) prepared, in respect of the years ended
July 31, 2016 and July 31, 2015, in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) (IFRS-IASB).

As permitted by SEC Release No. 33-8879 Acceptance from
Foreign Private Issuers of Financial Statements Prepared in Accordance with
International Reporting Standards Without Reconciliation to U.S. GAAP, the
Company includes selected financial data prepared in compliance with IFRS-IASB
without reconciliation to U.S. GAAP.

The selected financial data of the Company for the fiscal years
presented was derived from the consolidated financial statements of the Company
that have been audited by Davidson & Company LLP, independent Registered
Public Accountants, as indicated in their audit report which is included at
Exhibit 99.1 in this Annual Report.

The auditors conducted their audits in accordance with United
States and Canadian generally accepted auditing standards, and the standards of
the Public Company Accounting Oversight Board (United States).

Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year ended
    
    
    Year endedJuly 31, 2016
    
    
    July 31, 2015
    
    
    July 31, 2014
    
    
    July 31, 2013
    
    
    July 31, 2012Sales revenue
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    Loss from operations
    $
    322,605
    
    $
    1,410,322
    
    $
    865,427
    
    $
    3,458,827
    
    $
    3,587,805Loss (income) and comprehensive loss (income)
    $
    (92,549
    )
    $
    1,410,322
    
    $
    865,427
    
    $
    3,458,827
    
    $
    3,587,805Basic and diluted loss per common share
    $
    
    
    $
    0.05
    
    $
    0.03
    
    $
    0.13
    
    $
    0.20Dividends per share
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    Working capital
    $
    (2,866,383
    )
    $
    (2,548,933
    )
    $
    (2,527,095
    )
    $
    (1,743,116
    )
    $
    911,035Total assets
    $
    313,168
    
    $
    $478,407
    
    $
    1,975,310
    
    $
    2,469,814
    
    $
    2,821,289


8

---

Year
      ended
    
    
    Year
      ended
    
    
    Year
      ended
    
    
    Year
      ended
    
    
    Year
      endedJuly
      31, 2016
    
    
    July
      31, 2015
    
    
    July
      31, 2014
    
    
    July
      31, 2013
    
    
    July
      31, 2012Shareholders equity
    $
    (2,866,382
    )
    $
    (2,998,931
    )
    $
    (1,588,609
    )
    $
    (723,182
    )
    $
    989,036Share capital
    $
    26,090,118
    
    $
    26,050,118
    
    $
    26,050,118
    
    $
    26,050,118
    
    $
    24,514,381Shares outstanding
    
    29,299,513
    
    
    27,299,513
    
    
    27,299,513
    
    
    27,299,513
    
    
    22,032,793


Currency and Exchange Rates

On October 3rd, 2016 the rate of exchange of the
Canadian dollar, based on the daily noon rate in Canada as published by the Bank
of Canada, was US$1 = Canadian $1.3137. Exchange rates published by the Bank of
Canada are, available on its website www.bankofcanada.ca, nominal
quotations  not buying or selling rates  and are intended for statistical or
analytical purposes.

The following tables set out the exchange rates, based on the
daily noon rates in Canada as published by the Bank of Canada for the conversion
of Canadian dollars per U.S. dollar.

|                           |  | For the fiscal year ended July 31  | 
|-------------------------- |  | ---------------------------------- | 
|                           |  | (Canadian Dollars per U.S. Dollar) | 
|                           |  | 2016                               | 
|End of Period              |  | 1.3056                             | 
|Average for the Period (1) |  | 1.3285                             | 
|High for the Period        |  | 1.4661                             | 
|Low for the Period         |  | 1.2497                             | 

|(1) | The average rate for each period is the average of the
      daily noon rates on the last day of each month during the
  period.
|--- | --------------------------------------------------------------------------------------------------------------------------------

Monthly High and Low Exchange Rate (Canadian Dollars per
      U.S. Dollar)Month
    High
    LowAugust
      2016
    1.3200
    1.2765July
      2016
    1.3256
    1.2832June
      2016
    1.3144
    1.2660May
      2016
    1.3167
    1.2514


|B. | CAPITALIZATION AND
INDEBTEDNESS
|-- | -------------------------------

Not applicable.

|C. | REASONS FOR THE OFFER AND USE OF
  PROCEEDS
|-- | -------------------------------------------

Not applicable.

|D. | RISK FACTORS
|-- | ------------

Due to the nature of the Company's business and the present
stage of exploration and development of its projects in British Columbia, an
investment in the securities of Quartz Mountain is highly speculative and
subject to a number of risks. Briefly, these include the highly speculative
nature of the resources industry, characterized by the requirement for large capital investments
from an early stage and a very small probability of finding economic mineral
deposits. In addition to the general risks of mining, there are country-specific
risks, including currency, political, social, permitting and legal risk.

9

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You should carefully consider the risks described below and the
other information that Quartz Mountain furnishes to, or files with, the
Securities and Exchange Commission and with Canadian securities regulators
before investing in Quartz Mountain's common shares. You should not consider an
investment in Quartz Mountain unless you are capable of sustaining the economic
loss of your entire investment.

Going concern assumption

The Company's consolidated financial statements have been
prepared assuming the Company will continue on a going concern basis. However,
unless additional funding is obtained, this assumption will have to change. The
Company has incurred losses since inception. Failure to continue as a going
concern would require that Quartz Mountain's assets and liabilities be restated
on a liquidation basis, which could differ significantly from the going concern
basis.

Additional Funding Requirements

At July 31, 2016, the Company had cash and cash equivalents of
$306,398 and a working capital deficit of $2,866,383. Substantially all of the
total short-term liabilities of $3.2 million at July 31, 2016 were payable to
Hunter Dickinson Services Inc. ("HDSI"). In January 2016, the Company made
arrangements with HDSI to settle debt owing for services by HDSI whereby HDSI
would forgive debt in the net amount owing at that time of $3,086,089, if Quartz
Mountain makes a cash payment of $180,207 and issues 6 million shares to HDSI.
Notwithstanding that the TSX Venture Exchange has approved the transaction with
HDSI, the settlement of debt through the issuance of the shares and cash payment
to HDSI has been deferred and will occur at a mutually agreed date.

Further corporate activities and development of the Company's
properties will require additional capital. The Company currently does not have
sufficient funds to fully develop the properties it holds. In addition, a
positive production decision at these properties or any other development
projects acquired in the future would require significant capital for project
engineering and construction. Accordingly, the continuing development of the
Company's properties will depend upon the Company's ability to obtain funding
through debt or equity financings, the joint venturing of projects, or other
means. It is possible that the financing required by the Company will not be
available, or, if available, will not be available on acceptable terms. If the
Company issues shares to finance its operations or expansion plans, control of
the Company may change and shareholders may suffer dilution of their investment.
If adequate funds are not available, or are not available on acceptable terms,
the Company may not be able to take advantage of opportunities, or otherwise
respond to competitive pressures and remain in business. In addition, a positive
production decision at any of the Companys current projects or any other
development projects acquired in the future would require significant
resources/funding for project engineering and construction. Accordingly, the
continuing development of the Companys properties will depend upon the
Companys ability to obtain financing through debt financing, equity financing,
the joint venturing of projects, or other means. There is no assurance that the
Company will be successful in obtaining the required financing for these or
other purposes, including for general working capital.

Market for Securities and Volatility of Share Price

There can be no assurance that active trading market in the
Company's securities will be established or sustained. The market price for the
Company's securities is subject to wide fluctuations. Factors such as
announcements of exploration results, as well as market conditions in the
industry or the economy as a whole, may have a significant adverse impact on the
market price of the securities of the Company.

The stock market has from time to time experienced extreme
price and volume fluctuations that have often been unrelated to the operating
performance of particular companies.

Exploration, Development and Mining Risks

Resource exploration, development, and operations are highly
speculative, characterized by a number of significant risks, which even a
combination of careful evaluation, experience and knowledge may not reduce,
including among other things, unsuccessful efforts resulting not only from the
failure to discover mineral deposits but from finding mineral deposits which,
though present, are insufficient in quantity and quality to return a profit from
production. Few properties that are explored are ultimately developed into
producing mines. Unusual or unexpected formations, formation pressures, fires,
power outages, labor disruptions, flooding, explosions, cave-ins, landslides and
the inability to obtain suitable or adequate machinery, equipment or labor are
other risks involved in the operation of mines and the conduct of exploration
programs. The Company will rely upon consultants and others for exploration,
development, construction and operating expertise. Substantial expenditures
are required to establish mineral resources and mineral reserves through
drilling, to develop metallurgical processes to extract the metal from mineral
resources, and in the case of new properties, to develop the mining and
processing facilities and infrastructure at any site chosen for mining.

10

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No assurance can be given that minerals will be discovered in
sufficient quantities to justify commercial operations or that funds required
for development can be obtained on a timely basis. Whether a mineral deposit
will be commercially viable depends on a number of factors, some of which are:
the particular attributes of the deposit, such as size, grade and proximity to
infrastructure; metal prices, which are highly cyclical; and government
regulations, including regulations relating to prices, taxes, royalties, land
tenure, land use, importing and exporting of minerals, and environmental
protection. The exact effect of these factors cannot accurately be predicted,
but the combination of these factors may result in the Company not receiving an
adequate return on invested capital.

The Company will carefully evaluate the political and economic
environment in considering any properties for acquisition.

Future Profits/Losses and Production Revenues/Expenses

The Company has no history of operations or earnings, and
expects that its losses and negative cash flow will continue for the foreseeable
future. The Company currently has a limited number of mineral properties and
there can be no assurance that the Company will, if needed, be able to acquire
additional properties of sufficient technical merit to represent a compelling
investment opportunity. If the Company is unable to acquire additional
properties, its entire prospects will rest solely with its current projects and
accordingly, the risk of being unable to identify a mineral deposit will be
higher than if the Company had additional properties to explore. There can be no
assurance that the Company will ever be profitable in the future. The Company's
operating expenses and capital expenditures may increase in subsequent years as
needed consultants, personnel and equipment associated with advancing
exploration, development and commercial production of its current properties and
any other properties that the Company may acquire are added. The amounts and
timing of expenditures will depend on the progress of on-going exploration and
development, the results of consultants' analyses and recommendations, the rate
at which operating losses are incurred, the execution of any joint venture
agreements with strategic partners, and the Company's acquisition of additional
properties and other factors, many of which are beyond the Company's control.
The Company does not expect to receive revenues from operations in the
foreseeable future, and will incur losses unless and until such time as its
current properties, or any other properties the Company may acquire commence
commercial production and generate sufficient revenues to fund its continuing
operations. The development of the Companys current properties and any other
properties the Company may acquire will require the commitment of substantial
resources to conduct the time-consuming exploration and development of
properties. The Company anticipates that it will retain any cash resources and
potential future earnings for the future operation and development of the
Company's business.

The Company has not paid dividends since incorporation and the
Company does not anticipate paying dividends in the foreseeable future. There
can be no assurance that the Company will generate any revenues or achieve
profitability.

There can be no assurance that the underlying assumed levels of
expenses will prove to be accurate. To the extent that such expenses do not
result in the creation of appropriate revenues, the Company's business may be
materially adversely affected. It is not possible to forecast how the business
of the Company will develop.

Permits and Licenses

The operations of the Company will require licenses and permits
from various governmental authorities. There can be no assurance that the
Company will be able to obtain all necessary licenses and permits which may be
required to carry out exploration and development of the Company's projects.

Infrastructure Risk

The operations of the Company are carried out in geographical
areas which may lack adequate infrastructure and are subject to various other
risk factors. Mining, processing, development and exploration activities depend,
to one degree or another, on adequate infrastructure. Reliable roads, bridges,
power sources and water supply are important determinants which affect capital
and operating costs. Lack of such infrastructure or unusual or infrequent
weather phenomena, government or other interference in the maintenance or
provision of such infrastructure could adversely affect the Company's
operations, financial condition and results of operations.

11

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Changes in Local Legislation or Regulation

The Company's mining and processing operations and exploration
activities are subject to extensive laws and regulations governing the
protection of the environment, exploration, development, production, exports,
taxes, labour standards, occupational health, waste disposal, toxic substances,
mine and worker safety, protection of endangered and other special status
species and other matters. The Company's ability to obtain permits and approvals
and to successfully operate in particular communities may be adversely impacted
by real or perceived detrimental events associated with the Company's activities
or those of other mining companies affecting the environment, human health and
safety of the surrounding communities. Delays in obtaining or failure to obtain
government permits and approvals may adversely affect the Company's operations,
including its ability to explore or develop properties, commence production or
continue operations. Failure to comply with applicable environmental and health
and safety laws and regulations may result in injunctions, fines, suspension or
revocation of permits and other penalties. The costs and delays associated with
compliance with these laws, regulations and permits could prevent the Company
from proceeding with the development of a project or the operation or further
development of a mine or increase the costs of development or production and may
materially adversely affect the Company's business, results of operations or
financial condition. The Company may also be held responsible for the costs of
addressing contamination at the site of current or former activities or at third
party sites. The Company could also be held liable for exposure to hazardous
substances.

Land Claims

In Canada, aboriginal interests, rights (including treaty
rights), claims and title may exist notwithstanding that they may be
unregistered or overlap with other tenures and interests granted to third
parties. Generally speaking, the scope and content of such rights are not well
defined and may be the subject of litigation or negotiation with the government.
The government has a legal obligation to consult First Nations on proposed
activities that may have an impact on asserted or proven aboriginal interests,
claims, rights or title. All of the mineral claims in the Companys projects are
identified by the Province of British Columbia as overlapping with areas in
which certain aboriginal groups have asserted aboriginal interests, rights,
claims or, title. Nevertheless, potential overlaps between the Companys
properties and existing or asserted aboriginal interests, rights, claims or,
title, or undefined rights under historic treaties may exist notwithstanding
whether the Province of British Columbia has identified such interests, rights,
claims, title or undefined rights under historic treaties.

Groups Opposed to Mining May Interfere with the Company's
Efforts to Explore and Develop its Properties

Organizations opposed to mining may be active in the regions in
which the Company conducts its exploration activities. Although the Company
intends to comply with all environmental laws and maintain good relations with
local communities, there is still the possibility that those opposed to mining
will attempt to interfere with the development of the Company's properties. Such
interference could have an impact on the Company's ability to explore and
develop its properties in a manner that is most efficient or appropriate, or at
all, and any such impact could have a material adverse effect on the Company's
financial condition and the results of its operations.

Environmental Matters

All of the Company's operations are and will be subject to
environmental laws and regulations, which can make operations expensive or
prohibit them altogether. The Company may be subject to potential risks and
liabilities associated with pollution of the environment and the disposal of
waste products that could occur as a result of its mineral exploration,
development and production. In addition, environmental hazards may exist on a
property in which the Company directly or indirectly holds an interest, which
are unknown to the Company at present and have been caused by previous or
existing owners or operators of the Companys projects. Environmental
legislation provides for restrictions and prohibitions on spills, releases or
emissions of various substances produced in association with certain mining
industry operations which would result in environmental pollution. A breach of
such legislation may result in the imposition of fines and penalties, or the
requirement to remedy environmental pollution, which would reduce funds
otherwise available to the Company and could have a material adverse effect on
the Company. If the Company is unable to fully remedy an environmental problem,
it could be required to suspend operations or undertake interim compliance
measures pending completion of the required remedy, which could have a material
adverse effect on the Company.

There is no assurance that future changes in environmental
regulation, if any, will not adversely affect the Companys operations. There is
also a risk that the environmental laws and regulations may become more onerous,
making the Company's operations more expensive. Many of the environmental laws
and regulations applicable to the Companys operations will require the Company
to obtain permits for its activities. The Company will be required to update and review
its permits from time to time, and may be subject to environmental impact
analyses and public review processes prior to approval of the additional
activities. It is possible that future changes in applicable laws, regulations
and permits or changes in their enforcement or regulatory interpretation could
have a significant impact on some portion of the Company's business, causing
those activities to be economically re-evaluated at that time.

12

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Conflicts of Interest

The Company's directors and officers may serve as directors or
officers of other companies, joint venture partners, or companies providing
services to the Company or they may have significant shareholdings in other
companies. Situations may arise where the directors and/or officers of the
Company may be in competition with the Company. Any conflicts of interest will
be subject to and governed by the law applicable to directors' and officers'
conflicts of interest. In the event that such a conflict of interest arises at a
meeting of the Company's directors, a director who has such a conflict will
abstain from voting for or against the approval of such participation or such
terms. In accordance with applicable laws, the directors of the Company are
required to act honestly, in good faith and in the best interests of the
Company.

Lack of Revenue and a History of Operating Losses

The Company does not have any operational history or earnings
and the Company has incurred net losses and negative cash flow from its
operations since its incorporation. Although the management of the Company hopes
to eventually generate revenues, significant operating losses are to be
anticipated for at least the next several years and possibly longer. To the
extent that such expenses do not result in the creation of appropriate revenues,
the Company's business may be materially adversely affected. It is not possible
to forecast how the business of the Company will develop.

General Economic Conditions

Global financial markets have experienced a sharp increase in
volatility during the last few years. Market conditions and unexpected
volatility or illiquidity in financial markets may adversely affect the
prospects of the Company and the value of the Company's shares.

Reliance on Key Personnel

The Company is dependent on the continued services of its
senior management team, and its ability to retain other key personnel. The loss
of such key personnel could have a material adverse effect on the Company. There
can be no assurance that any of the Company's employees will remain with the
Company or that, in the future, the employees will not organize competitive
businesses or accept employment with companies competitive with the Company.
Furthermore, as part of the Company's growth strategy, it must continue to hire
highly qualified individuals. There can be no assurance that the Company will be
able to attract, train or retain qualified personnel in the future, which would
adversely affect its business.

Competition

The resources industry is highly competitive in all its phases,
and the Company will compete with other mining companies, many of which have
greater financial, technical and other resources. Competition in the mining
industry is primarily for: attractive mineral rich properties capable of being
developed and producing economically; the technical expertise to find, develop
and operate such properties; the labour to operate the properties; and the
capital for the purpose of funding such properties. Many competitors not only
explore for and mine certain minerals, but also conduct production and marketing
operations on a worldwide basis. Such competition may result in the Company
being unable to acquire desired properties, to recruit or retain qualified
employees or to acquire the capital necessary to fund its operations and develop
its properties. The Company's inability to compete with other mining companies
for these resources could have a materially adverse effect on the Company's
results of operations and its business.

Uninsurable Risks

In the course of exploration, development and production of
mineral properties, certain risks, and in particular, unexpected or unusual
geological operating conditions including rock bursts, cave ins, fires, flooding
and earthquakes may occur. It is not always possible to fully insure against
such risks and the Company may decide not to take out insurance against such
risks as a result of high premiums or other reasons.

13

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Property Title

The acquisition of title to resource properties is a very
detailed and time-consuming process. Title to, and the area of, resource claims
may be disputed. Although the Company believes it has taken reasonable measures
to ensure that title to the mineral claims comprising its projects are held as
described, there is no guarantee that title to any of those claims will not be
challenged or impaired. There may be valid challenges to the title of any of the
mineral claims comprising the Companys projects that, if successful, could
impair development or operations or both.

The mineral property underlying the Company's net smelter
return royalty interest contains no known ore.

The Company holds a 1% net smelter return ("NSR") royalty
interest on the Quartz Mountain Property (renamed "Angel's Camp"), an
exploration stage prospect in Oregon, USA. The Company's interest in the
property will be limited to any future NSR that would be forthcoming only if or
when any mining commences on the property. There is currently no known body of
ore on the property. Extensive additional exploration work will be required to
ascertain if any mineralization may be economic.

Likely PFIC status has consequences for United States
investors

Potential investors who are U.S. taxpayers should be aware that
the Company expects to be classified for U.S. tax purposes as a passive foreign
investment company ("PFIC") for the current fiscal year, and may also have been
a PFIC in prior years and may also be a PFIC in future years. If the Company is
a PFIC for any year during a U.S. taxpayer's holding period, then such U.S.
taxpayer generally will be required to treat any so-called "excess distribution"
on its common shares, or any gain realized upon a disposition of common shares,
as ordinary income which would be taxed at the shareholder's highest marginal
rates and to pay an interest charge on a portion of such distribution or gain,
unless the taxpayer has made a timely qualified electing fund ("QEF") election
or a mark-to-market election with respect to the shares of the Company. In
certain circumstances, the sum of the tax and the interest charge may exceed the
amount of the excess distribution received, or the amount of proceeds of
disposition realized, by the taxpayer. A U.S. taxpayer who makes a QEF election
generally must report on a current basis its share of the Company's net capital
gain and ordinary earnings for any year in which the Company is a PFIC, whether
or not the Company distributes any amounts to its shareholders. A U.S. taxpayer
who makes the mark-to-market election generally must include as ordinary income
each year the excess of the fair market value of the common shares over the
taxpayer's tax basis therein. See also Item 10E  "Passive Foreign
Investment Company".

Potential investors should also note that recently enacted
legislation may require U.S. shareholders to report their interest in a PFIC on
an annual basis. US shareholders of the Company should consult their tax
advisors as to these reporting requirements as well as the consequences of
investing in the Company.

Penny stock classification

Penny stock classification could affect the marketability of
the Company's common stock and shareholders could find it difficult to sell
their stock

The penny stock rules in the United States require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation.

Further, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules; the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These additional broker-dealer practice and
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for the Company's common shares in the U.S.,
and shareholders may find it more difficult to sell their shares.

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|ITEM 4 | INFORMATION ON THE COMPANY
|------ | --------------------------

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

Incorporation

The legal name of the Company is "Quartz Mountain Resources
Ltd."

Quartz Mountain Resources Ltd. was incorporated on August 3,
1982, in British Columbia, Canada, and it continues to subsist under the laws of
the Province of British Columbia.

The Company was originally incorporated as Wavecrest Resources
Ltd., but changed its name to Quartz Mountain Gold Corp. on June 18, 1986. On
November 5, 1997, the name of the Company was changed from Quartz Mountain Gold
Corp. to Quartz Mountain Resources Ltd., and the common shares were consolidated
on a ten-old-for-one-new share basis.

Market for the Company's Securities

The Company's common shares were quoted on NASDAQ SmallCap
Market in the United States from September 17, 1987 until May 12, 1994. The
Company's common shares were also listed on the Toronto Stock Exchange until
November 10, 1994. The Company voluntarily surrendered its listing on the
Vancouver Stock Exchange.

In October 2000, the Company listed on a newly created Tier 3
of the Canadian Venture Exchange (now renamed the TSX Venture Exchange
("TSX-V")). In December 2003, the Company was reclassified as a Tier 2 company
on the TSX-V. On February 17, 2005, the Company transferred its listing to NEX,
a separate board of the TSX-V established in 2003 to provide a new trading forum
for listed companies that had fallen below the TSX-V's continued listing
standards, due to low levels of business activity.

The Company was relisted on the TSX-V on December 30, 2011.

Currently, the Company's common shares trade on the TSX-V under
the symbol QZM, and certain broker-dealers in the United States make market in
the Company's common shares on the OTC Grey Market under the symbol QZMRF.

Offices

The Company's business office is located at 15th Floor, 1040
West Georgia Street, Vancouver, British Columbia V6E 4H1; telephone (604)
684-6365. The Company's registered office is Suite 1500  1055 West Georgia
Street, Vancouver, British Columbia V6E 4N7; telephone (604) 689-9111.

|B. | BUSINESS OVERVIEW
|-- | -----------------

The Company's Business Strategy and Principal Activities

Quartz Mountain has been in the business of exploring and
developing mineral properties. The Companys activities on the properties are
primarily focused on ascertaining whether the properties host commercially
viable mineral deposits.

In the first three years of its existence, the Company was
active in the exploration of small gold and silver prospects in Canada, but none
of these prospects warranted further exploration or development. In 1986, the
Company acquired the Quartz Mountain gold property, located in south central
Oregon, and until January 2002 most of the Company's efforts were expended on
the exploration and maintenance of these claims. The Company's interests in the
Quartz Mountain gold property, and in its other properties, were acquired by
direct purchase, lease and option, or through joint ventures.

The Company sold the Quartz Mountain gold property during 2002,
to Seabridge Resources Ltd. and Seabridge Resources Inc. (collectively
"Seabridge"). Seabridge subsequently changed its name to Seabridge Gold Inc. At
closing, Quartz Mountain received 300,000 Seabridge common shares, 200,000
Seabridge common share purchase warrants, US$100,000 and a 1% NSR from any
future production on the Quartz Mountain gold property. The Seabridge warrants
were exercised and all Seabridge common shares held by the Company have been
sold. The Company's interest in the Quartz Mountain gold property is limited to
the 1% NSR royalty. The Company does not expect to generate any royalty revenue
from the Quartz Mountain gold property (renamed "Angel's Camp" by its subsequent
owners) for several years, and it is not known at this time when any mining will
commence, if at all, on that property. Following the sale of the Quartz Mountain
gold property, the Company continued in its efforts to find a suitable mineral
property for potential acquisition and exploration during the period of 2002 to
2011.

15

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In December 2011, the Company acquired an option to earn a 100%
interest in the Buck gold-silver property near the town of Houston in central
British Columbia (the Buck Project). Concurrently with the Buck Project
acquisition, the Company completed a $4.2 million private placement financing
and began trading on the TSX-V. Exploration programs were carried out at Buck in
2011 and 2012, confirming targets. Difficult financing conditions for junior
companies in 2013 necessitated that the Company limit its exploration
expenditures and prioritize its property holdings. As a result, Quartz Mountain
terminated its option on the Buck Project in July 2013.

In August 2012, the Company acquired 100% of the Galaxie
copper-gold property in northwestern British Columbia (the Galaxie Project),
and carried out exploration programs in 2012 at five new prospects within the
property as well as at the Gnat porphyry copper deposit.

Quartz Mountain acquired the ZNT Project by utilizing British
Columbias on-line mineral tenure system in 2012. The ZNT Project is located 15
kilometers southeast of the town of Smithers, British Columbia. Exploration in
2012 and 2013 has identified potential for the discovery of a bulk tonnage
silver deposit at ZNT.

In November 2012, Quartz Mountain entered into an option and
joint venture agreement with Amarc Resources Ltd. (Amarc) pursuant to which
Amarc could earn a 40% ownership interest, with an option to acquire an
additional 10% ownership interest, in the Galaxie and ZNT Projects. Amarc gained
an initial 40% interest in the Galaxie and ZNT Projects by funding a drilling
program at Gnat porphyry copper deposit at the Galaxie Project in late 2012. In
June 2013, Quartz Mountain and Amarc entered into an amendment agreement through
which Amarc had an option until October 31, 2013 to earn a 60% interest in each
of the ZNT and Galaxie properties, by making certain property expenditures.
Amarc earned a 60% interest in the ZNT Project but earned only a 40% interest in
the Galaxie Project. In April 2014, Amarc terminated joint ventures with the
Company and returned earned interests in the Galaxie and ZNT Projects in British
Columbia and Quartz Mountain owned 100% of the Galaxie and ZNT Projects.

After carrying out exploration in 2012 and 2013, the ZNT
Project did not warrant further work. The mineral claims comprising the property
were allowed to lapse subsequent to the year ended July 31, 2016. Work was also
conducted at the Galaxie Project in 2012 and 2013 but, largely because of the
prevailing difficult market conditions for mineral exploration companies, the
Company has since been unable to secure a joint venture or option agreement to
further advance exploration. As a result, during the year ended July 31, 2016,
three mineral claims were returned to a vendor and the remaining mineral claims
comprising the property were allowed to lapse subsequent to year end.

The Company is currently investigating new opportunities.

The Company does not have any operating revenue and anticipates
that it will rely on sales of its equity securities in order to finance its
acquisition and exploration activities.

British Columbia Mineral Tenure

On January 12, 2005, the Province of British Columbia adopted
an on-line mineral tenure system that includes mineral tenure acquisition and
tenure maintenance procedures, as well as a method of converting previous format
claims (legacy claims) to new format claims (cell claims). All of the Company's
mineral tenures have been converted to cell claims resulting in new tenure
numbers and marginally larger claim boundaries. The mineral claims are
maintained through the completion of exploration activities referred to as
"Assessment Work". The financial requirements related to these exploration works
defined by the Provincial Government. Currently the cost to stake a mineral
claim is $1.75 per hectare and the cost of maintaining a claim is $5.00 per
hectare per year during the first two years following location of the mineral
claim, $10.00 per hectare per year in the third and fourth years, $15.00 per
hectare in the fifth and sixth years, and $20.00 per hectare in the seventh and
all succeeding years. If the assessment work is not completed the mineral claims
may be maintained by a cash payment, but if this payment is not made before the
forfeiture date, the tenure is relinquished.

Another type of mineral tenure exists, called crown-granted
mineral claims, on which the perimeter has been physically surveyed.
Crown-granted mineral claims are maintained by paying taxes on an annual basis.
Unlike mineral claims, the taxes can be paid late with penalties and interest.
If the taxes remain unpaid after a specified period of time, the claims will
revert to the Crown and will be subsequently made available for acquisition by
normal procedures.

Environmental Matters

Environmental matters related to mineral exploration companies
in British Columbia are administered by the Ministry of Energy, Mines and
Petroleum Resources. The Company files notice of its work programs with the
Ministry, and a reclamation security is determined that will set aside
sufficient monies to reclaim the exploration sites to their pre-exploration land
use. Typically, no reclamation security is required for non-mechanized exploration activities such as surface
geological, geochemical and geophysical surveys. However, a reclamation security
is generally required for mechanized activities such as machine work and
drilling. The required level of reclamation usually involves leaving the sites
in a geotechnically stable condition, and grooming the sites to both prevent
forest fire hazards and to ensure that natural regeneration of indigenous plant
species can progress within a reasonable period of time.

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|C. | MINERAL PROPERTIES
|-- | ------------------

Angel's Camp Property

The Company retains a 1% net smelter return royalty payable to
the Company on any production from the Angel's Camp property located in Lake
County, Oregon. The Angel's Camp property is currently held by Alamos Gold
Inc.

During the year ended July 31, 2002, the Company sold 100% of
its title, rights and interest in the Angel's Camp property located in Lake
County, Oregon to Seabridge Resources Inc. ("Seabridge"), which later changed
its name to Seabridge Gold Inc., for 300,000 common shares of Seabridge (sold in
prior years), 200,000 common share purchase warrants of Seabridge (exercised and
sold in prior years), cash of $100,000, and a 1% net smelter return royalty
payable to the Company on any production from the Angel's Camp property.

In 2003, Seabridge optioned a 50% interest in the property to
Quincy Gold Inc., which later changed its name to Golden Predator Mines Inc.,
then to Golden Predator Royalty & Development Corporation, then to Golden
Predator Corporation, and is now named Americas Bullion Royalty Corp
(TSX:AMB).

In April 2012, Orsa Ventures Corp. (Orsa) (TSX-V: ORN)
exercised its option to acquire all of Seabridge's remaining undivided 50%
beneficial joint venture interest in the Angel's Camp property. In March 2013,
Orsa announced it had entered into an agreement with Americas Bullion Royalty
Corp. to acquire, over a number of years, the 50% of Angels Camp that it did
not own. Additionally, in March 2013 Orsa announced that it had received
regulatory approval for, and fulfilled closing requirements for the joint
venture purchase agreement with Americas Bullion Royalty Corp. to acquire their
50% joint venture interest in the Angel's Camp Property.

In September 2013, Alamos Gold Inc. reported the completion of
the acquisition of all of the issued and outstanding common shares of Orsa
Ventures Corp.

Other Properties

After carrying out exploration in 2012 and 2013, the ZNT
Project did not warrant further work. The mineral claims comprising the property
were allowed to lapse subsequent to the year ended July 31, 2016. Work was also
conducted at the Galaxie Project in 2012 and 2013 but, largely because of the
prevailing difficult market conditions for mineral exploration companies, the
Company has since been unable to secure a joint venture or option agreement to
further advance exploration. As a result, three mineral claims were returned to
a vendor and the remaining mineral claims comprising the property were allowed
to lapse.

The Company is currently investigating new opportunities.

|D. | ORGANIZATIONAL STRUCTURE
|-- | ------------------------

The Company operates in a single reportable operating segment 
the acquisition, exploration and development of mineral property interests. The
Company is currently focused on the acquisition and exploration of mineral
property interests in Canada, and conducts most of its business affairs through
its Canadian parent entity.

The Company has one inactive wholly-owned subsidiary, Wavecrest
Resources Inc., a Delaware corporation.

|E. | PROPERTY, PLANT AND
EQUIPMENT
|-- | -----------------------------

The Company has no material tangible fixed assets, such as
mining equipment or plant facilities.

|F. | CURRENCY
|-- | --------

All currency amounts in this Annual Report are stated in
Canadian dollars unless otherwise indicated (see Item 3 for exchange rate
information).

17

---

|ITEM 4A | UNRESOLVED STAFF COMMENTS
|------- | -------------------------

Not applicable.

|ITEM 5 | OPERATING AND FINANCIAL REVIEW AND
      PROSPECTS
|------ | --------------------------------------------------

OVERVIEW

As a result of difficult financing conditions for junior
exploration companies, no material exploration work was completed in 2016.
Accordingly, during the fiscal year ended July 31, 2016, the Company's
activities primarily involved seeking joint ventures or farm out agreements to
advance the exploration activities at its properties.

The Company's financial statements are prepared on the basis
that it will continue as a going concern. The Company has incurred losses since
inception, and the ability of the Company to continue as a going concern depends
upon its ability to continue to raise adequate financing and to develop
profitable operations. Quartz Mountain's financial statements do not reflect
adjustments, which could be material, to the carrying values of assets and
liabilities, which may be required should the Company not be able to continue as
a going concern.

The following discussion should be read in conjunction with the
audited annual consolidated financial statements for the years ended July 31,
2016, 2015 and 2014 and the related notes accompanying this Annual Report. The
Company prepares its financial statements in accordance with IFRS. The Company
includes selected financial data prepared in compliance with IFRS without
reconciliation to U.S. GAAP.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The required disclosure is provided in note 2 of the
accompanying audited financial statements as of and for the year ended July 31,
2016, which are presented in Exhibit 99.1 of this Annual Report on Form 20-F.

|A. | OPERATING RESULTS
|-- | -----------------

Comprehensive loss for the year ended July 31, 2016 vs. 2015

The Company recorded an income from operations of $93,000 in
the current year compared to a loss from operations of $1,410,000 in the prior
fiscal year. The decrease in loss during the fiscal year 2016 was due to
curtailed exploration and evaluation activities to conserve cash resources as
well as a gain recorded from the settlement of the Bearclaw debenture.

The following table provides a breakdown of exploration costs
incurred during the year ended July 31, 2016:

|               |   | Galaxie |  |   | Hotai |  |   | ZNT |  |   | Other |  |   | Total 2016 | 
|-------------- | - | ------- |  | - | ----- |  | - | --- |  | - | ----- |  | - | ---------- | 
|Assaying       | $ |        |  | $ |      |  | $ |    |  | $ | 170   |  | $ | 170        | 
|Geological     |   |        |  |   |      |  |   |    |  |   |      |  |   |           | 
|Graphics       |   |        |  |   |      |  |   |    |  |   |      |  |   |           | 
|Sustainability |   |        |  |   |      |  |   |    |  |   | 300   |  |   | 630        | 
|Total          | $ |        |  | $ |      |  | $ |    |  | $ | 470   |  | $ | 470        | 

18

---

The following table provides a breakdown of exploration costs
incurred during the year ended July 31, 2016:

|               |   | Galaxie |  |   | Hotai |  |   | ZNT |  |   | Other (i) |  |   | Total 2015 | 
|-------------- | - | ------- |  | - | ----- |  | - | --- |  | - | --------- |  | - | ---------- | 
|Assaying       |   |        |  |   |      |  |   |    |  | $ | 5,147     |  | $ | 5,147      | 
|Geological     |   |        |  |   |      |  |   |    |  |   | 8,175     |  |   | 8,175      | 
|Graphics       |   |        |  |   |      |  |   |    |  |   | 145       |  |   | 145        | 
|Sustainability |   |        |  |   |      |  |   |    |  |   | 600       |  |   | 600        | 
|Total          | $ |        |  | $ |      |  | $ |    |  | $ | 14,067    |  | $ | 14,067     | 

The following table provides a breakdown of the administration
costs incurred:

|Administration costs         |   | 2016    |  |   | 2015    | 
|---------------------------- | - | ------- |  | - | ------- | 
|Conferences and travel       | $ |        |  | $ |        | 
|Legal, accounting and audit  |   | 28,421  |  |   | 34,775  | 
|Office and miscellaneous     |   | 619     |  |   | 3,678   | 
|Insurance                    |   | 44,075  |  |   | 38,170  | 
|IT Services                  |   | 22,000  |  |   | 47,500  | 
|Salaries and benefits        |   | 189,021 |  |   | 317,319 | 
|Regulatory, trust and filing |   | 34,038  |  |   | 20,209  | 
|Shareholder communications   |   | 3,961   |  |   | 11,122  | 
|Total                        | $ | 322,135 |  | $ | 472,773 | 

Administrative costs have tended to follow the trend in the
Company's exploration and business development activities of the Company. They
have been reduced to minimum levels necessary to meet continued disclosure and
corporate governance requirements of a public company.

Comprehensive loss for the year ended July 31, 2015 vs. 2014

The Company recorded a loss from operations of $1,410,000 in
the 2015 fiscal year compared to a loss from operations of $865,000 in the 2014
fiscal year. The increase in loss during the fiscal year 2015 was due to
impairment of mineral property interest triggered primarily by suppressed prices
of the Companys shares as the capital markets for junior resource companies
continued to deteriorate and the Company curtailed its exploration and
evaluation activities to conserve its cash resources.

19

---

The following tables provide a breakdown of exploration costs
incurred during the year ended July 31, 2014:

|                |   | Galaxie |  |   | Hotai  |  |   | ZNT     |  |   | Other (i) |   |   | Total 2014 | 
|--------------- | - | ------- |  | - | ------ |  | - | ------- |  | - | --------- | - | - | ---------- | 
|Assaying        | $ | 7,274   |  | $ | 1,053  |  | $ | 12,104  |  | $ | 490       |   | $ | 20,921     | 
|Drilling        |   |        |  |   |       |  |   | 90,773  |  |   |          |   |   | 90,773     | 
|Environmental   |   |        |  |   |       |  |   | 1,507   |  |   |          |   |   | 1,507      | 
|Geological      |   | 30,570  |  |   | 3,200  |  |   | 45,615  |  |   | (11,698   | ) |   | 67,687     | 
|Graphics        |   | 204     |  |   |       |  |   | 153     |  |   | 3,060     |   |   | 3,417      | 
|Property fees   |   | 1,409   |  |   |       |  |   |        |  |   |          |   |   | 1,409      | 
|Site activities |   | 8,529   |  |   | 677    |  |   | 19,571  |  |   | 8,772     |   |   | 37,549     | 
|Socioeconomic   |   |        |  |   | 34     |  |   | 15,641  |  |   | 75        |   |   | 15,750     | 
|Helicopter      |   | 4,770   |  |   |       |  |   |        |  |   |          |   |   | 4,770      | 
|Travel          |   | 4,672   |  |   | 5,530  |  |   | 5,337   |  |   | 2,649     |   |   | 18,188     | 
|Total           | $ | 57,428  |  | $ | 10,494 |  | $ | 190,701 |  | $ | 3,348     |   | $ | 261,971    | 

|(i) | Recorded under geological expenses are cost recoveries
      pertaining to Mineral Exploration Tax Credits received or receivable from
      the Government of British Columbia
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table provides a breakdown of the administration
costs incurred:

|Administration costs         |   | 2015    |  |   | 2014    | 
|---------------------------- | - | ------- |  | - | ------- | 
|Conferences and travel       | $ |        |  | $ | 8,147   | 
|Legal, accounting and audit  |   | 34,775  |  |   | 50,321  | 
|Office and administration    |   | 406,667 |  |   | 505,061 | 
|Regulatory, trust and filing |   | 20,209  |  |   | 21,904  | 
|Shareholder communications   |   | 11,122  |  |   | 18,565  | 
|Total                        | $ | 472,773 |  | $ | 603,998 | 

Administrative costs have tended to follow the trend in the
Company's exploration and business development activities of the Company. They
have been reduced to minimum levels necessary to meet continued disclosure and
corporate governance requirements of a public company.

|B. | LIQUIDITY AND CAPITAL
RESOURCES
|-- | -------------------------------

Historically, the Company's source of funding has been the
issuance of equity securities for cash, primarily through private placements to
sophisticated investors and institutions. The Company is in the process of
acquiring and exploring mineral property interests. The Company's continuing
operations are entirely dependent upon the ability of the Company to obtain the
necessary financing to complete the exploration and development of its projects,
the existence of economically recoverable mineral reserves at its projects, the
ability of the Company to obtain the necessary permits to mine, on future
profitable production of any mine and the proceeds from the disposition of its
mineral property interests.

20

---

At July 31, 2016, the Company had cash and cash equivalents of
$0.31 million and a working capital deficit of $2.9 million. Substantially all
of the total short-term liabilities of $3.2 million at July 31, 2016 were
payable to Hunter Dickinson Services Inc. ("HDSI").

In January 2016, the Company made arrangements with HDSI to
settle debt owing for services by HDSI whereby HDSI would forgive debt in the
net amount owing at that time of $3,086,089, if the Company makes a cash payment
of $180,207 and issues 6 million shares to HDSI. Notwithstanding that the TSX
Venture Exchange has approved the transaction with HDSI, the settlement of debt
through the issuance of the shares and cash payment to HDSI has been deferred
and will occur at a mutually agreed date.

The Company believes that its liquid assets at July 31, 2016
are sufficient to meet its known obligations falling due in the next 12 months,
other than the amount payable to HDSI. Future obligations should be considered
together with the Companys history of losses and going concern basis. The
Company is actively managing its cash reserves, and curtailing activities as
necessary in order to ensure its ability to meet payments as they come due.
Future obligations

Additional debt or equity financing will be required to fund
additional exploration or development programs. However, there can be no
assurance that the Company will continue to obtain additional financial
resources or that it will be able to achieve positive cash flows.

Financial market conditions for junior exploration companies
have resulted in very depressed equity prices. A further and continued
deterioration in market conditions will increase the cost of obtaining capital
and significantly limit the availability of funds to the Company in the future.
Accordingly, management is actively monitoring the effects of the current
economic and financing conditions on the Companys business and reviewing
discretionary spending, capital projects and operating expenditures, and
implementing cash and cash management strategies.

Debenture

In August 2012, pursuant to the Sale Agreement relating to the
Galaxie Project, in particular, acquisition of three mineral claims called the
Gnat Property from Bearclaw Capital Corp. (Bearclaw), the Company issued a
convertible debenture (the "Debenture") in the amount of $650,000 maturing on
October 31, 2013, and bearing interest at a rate of 8% per annum (payable
quarterly in arrears) to Bearclaw. The Debenture was convertible into the
Company's common shares at a conversion price of $0.40 per share at any time
before its expiry.

July 2013 Amendment

In July 2013, Quartz Mountain and the holder of the Debenture
entered into an agreement to amend the Debenture, whereby among other things,
the Company made a $50,000 payment toward the Debenture reducing the outstanding
balance to $600,000, the interest rate was increased to 10% per annum from 8%
per annum, and the maturity date was extended to October 31, 2014 from October
31, 2013. Interest payments for the Debenture were payable quarterly in arrears
and the Debenture was convertible into the Company's common shares at an
exercise price of $0.15 per share (previously $0.40 per share) on or before
maturity of the Debenture on October 31, 2014. Any interest accrued, but unpaid,
was to be converted at an exercise price of the higher of $0.15 per share
(previously $0.40 per share) and the market price at the time of conversion.

October 2014 Amendment

Effective October 1, 2014, the Company and Bearclaw amended the
terms of the Debenture (hereafter referred to as the Amended Debenture),
pursuant to which:

| |  | the Company made a principal payment of $50,000 to
      Bearclaw against the Debenture (completed October 8, 2014),                                                                                                           
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                
| |  | the remaining balance (the Principal Sum) of $550,000
      is repayable in equal annual installments of $50,000, commencing on
      January 31, 2015 (first installment of $50,000 was paid on January 31,
      2105); and
| |   |                                                                                                                                                                                                                                
| |  | effective October 1, 2014, the principal amount
      outstanding bears interest at 7.5% per annum, payable quarterly in
      arrears.                                                                                        

Upon a completion by the Company of an equity financing (the
New Financing) for a minimum amount of $1,000,000, at least 50% of any
outstanding balance of the then-outstanding Principal Sum along with any
interest accrued thereon will be automatically converted (the Automatic
Conversion) into the Companys common shares. Bearclaw may elect to convert,
concurrent with the Automatic Conversion, any portion of the remaining 50% of
the then-outstanding Principal Sum and accrued interest thereon (the Optional
Conversion) into Quartz Mountain common shares. For the purposes of Automatic
Conversion and Optional Conversion, subject to the rules and policies of the
TSX-V, the conversion price will be the greater of (i) the volume-weighted average trading
price of common shares of the Company on the TSX-V for the 20 consecutive
trading days ending on the fifth trading day preceding the date of such
conversion, and (ii) the price at which the Company issues common shares
pursuant to the New Financing. For the purposes of Automatic Conversion and
Optional Conversion of any accrued interest, the conversion price will be the
market price of the Companys common shares on the date of conversion. Except
pursuant to the Automatic Conversion and Optional Conversion provisions,
Bearclaw does not have an option to convert the Amended Debenture into the
Companys common shares.

21

---

January 2016 Settlement

In January 2016, the Company entered into an agreement with
Bearclaw to settle the amount owing under the Debenture ($500,000 plus interest)
related to the Gnat Property. As part of the settlement in March 2016, the
Company made a $29,793 cash payment and issued 2 million common shares to
Bearclaw as well as transferring title to the Gnat Property back to Bearclaw at
no cost to complete the settlement.

Capital Resources

The Company had no material commitments for capital
expenditures as at July 31, 2016.

The Company has no lines of credit or other sources of
financing which have been arranged but are as of yet, unused.

At July 31, 2016, there were no externally imposed capital
requirements to which the Company is subject and with which the Company has not
complied.

As the Company continues to incur losses in support of the
advancement of exploration activities on its projects, shareholders equity has
come to be in a deficit position.

Requirement of Financing

The Company is in the process of acquiring and exploring
mineral property interests. The Company's continuing operations are entirely
dependent upon the existence of economically recoverable mineral reserves, the
ability of the Company to obtain the necessary financing to complete the
exploration and development of these projects, obtaining the necessary permits
to mine, on future profitable production of any mine and the proceeds from the
disposition of the mineral property interests.

The Company believes that its current liquid assets, as of the
date of this Annual Report, are sufficient to meet all known obligations, aside
from the amount payable to HDSI, falling due for the next 12 month period.
Additional debt or equity financing will be required to fund additional
exploration or development programs. The Company has a reasonable expectation
that additional funds will be available when necessary to meet ongoing
exploration and development costs. However, there can be no assurance that the
Company will continue to obtain additional financial resources and/or achieve
profitability or positive cash flows. If the Company is unable to obtain
adequate additional financing, the Company will be required to re-evaluate its
planned expenditures until additional funds can be raised through financing
activities.

Except for the Debenture, the Company has no long-term debt,
capital lease obligations, operating leases or any other long-term obligations.

The Company has no "Purchase Obligations" defined as any
agreement to purchase goods or services that is enforceable and legally binding
on the Company that specifies all significant terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction.

|C. | RESEARCH EXPENDITURES
|-- | ---------------------

Quartz Mountain does not carry out any research or development
activities. Please refer to Item 5A and Item 5B above for a
discussion of the expenditures that the Company has incurred in connection with
its business activities.

|D. | TREND INFORMATION
|-- | -----------------

The Company does not currently hold any properties.

|E. | OFF  BALANCE SHEET
ARRANGEMENTS
|-- | --------------------------------

Quartz Mountain has no off-balance sheet arrangements.

22

---

As used in this Item 5E, the term "off-balance sheet
arrangement" means any transaction, agreement or other contractual arrangement
to which an entity, unconsolidated with the Company, is a party, under which the
Company has:

|(a) | any obligation under a guarantee contract that has any of
      the characteristics identified in paragraph 3 of FASB Interpretation No.
      45, Guarantor's Accounting and Disclosure Requirements for Guarantees,
      Including Indirect Guarantees of Indebtedness of Others (November 2002)
      ("FIN 45"), as may be modified or supplemented, excluding the types of
      guarantee contracts described in paragraphs 6 and 7 of FIN 45;                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(b) | a retained or contingent interest in assets transferred
      to an unconsolidated entity or similar arrangement that serves as credit,
      liquidity or market risk support to such entity for such assets;                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(c) | any obligation under a derivative instrument that is both
      indexed to the Company's own stock and classified in stockholders' equity,
      or not reflected, in the Company's statement of financial position;
    or                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(d) | any obligation, including a contingent obligation,
      arising out of a variable interest (as referenced in FASB Interpretation
      No. 46, Consolidation of Variable Interest Entities (January 2003), as may
      be modified or supplemented) in an unconsolidated entity that is held by,
      and material to, the Company, where such entity provides financing,
      liquidity, market risk or credit risk support to, or engages in leasing,
      hedging or research and development services with, the
  Company.

|F. | TABULAR DISCLOSURE OF CONTRACTUAL
    OBLIGATIONS
|-- | -------------------------------------------------

The following obligations existed at July 31, 2016:

|                                      |   | Payments
      due by period | 
|------------------------------------- | - | ---------------------------- | 
|                                      |   |                              | 
|                                      |   | Total                        | 
|Amounts payable and other liabilities | $ | 1,107                        | 
|Due
      to a related party          |   | 3,178,443                    | 
|Total                                 | $ | 3,179,550                    | 

The Company has no material capital lease or operating lease
obligations. The Company has no "Purchase Obligations", defined as any agreement
to purchase goods or services that is enforceable and legally binding on the
Company that specifies all significant terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction.

|G. | SAFE HARBOR
|-- | -----------

The safe harbor provided in Section 27A of the Securities Act
and Section 21E of the Exchange Act applies to forward-looking information
provided pursuant to Item 5Eand Item 5F above.

|ITEM 6 | DIRECTORS, SENIOR MANAGEMENT AND
      EMPLOYEES
|------ | ------------------------------------------------

|A. | DIRECTORS AND SENIOR
MANAGEMENT
|-- | -------------------------------

Ronald W. Thiessen (1952), President, Chief Executive
Officer and Director

Ronald Thiessen is a Chartered Professional Accountant with
professional experience in finance, taxation, mergers, acquisitions and
re-organizations. Since 1986, Mr. Thiessen has been involved in the acquisition
and financing of mining and mineral exploration companies. Mr. Thiessen is a
director of Hunter Dickinson Inc. (HDI) and its wholly owned subsidiary,
Hunter Dickinson Services Inc. (HDSI), a company providing management and
administrative services to several publicly-traded companies and focuses on
directing corporate development and financing activities.

23

---

Mr. Thiessen is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAmarc Resources Ltd.
    Director
    September 1995
    PresentPresident and Chief
      Executive Officer
    September 2000
    November 2014Chief Executive Officer
    November 2014
    PresentDetour Gold Corporation
    Director
    July 2006
    May 2012Great Basin Gold Ltd.
    Director
    October 1993
    June 2013Chairman
    November 2006
    June 2013Northern Dynasty Minerals Ltd.
    Director
    November 1995
    PresentPresident and Chief Executive
      Officer
    November 2001
    PresentQuartz Mountain Resources Ltd.
    Director
    December 2011
    PresentPresident and Chief Executive
      Officer
    December 2011
    PresentTaseko Mines Limited
    Director
    October 1993
    PresentChairman
    May 2006
    Present


Scott D. Cousens (1964), Chairman and Director

Mr. Cousens provides management and financial services to a
number of publicly traded companies associated with Hunter Dickinson Inc. His
focus for the past 20 years has been the development of relationships within the
international investment community. Substantial financings and subsequent
corporate success has established strong ties with North American, European and
Middle Eastern investors. Mr. Cousens is also the Director of Capital Finance
for Hunter Dickinson Inc.

Mr. Cousens is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAmarc Resources Ltd.
    Director
    September 1995
    PresentHeatherdale Resources Ltd.
    Chairman and Director
    November 2009
    PresentNorthcliff Resources Ltd.
    Director
    June 2011
    February 2012Director
    May 2012
    PresentNorthern Dynasty Minerals Ltd.
    Director
    June 1996
    PresentQuartz Mountain Resources Ltd.
    Chairman and Director
    November 2012
    PresentRathdowney Resources Ltd.
    Director
    June 2011
    September 2016Taseko Mines Limited
    Director
    October 1992
    July 2014


24

---

Robert A. Dickinson (1948), Director

Robert Dickinson is an economic geologist who serves as a
member of management of several mineral exploration companies, primarily those
for whom Hunter Dickinson Services Inc. provides services. He holds a Bachelor
of Science degree (Hons. Geology) and a Master of Science degree (Business
Administration - Finance) from the University of British Columbia. Mr. Dickinson
has been active in mineral exploration for over 40 years and was inducted into
the Canadian Mining Hall of Fame in 2012. He is a director of Hunter Dickinson
Services Inc. He is also President and Director of United Mineral Services Ltd.,
a private resource company. He also serves as a Director of the BC Mining Museum
and a Trustee of the BC Mineral Resources Education Program.

Mr. Dickinson is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAmarc Resources Ltd.
    Director
    April 1993
    PresentChairman
    April 2004
    PresentCuris Resources Ltd.
    Director
    November 2010
    November 2012Heatherdale Resources Ltd.
    Director
    November 2009
    PresentNorthcliff Resources Ltd.
    Director
    June 2011
    PresentChairman
    June 2011
    January 2013Northern Dynasty Minerals Ltd.
    Director
    June 1994
    PresentChairman
    April 2004
    PresentQuartz Mountain Resources Ltd.
    Director
    December 2011
    PresentChairman
    December 2011
    November 2012Rathdowney Resources Ltd.
    Director & Chairman
    March 2011
    December 2011Taseko Mines Limited
    Director
    January 1991
    Present


David Mordant (1944), Director

Mr. Mordant is the retired founder and CEO of an agricultural
commodities trading business that was sold to a listed company. He has focused
on commodity and stock market trading in local and international markets since
2002 and has been a guest commentator on CNBC on commodities and stocks.

Mr. Mordant is, or was within the past five years, a director
of the following public companies:

Company
    Positions Held
    From
    ToQuartz Mountain
      Resources Ltd.
    Director
    December 2011
    Present


Gordon Fretwell (1953), Director

Mr. Fretwell holds a B.Comm, degree and graduated from the
University of British Columbia in 1979 with his Bachelor of Law degree. Formerly
a partner in a large Vancouver law firm, Mr. Fretwell has, since 1991, been a
self-employed solicitor (Gordon J. Fretwell Law Corporation) in Vancouver
practicing primarily in the areas of corporate and securities law.

25

---

Mr. Fretwell is, or was within the past five years, an officer
and/or director of the following public companies:

Company
    Positions Held
    From
    ToAsanko Gold Inc.
    Director
    February 2004
    PresentAuryn Resources Inc.
    Director
    October 2013
    PresentBenton Capital Corp. (formerly
      Benton Resources Corp.)
    Director
    July 2003
    July 2013Secretary
    December 2003
    PresentBenton Resources Inc.
    Director
    November 2011
    March 2014Secretary
    November 2011
    PresentCanada Rare Earth Corp.
    Secretary
    June 2009
    PresentCoro
      Mining Corporation
    Director
    June 2009
    PresentCoro
      Resources Corp.
    Director
    January 2009
    PresentCuris Resources Ltd.
    Director
    January 2011
    November 2014CVC
      Cayman Venture Corp.
    Director
    July 2010
    November 2010Lignol Energy Corporation
    Director
    January 2007
    PresentMeritus Minerals Ltd.
    Director
    June 2007
    November 2012Secretary
    August 2009
    PresentNorthern Dynasty Minerals Ltd.
    Director
    June 2004
    PresentQuartz Mountain Resources Ltd.
    Director
    January 2003
    PresentSecretary
    January 2003
    December 2011Rockwell Diamonds Inc.
    Secretary
    September 2012
    PresentSokoman Iron Corp. (formerly Golden Dory
      Resources Corp.)
    Secretary
    August 2008
    Present


Lena Brommeland, BSc (1967), Executive Vice President

Lena Brommeland has a BSc in geology and more than 20 years of
experience in mineral project evaluation and on-site management of large-scale
mineral projects, including the Pebble and Niblack projects both located in
Alaska and the Prosperity project in BC.

Ms. Brommeland is, or was within the past five years, a
director or officer of the following public companies:

Company
    Positions Held
    From
    ToRathdowney
      Resources Ltd.
    Director
    December 2011
    PresentQuartz Mountain Resources Ltd.
    Executive Vice President
    February 2013
    PresentHeatherdale
      Resources Ltd.
    Director
    March
      2014
    Present


26

---

Michael Lee, CPA CA, CIA, CISA, CFE, PMP (1974), Chief
Financial Officer

Michael Lee is a Chartered Professional Accountant and has over
15 years of experience in the areas of governance, risk management and financial
reporting, working primarily with Canadian and US public corporations.

Mr. Lee is, or was within the past five years, a director or
officer of the following public companies:

Company
    Positions Held
    From
    ToQuartz Mountain
      Resources Ltd.
    Chief
      Financial Officer
    February 2013
    Present


Trevor Thomas, LLB (1967), Corporate Secretary

Trevor Thomas has practiced in the areas of corporate
commercial, corporate finance, securities and mining law since 1995, both in a
private practice environment as well as in-house positions and is currently
general counsel for Hunter Dickinson Inc. Prior to joining Hunter Dickinson Inc.
he served as in-house legal counsel with Placer Dome Inc.

Mr. Thomas is, or was within the past five years, an officer of
the following public companies:

Company
    Positions Held
    From
    ToAmarc Resources
      Ltd.
    Secretary
    February 2008
    PresentCuris Resources
      Ltd.
    Secretary
    June
      2013
    November 2014Mineral Mountain
      Resources Ltd.
    Director
    September 2016
    PresentHeatherdale
      Resources Ltd.
    Secretary
    June
      2013
    PresentNorthcliff
      Resources Ltd.
    Secretary
    June
      2011
    PresentNorthern Dynasty
      Minerals Ltd.
    Secretary
    February 2008
    PresentQuartz Mountain
      Resources Ltd.
    Secretary
    June
      2013
    PresentRathdowney
      Resources Ltd.
    Secretary
    March
      2011
    PresentRockwell Diamonds
      Inc.
    Secretary
    February 2008
    September 2012Taseko Mines
      Limited
    Secretary
    July
      2008
    Present


|B. | COMPENSATION
|-- | ------------

During the Company's financial year ended July 31, 2016, the
aggregate cash compensation paid or payable by the Company to its directors and
senior officers was $43,378.

Ronald W. Thiessen, President, Michael Lee, Chief Financial
Officer, and Lena Brommeland, Executive Vice President, are each "Named
Executive Officers" of the Company for the purposes of the following disclosure.

The compensation paid to the Named Executive Officers during
the Company's most recently completed financial year is as set out below:

27

---

Name and principal position
    Fiscal 
    year
    Salary ($)
    Share-based 
    awards
      ($)
    Option-based 
    awards
      ($)
    Pension 
    value ($)
    All other 
    compensation
      ($)
    Total 
    compensation
      ($)Ronald W. Thiessen President and Chief
      Executive Officer
    2016
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2015
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2014
    Nil
    Nil
    Nil
    Nil
    Nil
    NilMichael Lee (2) Chief Financial
      Officer
    2016
    23,973
    Nil
    Nil
    Nil
    Nil
    23,9732015
    28,266
    Nil
    Nil
    Nil
    Nil
    28,2662014
    36,443
    Nil
    Nil
    Nil
    Nil
    36,443Lena Brommeland Executive Vice President
    2016
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2015
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil2014
    16,742
    Nil
    Nil
    Nil
    Nil
    16,742


During the fiscal year ended July 31, 2016, the above named
NEOs did not serve the Company solely on a full-time basis, and their
compensation from the Company is allocated based on the estimated amount of time
spent providing services to the Company.

Director Compensation

The compensation provided to the directors, excluding a
director who is already set out in disclosure for a NEO for the Company's most
recently completed financial year ended July 31, 2016 is as set out below:

Name
    Fees 
    earned ($)
    Share-based 
    awards
      ($)
    Option-based 
    awards
      ($)
    Non-equity 
    incentive plan 
    compensation ($)
    Pension 
    value ($)
    All other 
    compensation
      ($)
    Total ($)Scott Cousens(2)(3)
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilRobert A. Dickinson (2)
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilDavid Mordant (1)(5)
    $5,635
    Nil
    Nil
    Nil
    Nil
    Nil
    NilGordon Fretwell (1)(6)
    $6,885
    Nil
    Nil
    Nil
    Nil
    Nil
    NilJames Kerr(1)(4)
    $6,885
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil


Notes:

|(1) | On July 1, 2015 independent director fees were decreased
      so that they would receive an annual fee of $8,270 for their services plus
      an additional $2,500 annually for holding the position of Committee Chair,
      and $1,500 annually for being a Committee Member; January 2016 and onward,
      fees were reduced to $nil. Prior to July 1, 2015, independent directors
      received an annual fee of $$16,540 for their services plus an additional
      $5,000 annually for holding the position of Committee Chair, and $3,000
      annually for being a Committee Member.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(2) | Pursuant to the Corporate Services Agreement with HDSI,
      compensation for Messrs. Lee, Cousens and Dickinson is allocated to the
      Company on the basis of time spent in respect of the Company's
      business.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(3) | Mr. Cousens is the Chairman of the board and the
      Compensation Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(4) | Mr. Kerr was formerly the Chairman of the Audit and Risk
      Committee as well as a member of the Compensation Committee and Nominating
      and Governance Committee. He resigned as a director and from these
      positions in February 2016                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(5) | Mr. Mordant is a member of the Audit and Risk Committee
      and Nominating and Governance Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(6) | Mr. Fretwell is the Chairman of the Nominating and
      Governance Committee as well as a member of the Audit and Risk Committee
      and Compensation Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                

28

---

Pension and Retirement Benefits

Neither the Company nor its subsidiary provides any pension,
retirement or similar benefits.

|C. | BOARD PRACTICES
|-- | ---------------

All directors were re-elected at the annual general meeting of
the Company's shareholders held on February 18, 2016. All directors have a term
of office expiring at the next annual general meeting of the Company's
shareholders, which is expected to be held in early 2017. All officers have a
term of office lasting until their removal or replacement by the Board of
Directors.

Directors Service Contracts

There is no written employment contract between the Company and
any director.

There is no service contract between any director of the
Company and either the Company or its subsidiary, which provides for any
benefits upon termination of employment.

Audit and Risk Committee

Composition of Audit and Risk Committee

The members of the Audit and Risk Committee are David Mordant
and Gordon J. Fretwell (Chairman). All Audit and Risk Committee members are
financially literate and no Audit and Risk Committee members are officers,
employees or Control Persons of the Company.

Relevant Education and Experience

As a result of their education and experience, each member of
the Audit and Risk Committee has familiarity with, an understanding of, or
experience in the accounting principles used by the Company to prepare its
financial statements, and the ability to assess the general application of those
principles in connection with estimates, accruals and reserves; reviewing or
evaluating financial statements that present a breadth and level of complexity
of accounting issues that are generally comparable to the breadth and complexity
of issues that can reasonably be expected to be raised by the Company's
financial statements; and an understanding of internal controls and procedures
for financial reporting.

Mr. Fretwell is an experienced securities lawyer and Mr.
Mordant is an experienced businessman with corporate finance experience. See
disclosure under A. Directors and Senior Management above.

Audit and Risk Committees Charter

The function of the Audit and Risk Committee is to oversee the
employment and compensation of the Companys independent auditor, and other
matters under the authority of the Committee. The Committee also assists the
Board of Directors in carrying out its oversight responsibilities relating to
the Companys financial, accounting and reporting processes, the Companys
system of internal accounting and financial controls, the Companys compliance
with related legal and regulatory requirements, and the fairness of transactions
between the Company and related parties.

The Audit and Risk Committee has a charter that sets out its
mandate and responsibilities, which is contained in Appendix 6 of the Corporate
Governance Policies and Procedures Manual (available for download from the
Companys website under Corporate Governance at
www.quartzmountainresources.com). The Audit and Risk Committee has the
following responsibilities and authority:

Relationship with Independent Auditor

Subject to the law of British Columbia as to the role of the
Shareholders in the appointment of independent auditors, the Committee shall
have the sole authority to appoint or replace the independent auditor.

The Committee shall be directly responsible for the
compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work.

The independent auditor shall report directly to the Committee.

The Committee shall approve in advance all audit and permitted
non-audit services with the independent auditor, including the terms of the
engagements and the fees payable; provided that the Committee Chairman may
approve services to be performed by the independent auditor between Committee
meetings if the amount of the fee does not exceed $50,000,
provided that any such approval shall be reported to the Committee at the next
meeting thereof. The Committee may delegate to a subcommittee the authority to
grant pre-approvals of audit and permitted non-audit services, provided that the
decision of any such subcommittee shall be presented to the full Committee at
its next scheduled meeting.

29

---

At least annually, the Committee shall review and evaluate the
experience and qualifications of the lead partner and senior members of the
independent auditor team.

At least annually, the Committee shall obtain and review a
report from the independent auditor regarding:

| |  | the independent auditors internal quality-control
      procedures;                                                                                                                                                                                                                                                    
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | any material issues raised by the most recent internal
      quality-control review, or peer review, of the auditor, or by any inquiry
      or investigation by governmental or professional authorities within the
      preceding five years respecting one or more independent audits carried out
      by the firm;
| |  | any steps taken to deal with any such issues; and                                                                                                                                                                                                                                                                       
| |  | all relationships between the independent auditor and the
      Company.                                                                                                                                                                                                                                                

At least annually, the Committee shall evaluate the
qualifications, performance and independence of the independent auditor,
including considering whether the auditors quality controls are adequate and
the provision of permitted non-audit services is compatible with maintaining the
auditors independence.

The Committee shall ensure the rotation of the lead (or
coordinating) audit partner having primary responsibility for the audit, the
concurring partner responsible for reviewing the audit, and other audit partners
as required by law.

The Committee shall consider whether, in order to assure
continuing auditor independence, it is appropriate to adopt a policy of rotating
the independent auditing firm on a regular basis.

The Committee shall recommend to the Board policies for the
Companys hiring of employees or former employees of the independent auditor who
were engaged on the Companys account or participated in any capacity in the
audit of the Company.

The Committee shall oversee the implementation by management of
appropriate information technology systems for the Company, including as
required for proper financial reporting and compliance.

Financial Statement and Disclosure Review

The Committee shall review and discuss with management and the
independent auditor the annual audited financial statements, including
disclosures made in managements discussion and analysis, and recommend to the
Board whether the audited financial statements should be filed with applicable
securities regulatory authorities and included in the Companys annual reports.

The Committee shall review and discuss with management (and, to
the extent the Committee deems it necessary or appropriate, the independent
auditor) the Companys quarterly financial statements, including disclosures
made in managements discussion and analysis, and recommend to the Board whether
such financial statements should be filed with applicable securities regulatory
authorities.

The Committee shall review and discuss with management and the
independent auditor significant financial reporting issues and judgments made in
connection with the preparation of the Companys financial statements, including
the independent auditors assessment of the quality of the Companys accounting
principles, any significant changes in the Companys selection or application of
accounting principles, any major issues as to the adequacy of the Companys
internal controls over financial reporting, and any special steps adopted in
light of material control deficiencies.

At least annually and prior to the publication of annual
audited financial statements, the Committee shall review and discuss with
management and the independent auditor a report from the independent auditor on:

| |  | all critical accounting policies and practices used by
      the Company;                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | all alternative accounting treatments of financial
      information that have been discussed with management since the prior
      report, ramifications of the use of such alternative disclosures and
      treatments, the treatment preferred by the independent auditor, and an
      explanation of why the independent auditors preferred method was not
      adopted; and,                              
| |  | other material written communications between the
      independent auditor and management since the prior report, such as any
      management letter or schedule of unadjusted differences, the development,
      selection and disclosure of critical accounting estimates, and analyses of
      the effect of alternative assumptions, estimates or GAAP methods on the
      Companys financial statements.

Prior to their filing or issuance, the Committee shall review
the Companys Annual Information Form, quarterly and annual earnings press
releases, and other financial press releases, including the use of pro forma
or adjusted non-GAAP information.

30

---

The Committee shall review and discuss with management the
financial information and earnings guidance provided to analysts and rating
agencies. Such discussion may be specific or it may be in general regarding the
types of information to be disclosed and the types of presentations to be made.

Conduct of the Annual Audit

The Committee shall oversee the annual audit, and in the course
of such oversight the Committee shall have the following responsibilities and
authority:

The Committee shall meet with the independent auditor prior to
the audit to discuss the planning and conduct of the annual audit, and shall
meet with the independent auditor as may be necessary or appropriate in
connection with the audit.

The Committee shall ascertain that the independent auditor is
registered and in good standing with the Canadian Public Accounting Board and
that the independent auditor satisfies all applicable independence standards.
The Committee shall obtain from the auditor a written statement delineating all
relationships between the auditor and the Company as per applicable independence
standards, and review relationships that may impact the objectivity and
independence of the auditor.

The Committee shall discuss with the independent auditor the
matters required to be discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit, including:

| |  | the adoption of, or changes to, the Companys significant
      auditing and accounting principles and practices as suggested by the
      independent auditor, internal auditors or management;                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the management letter provided by the independent auditor
      and the Companys response to that letter; and                                                                                                        
| |  | any difficulties encountered in the course of the audit
      work, including any restrictions on the scope of activities or access to
      requested information, and any significant disagreements with management.

The Committee shall make such inquiries to the management and
the independent auditor as the Committee members deem necessary or appropriate
to satisfy themselves regarding the efficacy of the Companys financial and
internal controls and procedures and the auditing process.

Compliance and Oversight

The Committee shall meet periodically with management and the
independent auditor in separate executive sessions. The Committee may also, to
the extent it deems necessary or appropriate, meet with the Companys investment
bankers and financial analysts who follow the Company.

The Committee shall discuss with management and the independent
auditor the effect of regulatory and accounting initiatives as well as
off-balance sheet structures on the Companys financial statements.

The Committee shall discuss with management the Companys major
financial risk exposures and the steps management has taken to monitor and
control such exposures, including the Companys risk assessment and risk
management policies, and regularly review the top risks identified by management
and the policies and practices adopted by the Company to mitigate those risks.

If required, the Committee shall annually review with
management and the independent auditor the disclosure controls and procedures
and confirm that the Company (with CEO and CFO participation) has evaluated the
effectiveness of the design and operation of the controls within 90 days prior
to the date of filing of the AIF. The Committee also shall review with
management and the independent auditor any deficiencies in the design and
operation of internal controls and significant deficiencies or material
weaknesses therein, and any fraud involving management or other employees who
have a significant role in the Companys internal controls. As a part of that
review, the Committee shall review the process followed in preparing and
verifying the accuracy of the required CEO and CFO annual certifications.

If required, the Committee shall annually, prior to the filing
of the AIF, review managements internal control report and the independent
auditors assessment of the internal controls and procedures.

The Committee shall establish procedures for the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.

The Committee shall discuss with management and the independent
auditor any correspondence with regulators or governmental agencies and any
employee complaints or reports which raise material issues regarding the
Companys financial statements or accounting policies.

At least annually, the Committee shall meet with the Companys
legal counsel and discuss any legal matters that may have a material impact on
the financial statements or the Companys compliance policies.

31

---

The Committee shall oversee the preparation of reports relating
to the Audit and Risk Committee as required under applicable laws, regulations
and stock exchange requirements.

The Committee shall exercise oversight with respect to
anti-fraud programs and controls.

Related Party Transactions

The Committee shall review for fairness to the Company proposed
transactions, contracts and other arrangements between the Company and its
subsidiaries and any related party or affiliate, and make recommendations to the
Board whether any such transactions, contracts and other arrangements should be
approved or continued. The foregoing shall not include any compensation payable
pursuant to any plan, program, contract or arrangement subject to the authority
of the Companys Compensation Committee.

As used herein the term related party means any officer or
director of the Company or any subsidiary, or any shareholder holding a greater
than 10% direct or indirect financial or voting interest in the Company, and the
term affiliate means any person, whether acting alone or in concert with
others, that has the power to exercise a controlling influence over the Company
and its subsidiaries. "Related party" includes Hunter Dickinson Services Inc.

Compensation Committee

The Boards Compensation Committee currently consists of Scott
Cousens (Chairman) and Gordon Fretwell.

The function of the Compensation Committee is to assist the
Board in carrying out its responsibilities relating to executive and director
compensation. The Compensation Committee has a charter that sets out its mandate
and responsibilities, which is contained in Appendix 7 of the Corporate
Governance Policies and Procedures Manual (available for download from the
Companys website under Corporate Governance at
www.quartzmountainresources.com). In furtherance of its purpose, the
Compensation Committee has the following responsibilities and authority:

|(a) | The Compensation Committee shall recommend to the Board
      the form and amount of compensation to be paid by the Company to directors
      for service on the Board and on Board committees. The Compensation
      Committee shall review director compensation at least annually.                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(b) | The Compensation Committee shall annually review the
      Company's base compensation structure and the Company's incentive
      compensation, stock option and other equity based compensation programs
      and recommend changes in or additions in such structure and plans to Board
      as needed.                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(c) | The Compensation Committee shall recommend to the Board
      the annual base compensation of the Company's executive officers and
      senior managers (collectively the "Officers").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(d) | The Compensation Committee shall recommend to the Board
      the range of increase or decrease in the annual base compensation for
      non-Officer personnel providing services to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(e) | The Compensation Committee shall recommend to the Board
      annual corporate goals and objectives under any incentive compensation
      plan adopted by the Company for Officers and non- Officer personnel
      providing services to the Company, and recommend incentive compensation
      participation levels for Officers and non-Officer personnel providing
      services to the Company under any such incentive compensation plan. In
      determining the incentive component of compensation, the Committee will
      consider the Company's performance and relative shareholder return, the
      values of similar incentives at comparable companies and the awards given
      in past years.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(f) | The Compensation Committee shall evaluate the performance
      of Officers generally and in light of annual corporate goals and
      objectives under any incentive compensation plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(g) | The Compensation Committee shall periodically review with
      the Chairman and CEO their assessments of corporate officers and senior
      managers and succession plans, and make recommendations to the Board
      regarding appointment of officers and senior managers.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(h) | The Compensation Committee shall provide oversight of the
      performance evaluation and incentive compensation of non-Officer personnel
      providing services to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(i) | The Compensation Committee shall administer the Company's
      stock option and other equity based compensation plans and determines the
      annual grants of stock options and other equity based
  compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(j) | The Compensation Committee shall recommend to the
      Nominating and Governance Committee the qualifications and criteria for
      membership on the Compensation Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

32

---

Other Board Committees

The Company has a Nominating and Governance Committee which is
responsible for identifying new candidates for the Board of Directors as
necessary, after considering what competencies and skills the directors as a
group should possess and assessing the competencies and skills the directors as
a group should possess and assessing the competencies and skills of the existing
and any proposed directors, and considering the appropriate size of the Board.
The Committee is also responsible for developing and recommending to the Board a
set of corporate governance principles applicable to the Company, and overseeing
the evaluation of the Board and Senior Management. The current members of the
Nominating and Governance Committee are Gordon Fretwell, and David Mordant.

The Company has a Special Committee composed of independent
directors of the Company in order to consider the best interests of the Company
related to all matters in respect of any proposed transactions with members of
the Hunter Dickinson group of companies, including proposed transactions between
non-arms length parties, and to make recommendations to the Board in respect of
such matters. The current members of the Special Committee are Gordon Fretwell,
and David Mordant.

|D. | EMPLOYEES
|-- | ---------

At October 3rd, 2016 the Company had no employees
and had contracted staff on an as-needed basis. The directors of the Company
primarily administer the Company's functions through the employees of HDSI, a
private company with certain directors in common with the Company (see Item 7
 "MajorShareholders and Related Party Transactions").

|E. | SHARE OWNERSHIP
|-- | ---------------

Security Holdings of Directors and Senior Management

As at October 3rd, 2016, the directors and officers
of Quartz Mountain and their respective affiliates, directly and indirectly, own
or control as a group an aggregate of 4,594,421 common shares or 16.7% .

As at October 3rd, 2016, the Company's directors and
officers beneficially own the following number of the Company's common shares,
options and warrants:

Name of Insider
    Securities Beneficially
      Owned (1)(3)
    As a % of outstanding
      common sharesLena
      Brommeland
    nil
    nilScott Cousens
    147,177 common shares (3)60,000 options
    0.5%Robert A. Dickinson
    2,171,730 common shares
      (2)  60,000 options(3)
    7.4%Gordon J. Fretwell
    60,000 options(3)
    nilMichael Lee
    nil
    nilDavid Mordant
    107,000 common shares 60,000
      options (3)
    0.4%Ronald W. Thiessen
    2,080,514 common shares
      60,000 options (3)
    7.1%Trevor Thomas
    19,500 options
    nil


Notes:

|(1) | This information has been provided by the individual
      directors as provided by them on www.sedi.ca    
|--- | -----------------------------------------------------------------------------------------------------------
|    |                                                                                                            
|(2) | Certain of these shares are beneficially owned through a
      private company controlled by Mr. Dickinson.
|    |                                                                                                            
|(3) | Options to purchase common shares at $0.45 per share
      expiring on January 18, 2017.                   

33

---

Share Option Plan

As at October 3rd, 2016, an aggregate of 768,000
options were outstanding pursuant to the Company's share option plan (the
"Plan"), described below, and an aggregate of 1,961,951 common shares remained
available for issuance pursuant to the Plan, described below.

The Company adopted the Plan in order to advance the interests
of the Company by providing a means to encourage directors, officers, employees,
and others who provide services to the Company and its subsidiaries to acquire
shares of the Company, thereby increasing their proprietary interest in the
Company, encouraging them to remain associated with the Company and furnishing
them with additional incentive to advance the interests of the Company in the
conduct of their affairs.

The Plan is a "rolling" plan, whereby the maximum number of
shares that may be reserved for issuance pursuant to all option awards granted
under the Plan is 10% of the Company's outstanding common shares, as calculated
at the time that an award is granted. Under the policies of the TSX-V (the
"TSX-V"), the continuation of the Plan required shareholder approval by ordinary
resolution at each annual general meeting of the Company's shareholders. The
Company's shareholders confirmed the Plan in accordance with the policies of the
TSX-V at the Company's last annual general meeting, held on February 17, 2015.
Pursuant to the Plan, if outstanding options are exercised, or expire, or the
number of issued and outstanding common shares of the Company increases, the
number of options available to grant under the Plan increases proportionately.
The exercise price of each option is set by the Compensation Committee of the
Board of Directors at the time of grant but cannot be less than the Discounted
Market Price (as defined in, and determined in accordance with, the policies of
the TSX-V). Options can have a maximum term of five years (or 10 years if the
Company becomes a Tier 1 issuer on the TSX-V) and typically terminate 90 days
following the termination of the optionee's employment or engagement, except in
the case of retirement or death. Vesting of options is at the discretion of the
Board of Directors at the time the options are granted.

Eligible Optionees

Under the policies of the TSX-V, to be eligible for the
issuance of a stock option under the Plan, an optionee must either be a
director, officer or employee of the Company, or a consultant or an employee of
a company providing management or other services to the Company, or its
subsidiaries, at the time the option is granted.

Options may be granted only to an individual or to a company
that is wholly-owned by individuals eligible for an option grant. If the option
is granted to a non-individual, the company must provide the TSX-V with an
undertaking that it will not permit any transfer of its securities, nor issue
further securities, to any other individual or entity as long as the incentive
stock option remains in effect without the consent of TSX-V.

Limitations on Awards

No optionee can be granted an option or options to purchase
more than 5% of the outstanding listed shares of the Company in any one year
period.

|ITEM 7 | MAJOR SHAREHOLDERS AND RELATED PARTY
      TRANSACTIONS
|------ | -------------------------------------------------------

|A. | MAJOR SHAREHOLDERS
|-- | ------------------

Quartz Mountain is a publicly-held corporation, with its shares
held by residents of Canada, the United States of America and other countries.
To the best of Quartz Mountain's knowledge, other than as noted below, no
person, corporation or other entity beneficially owns, directly or indirectly,
or controls more than 5% of the common shares of Quartz Mountain, the only class
of securities with voting rights. For these purposes, "beneficial ownership"
means the sole or shared power to vote or direct the voting or to dispose or
direct the disposition of any security.

As of October 3rd, 2016, Quartz Mountain had
authorized unlimited common shares without par value, of which 29,299,513 were
issued and outstanding. The following table sets forth certain information with
respect to beneficial ownership of the Company's common stock as of October
3rd, 2016 by each shareholder known to be the beneficial owner of
more than 5% of the common stock.

---

Identity of Person or Group
    Shares
    Percentage Beneficially
      Owned of ClassFinsbury Exploration Ltd.
    2,038,111
    7.0%Robert A. Dickinson
    2,171,730
    7.4%Ronald Thiessen
    2,080,514
    7.1%Bearclaw Capital Corp.
    2,000,000
    6.8%


All of the common shares have the same voting rights and no
major shareholders of the Company have different voting rights.

Geographic Breakdown of Shareholders

As of October 3rd, 2016, Quartz Mountain's register
of shareholders indicates that Quartz Mountain's common shares are held as
follows:

Location
    Number of registered shareholders of
      record
    Number of shares
    Percentage of total sharesCanada
    106
    27,822,242
    94.96%United States
    1,474
    1,438,721
    4.91%Other
    13
    38,550
    0.13%Total
    1,593
    27,299,513
    100.0%


Shares registered in the names of intermediaries, were assumed
to be held by residents of the same country in which the intermediary is
located.

Transfer Agent

The Company's common shares are recorded on the books of its
transfer agent, Computershare Investor Services Inc., located at 4th Floor, 510
Burrard Street, Vancouver, B.C. V6C 3B9; telephone (604) 661-9400 in registered
form. However, the majority of the Company's common shares are registered in the
name of intermediaries such as brokerage houses and clearing houses (on behalf
of their respective brokerage clients). Quartz Mountain does not have knowledge
or access to the identities of the beneficial owners of such shares registered
through intermediaries.

Control

To the best of its knowledge, the Company is not owned or
controlled, directly or indirectly, by any other corporation, by any foreign
government or by any other natural or legal person, severally or jointly, other
than as noted above under Major Shareholders. There are no arrangements known to
Quartz Mountain which, at a subsequent date, may result in a change in control
of the Company.

Insider Reports under the Securities Acts of British
Columbia, Alberta and Ontario

Since the Company is a reporting issuer under the Securities
Acts of British Columbia, Alberta and Ontario, certain "insiders" of the Company
(including its directors, certain executive officers, and persons who directly
or indirectly beneficially own, control or direct more than 10% of its common
shares) are generally required to file insider reports of changes in their
ownership of Quartz Mountain's common shares within five days following the
trade under National Instrument 55-104  Insider Reporting Requirements and
Exemptions, as adopted by the CSA, and the Securities Act (Ontario). Copies of
such reports are available for public inspection at the offices of the British
Columbia Securities Commission, 9th Floor, 701 West Georgia Street, Vancouver,
British Columbia V7Y 1L2, (604) 899-6500 or at the British Columbia Securities
Commission web site, www.bcsc.bc.ca. In British Columbia, all insider
reports must be filed electronically five days following the date of the trade
at www.sedi.ca. The public is able to access these reports at
www.sedi.ca.

35

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|B. | RELATED PARTY TRANSACTIONS
|-- | --------------------------

Except as disclosed herein, Quartz Mountain has not, since the
beginning of its last fiscal year ended July 31, 2016:

|(1) | entered into any transactions which are material to
      Quartz Mountain, or a related party or any transactions unusual in their
      nature or conditions involving goods, services or tangible or intangible
      assets to which Quartz Mountain or any of its former subsidiaries was a
      party;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                             
|(2) | entered into any transactions or loans between the
      Company and:                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                             
|    | (a)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|    | (b)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|    | (c)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|    | (d)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|    | (e)                                                                                                                                                                                                                                                                                                         

Hunter Dickinson Services Inc. ("HDSI")

As an umbrella organization, HDSI provides, both cost and
expertise advantages to the companies through access to a shared
multidisciplinary team of mining and financial professionals. This includes:
management capability, geological, engineering and environmental expertise,
financial acumen, and administrative and support services. In addition, HDSI
organizes and shares leased premises and office and technical equipment for
staff to perform their duties.

Quartz Mountain's business relationship with HDSI consists of
utilizing the services described above. HDSI provides these services to Quartz
Mountain which includes the services of Quartz Mountain's President, pursuant to
a standard (within the group) Geological Management and Administration Services
Agreement with HDSI, dated June 1, 2008 (the "Geological Management and
Administration Services Agreement") and amended July 2, 2010. Because of cross
membership of many of the boards of directors within the group, certain members
of management and the Board of Directors of Quartz Mountain are also members of
the board of directors or employees of HDSI.

HDSI's arrangements are also flexible enough that it is able to
defer collection of monthly service invoices and on occasion, where surplus
funds are available to HDSI, make short term advances to members of the group.
The Geological Management and Administration Services Agreement can be
terminated by either party on 30 days' notice.

In January 2016, the Company reached agreement with Hunter
Dickinson Services Inc. (HDSI) to settle debt owing for services by HDSI. HDSI
agreed to forgive debt in the net amount owing at that time of $3,086,089, if
Quartz Mountain makes a cash payment of $180,207 and issues 6 million shares to
HDSI. Notwithstanding that the TSX Venture Exchange has also approved the
transaction with HDSI, settlement of debt by the issuance of the shares and cash
payment to HDSI has been deferred and will occur at a mutually agreed date.

During the fiscal year ended July 31, 2016, the Company had
transactions totaling $205,167 (2015  $322,063; 2014  $535,392) to HDSI for
services and reimbursements of third party disbursements pursuant to this
agreement.

|C. | INTERESTS OF EXPERTS AND
COUNSEL
|-- | --------------------------------

Not applicable.

36

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|ITEM 8 | FINANCIAL INFORMATION
|------ | ---------------------

|A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
      INFORMATION
|-- | -------------------------------------------------------------

Quartz Mountain's audited consolidated annual financial
statements as at and for the year ended July 31, 2016, 2015 and 2014 are
attached in Exhibit 99.1 to this Annual Report.

Legal Proceedings

The Company is not, and has not been in the recent past,
involved in any legal or arbitration proceedings, including governmental
proceedings and those relating to bankruptcy, receivership, or similar
proceedings.

Dividend Policy

The Company has not paid any dividends on its outstanding
common shares since its incorporation and does not anticipate that it will do so
in the foreseeable future. All funds of the Company are being retained for
administration expenses and mineral property investigations.

|B. | SIGNIFICANT CHANGES
|-- | -------------------

There have been no significant changes to the accompanying
financial statements, except as disclosed in this Annual Report on Form 20-F.

|ITEM 9 | THE OFFER AND LISTING
|------ | ---------------------

|A. | OFFER AND LISTING DETAILS
|-- | -------------------------

Trading Markets

The following tables set forth for the periods indicated the
price history, rounded to nearest 1 cent, of the Company's common shares on the
TSX-V (NEX board from 2008 to 2011) and on the OTC Grey Market:

TSX-V
    OTCFiscal year ended July 31
    High (Cdn$)
    Low (Cdn$)
    High (US$)
    Low (US$)2016
    0.04
    0.04
    0.04
    0.042015
    0.06
    0.01
    0.07
    0.022014
    0.12
    0.04
    0.09
    0.062013
    0.35
    0.07
    0.28
    0.072012
    0.50
    0.20
    0.50
    0.202011
    0.49
    0.18
    0.42
    0.162010
    0.30
    0.15
    0.30
    0.13


37

---

TSX-V
    OTCFiscal Quarter
    High (Cdn$)
    Low (Cdn$)
    High (US$)
    Low (US$)Q4, 2016
    0.065
    0.02
    0.02
    0.01Q3, 2016
    0.025
    0.02
    0.01
    0.00Q2, 2016
    0.02
    0.01
    0.00
    0.00Q1, 2016
    0.01
    0.01
    0.01
    0.00Q4, 2015
    0.03
    0.01
    0.02
    0.02Q3, 2015
    0.04
    0.03
    0.02
    0.02Q2, 2015
    0.05
    0.03
    0.04
    0.02Q1, 2015
    0.06
    0.04
    0.07
    0.04


TSX-V
    OTCMonth
    High (Cdn$)
    Low (Cdn$)
    High (US$)
    Low (US$)September 2016
    0.055
    0.055
    0.04
    0.04August 2016
    0.065
    0.035
    0.04
    0.02July 2016
    0.055
    0.04
    0.02
    0.02June 2016
    0.05
    0.02
    0.02
    0.01May 2016
    0.02
    0.015
    0.01
    0.01April 2016
    0.025
    0.015
    0.01
    0.01


|B. | PLAN OF DISTRIBUTION
|-- | --------------------

Not applicable.

|C. | MARKETS
|-- | -------

On December 30, 2011, the Company acquired a qualifying
property and was relisted on the main board of the TSX Venture Exchange, trading
under the symbol QZM. The Company continues to trade on the OTC Grey Market
under the symbol QZMRF.

On February 17, 2005, the Company transferred its listing to
NEX, a separate board of TSX-V and the Company's common shares traded on NEX
under the symbol QZM.H.

Prior to February 17, 2005, the Company's common shares were
listed and traded in Canada on Tier 2 on the TSX-V, under the symbol QZM.V. The
transition to Tier 2 became effective December 23, 2003. Prior to this, the
Company traded on Tier 3 on the TSX-V.

|D. | SELLING SHAREHOLDERS
|-- | --------------------

Not applicable.

38

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|E. | DILUTION
|-- | --------

Not applicable.

|F. | EXPENSES OF THE ISSUE
|-- | ---------------------

Not applicable.

|ITEM 10 | ADDITIONAL INFORMATION
|------- | ----------------------

|A. | SHARE CAPITAL
|-- | -------------

Not applicable.

|B. | MEMORANDUM AND ARTICLES OF
  ASSOCIATION
|-- | ----------------------------------------

Articles of Association

Quartz Mountain's original corporate constituting documents
comprised of the Memorandum and Articles of Association were registered with the
British Columbia Registrar of Companies under Corporation No. BC0253743. The
Companys Memorandum and Articles have subsequently been replaced by a Notice of
Articles and Articles under the Business Corporations Act (British Columbia)
(BCA), and the Articles were last amended by shareholder resolution at the
Companys Annual General Meeting, held on February 24, 2014. The Company's
articles of incorporation do not contain a description or place any restrictions
on the Company's objects and purposes. For more information, see the Articles of
Amalgamation filed as Exhibit 10.1 to this Form 20-F.

Certain Powers of Directors

The Companys articles require that a director or senior
officer who holds any office or possesses any property, right or interest that
could result, directly or indirectly, in the creation of a duty or interest that
materially conflicts with that individuals duty or interest as a director or
senior officer, must disclose the nature and extent of the conflict as required
by the BCA.

The BCA requires that every director or senior officer who is a
party to, or who is a director or officer of, or has a material interest in, any
person who is a party to, a material contract or transaction or a proposed
material contract or transaction with the Company, must disclose in writing to
the Company or request to have entered in the minutes of a meeting or a consent
resolution of directors, the nature and extent of his or her interest, and must
refrain from voting in respect of the contract or transaction, unless the
contract or transaction is: (a) one relating primarily to his or her
remuneration as a director of the corporation or an affiliate; (b) one for
indemnity of or insurance for directors as contemplated under the BCA; or (c)
one with an affiliate of the Company. However, a director who is prohibited by
the BCA from voting on a material contract or proposed material contract may be
counted in determining whether a quorum is present for the purpose of the
resolution, if the director disclosed his or her interest in accordance with the
BCA and the contract or transaction was reasonable and fair to the corporation
at the time it was approved.

The Company's Articles provide that the Board will from time to
time determine the remuneration to be paid to the directors. The Company must
reimburse each director for the reasonable expenses that he or she may incur in
and about the business of the Company. The Board may also, by resolution, award
special remuneration to any director for undertaking any professional or other
services on the Company's behalf, outside than the ordinary duties of a director
of the Company.

The Company's Articles provide that the directors may: (a)
borrow money in the manner and amount, on the security, from the sources and on
the terms and conditions that they consider appropriate; (b) issue bonds,
debentures and other debt obligations either outright or as security for any
liability or obligation of the Company or any other person and at such discounts
or premiums and on such other terms as the directors consider appropriate; (c)
guarantee the repayment of money by any other person or the performance of any
obligation of any other person; and (d) mortgage, charge, whether by way of
specific or floating charge, grant a security interest in, or give other
security on, the whole or any part of the present and future assets and
undertaking of the Company.

The directors may, by resolution, amend or repeal any articles
that regulate the business or affairs of the Company. The BCA requires the
directors to submit any such amendment or repeal to the Company's shareholders at the next meeting of shareholders, and the
shareholders may confirm, reject or amend the amendment or repeal.

39

---

The Board does not have a mandatory retirement policy for
directors based solely on age. The Company has a practice of conducting annual
Board, Committee and individual director evaluations, pursuant to which each
director's performance is evaluated annually. There is no minimum share
ownership requirement for directors qualification.

Authorized Share Capital

The Company's authorized share capital consists of an unlimited
number of common shares without par value, and an unlimited number of preferred
shares without par value.

All outstanding common shares of the Company are fully paid and
non-assessable. The holders of the common shares are entitled to one vote per
share at meetings of shareholders and to receive dividends if, as and when
declared by the directors of the Company. In the event of voluntary or
involuntary liquidation, dissolution or winding-up of the Company, after payment
of all outstanding debts, the remaining assets of the Company available for
distribution would be distributed rateably to the holders of the common shares.
Holders of the common shares of the Company have no pre-emptive, redemption,
exchange or conversion rights.

The preferred shares may be issued in series on such terms as
determined by the Company's directors in accordance with the class rights and
restrictions. The special rights and restrictions attaching to the preferred
shares are set forth in Part 26 of the Articles, and provide the directors with
wide latitude to create a series of preferred shares which may be convertible
into common shares, and have attached to them rights that rank ahead of common
shares in respect of entitlement to dividends. The directors may, by resolution,
create, define and attach special rights and restrictions to the shares of each
series, subject to the special rights and restrictions attached to the preferred
shares.

Except as described above, the Company may not create any class
or series of shares or make any modification to the provisions attaching to the
Company's shares without the affirmative vote of a majority of the votes cast by
the holders of the common shares.

Majority Voting Policy

Under the Companys Corporate Governance Manual, in an
uncontested director election, if the votes for the election of a director
nominee at a meeting of shareholders are fewer than the number voted withhold,
the nominee is expected to submit his or her resignation promptly after the
meeting for the consideration of the Nominating and Governance Committee. The
Nominating and Governance Committee will make a recommendation to the Board of
Directors after reviewing the matter, and the Board of Directors will then
decide whether to accept or reject the resignation. The Boards decision to
accept or reject the resignation will be disclosed to shareholders. The nominee
will not participate in any Nominating and Governance Committee deliberations
whether to accept or reject the resignation.

Meetings of Shareholders

The BCA requires the Company to call an annual shareholders'
meeting not later than 15 months after holding the last preceding annual meeting
and permits the Company to call a special shareholders' meeting at any time. In
addition, in accordance with the BCA, the holders of not less than 5% of the
Company's shares carrying the right to vote at a meeting sought to be held may
requisition the directors to call a special shareholders' meeting for the
purposes stated in the requisition. The Company is required to mail a notice of
meeting and management information circular to registered shareholders not less
than 21 days and not more than 2 months prior to the date of any annual or
special shareholders' meeting. These materials are also filed with Canadian
securities regulatory authorities and furnished to the SEC. The Company's
articles provide that a quorum of two shareholders in person or represented by
proxy holding or representing by proxy at least 10% of the Company's issued
shares carrying the right to vote at the meeting is required to transact
business at a shareholders' meeting. In addition to shareholders and their duly
appointed proxies and corporate representatives, the Company's directors,
president, secretary, lawyers, auditors, and invitees of the directors or
chairperson, are entitled to be admitted to the Company's annual and special
shareholders' meetings; provided that any such person is not to be counted in
the quorum and is not entitled to vote at the meeting unless that person is a
shareholder or proxy holder entitled to vote at the meeting.

Disclosure of Share Ownership

The Securities Act (British Columbia) currently provides that
the directors and certain officers of an issuer and its subsidiaries and any
person or company that beneficially owns, directly or indirectly, voting securities of an issuer or that exercises control or direction
over voting securities of an issuer or a combination of both, carrying more than
10% of the voting rights attached to all the issuer's outstanding voting
securities (a "significant shareholder"), as well as the directors and officers
of any significant shareholder, (each an "insider") must, within 10 days of
becoming an insider, file a report in the required form effective the date on
which the person became an insider, disclosing any direct or indirect beneficial
ownership of, or control or direction over, securities of the reporting issuer.
The Securities Act (British Columbia) also provides for the filing of a report
by an insider of a reporting issuer who acquires or transfers securities of the
issuer or who enters into, materially amends or terminates an arrangement the
effect of which is to alter the insider's economic interest in a security of the
issuer or the insider's economic exposure to the issuer. These reports must be
filed within five days after the reportable event. The Securities Act (British
Columbia) also requires these reports to be filed by reporting insiders within
five days after the applicable event, though are only required by the Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, directors,
any person or company responsible for a principal business unit and significant
shareholders of the Company.

40

---

The Securities Act (British Columbia) also provides that a
person or company that acquires (whether or not by way of a take-over bid, offer
to acquire or subscription from treasury) beneficial ownership of voting or
equity securities or securities convertible into voting or equity securities of
a reporting issuer that, together with previously held securities brings the
total holdings of such holder to 10% or more of the outstanding securities of
that class, must (a) issue and file forthwith a news release containing certain
prescribed information and (b) file a report within two business days containing
the same information set out in the news release. The acquiring person or
company must also issue a news release and file a report each time it acquires,
in the aggregate, an additional 2% or more of the outstanding securities of the
same class and every time there is a change to any material fact in the news
release and report previously issued and filed.

The rules in the United States governing the ownership
threshold above which shareholder ownership must be disclosed are more stringent
than those discussed above. Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), imposes reporting requirements on persons
who acquire beneficial ownership (as such term is defined in Rule 13d-3 under
the Exchange Act) of more than 5% of a class of an equity security registered
under Section 12 of the Exchange Act. In general, such persons must file, within
ten days after such acquisition, a report of beneficial ownership with the SEC
containing the information prescribed by the regulations under Section 13(d) of
the Exchange Act and promptly file an amendment to such report to disclose any
material change to the information reported, including any acquisition or
disposition of 1% or more of the outstanding securities of the registered class.
Certain institutional investors that acquire shares in the ordinary course of
business and not with the purpose or with the effect of changing or influencing
the control of the issuer, are subject to lesser disclosure obligations.

|C. | MATERIAL CONTRACTS
|-- | ------------------

Quartz Mountain's material contracts as of October
3rd, 2016 are:

| |  | Corporate Services Agreement with HDSI, dated
      for reference July 2, 2010. See Item 7B;
| | - | --------------------------------------------------------------------------------------------
| |  | Bearclaw and HDSI debt settlement agreement.
      See ITEM 19 EXHIBITS                     

|D. | EXCHANGE CONTROLS
|-- | -----------------

Quartz Mountain is incorporated pursuant to the laws of the
Province of British Columbia, Canada. There is no law or governmental decree or
regulation in Canada that restricts the export or import of capital, or affects
the remittance of dividends, interest or other payments to a non-resident holder
of common shares, other than withholding tax requirements. Any such remittances
to United States residents are generally subject to withholding tax, however no
such remittances are likely in the foreseeable future. See "Taxation",
below.

There is no limitation imposed by Canadian law or by the
charter or other constituent documents of the Company on the right of a
non-resident to hold or vote Common Shares of the Company, except that the
Investment Canada Act may require review and approval by the Minister of
Industry (Canada) of certain acquisitions of "control" of the Company by a
"non-Canadian". The threshold for acquisitions of "control" is generally defined
as being one-third or more of the voting shares of the Company. "Non-Canadian"
generally means an individual who is not a Canadian citizen or
a permanent resident of Canada, or a corporation, partnership, trust or joint
venture that is ultimately controlled by non-Canadians.

41

---

|E. | TAXATION
|-- | --------

Certain Canadian Federal Income Tax Information for United
States Residents

The following summarizes the principal Canadian federal income
tax considerations generally applicable to the holding and disposition of common
shares of the Company by a holder (a) who, for the purposes of the Income Tax
Act (Canada) the ("Tax Act"), is not resident in Canada or deemed to be resident
in Canada, deals at arm's length and is not affiliated with the Company, holds
the common shares as capital property and does not use or hold the common shares
in the course of carrying on, or otherwise in connection with, a business in
Canada, and (b) who, for the purposes of the Canada-United States Income Tax
Convention (the "Treaty"), is a resident of the United States, has never been a
resident of Canada, has not held or used (and does not hold or use) common
shares in connection with a permanent establishment or fixed base in Canada, and
who qualifies for the full benefits of the Treaty. The Canada Revenue Agency has
recently introduced special forms to be used in order to substantiate
eligibility for Treaty benefits, and affected holders should consult with their
own advisors with respect to these forms and all relevant compliance matters.

Holders who meet all such criteria in clauses (a) and (b) above
are referred to herein as a "U.S. Holder" or "U.S. Holders", and this summary
only addresses such U.S. Holders. The summary does not deal with special
situations, such as particular circumstances of traders or dealers, limited
liability companies, tax-exempt entities, insurers, financial institutions
(including those to which the mark-to-market provisions of the Tax Act apply),
or entities considered fiscally transparent under applicable law, or otherwise.

This summary is based on the current provisions of the Tax Act
and the regulations thereunder, all proposed amendments to the Tax Act and
regulations publicly announced by the Minister of Finance (Canada) to the date
hereof, the current provisions of the Treaty and our understanding of the
current administrative practices of the Canada Revenue Agency. It has been
assumed that all currently proposed amendments to the Tax Act and regulations
will be enacted as proposed and that there will be no other relevant change in
any governing law, the Treaty or administrative policy, although no assurance
can be given in these respects. This summary does not take into account
provincial, U.S. or other foreign income tax considerations, which may differ
significantly from those discussed herein.

This summary is not exhaustive of all possible Canadian income
tax consequences. It is not intended as legal or tax advice to any particular
U.S. Holder and should not be so construed. The tax consequences to a U.S.
Holder will depend on that U.S. Holder's particular circumstances. Accordingly,
all U.S. Holders or prospective U.S. Holders should consult their own tax
advisors with respect to the tax consequences applicable to them having regard
to their own particular circumstances. The discussion below is qualified
accordingly.

Dividends

Dividends paid or deemed to be paid or credited by the Company
to a U.S. Holder are subject to Canadian withholding tax. Under the Treaty, the
rate of withholding tax on dividends paid to a U.S. Holder is generally limited
to 15% of the gross dividend (or 5% in the case of a U.S. holder that is a
corporate shareholder owning at least 10% of the Company's voting shares),
provided the U.S. Holder can establish entitlement to the benefits of the
Treaty.

Disposition

A U.S. Holder is generally not subject to tax under the Tax Act
in respect of a capital gain realized on the disposition of a common share in
the open market, unless the share is "taxable Canadian property" to the holder
thereof and the U.S. Holder is not entitled to relief under the Treaty.

Provided that the Company's common shares are listed on a
"designated stock exchange" for purposes of the Tax Act (which currently
includes the TSX Venture) at the time of disposition, a common share will
generally not constitute taxable Canadian property to a U.S. Holder unless, at
any time during the 60 month period ending at the time of disposition, (i) the
U.S. Holder or persons with whom the U.S. Holder did not deal at arm's length
(or the U.S. Holder together with such persons) owned 25% or more of the issued
shares of any class or series of the Company AND (ii) more than 50% of the fair
market value of the share was derived directly or indirectly from certain types
of assets, including real or immoveable property situated in Canada, Canadian
resource properties or timber resource properties, and options, interests or
rights in respect of any of the foregoing. Common shares may also be deemed to
be taxable Canadian property under the Tax Act in certain specific
circumstances. A U.S. Holder holding Common shares as taxable Canadian property
should consult with the U.S. Holder's own tax advisors in advance of any disposition of Common shares or deemed disposition under the
Tax Act in order to determine whether any relief from tax under the Tax Act may
be available by virtue of the Treaty, and any related compliance procedures.

42

---

United States Federal Income Tax Consequences

The Company believes it is likely a "passive foreign investment
company" which may have adverse U.S. federal income tax consequences for U.S.
shareholders

U.S. shareholders should be aware that the Company believes it
was classified as a passive foreign investment company ("PFIC") during the tax
year ended July 31, 2016, and may be a PFIC in future tax years. If the Company
is a PFIC for any year during a U.S. shareholder's holding period, then such
U.S. shareholder generally will be required to treat any gain realized upon a
disposition of common shares, or any so-called "excess distribution" received on
its common shares, as ordinary income, and to pay an interest charge on a
portion of such gain or distributions, unless the shareholder makes a timely and
effective "qualified electing fund" election ("QEF Election") or a
"mark-to-market" election with respect to the common shares. A U.S. shareholder
who makes a QEF Election generally must report on a current basis its share of
the Company's net capital gain and ordinary earnings for any year in which the
Company is a PFIC, whether or not the Company distributes any amounts to its
shareholders. However, U.S. shareholders should be aware that there can be no
assurance that the Company will satisfy record keeping requirements that apply
to a qualified electing fund, or that the Company will supply U.S. shareholders
with information that such U.S. shareholders require to report under the QEF
Election rules, in the event that the Company is a PFIC and a U.S. shareholder
wishes to make a QEF Election. Thus, U.S. shareholders may not be able to make a
QEF Election with respect to their common shares. A U.S. shareholder who makes
the mark-to-market election generally must include as ordinary income each year
the excess of the fair market value of the common shares over the taxpayer's
basis therein. This paragraph is qualified in its entirety by the discussion
below under the heading "Certain United States Federal Income Tax
Considerations." Each U.S. shareholder should consult its own tax advisor
regarding the PFIC rules and the U.S. federal income tax consequences of the
acquisition, ownership, and disposition of common shares.

Certain United States Federal Income Tax Considerations

The following is a general summary of certain material U.S.
federal income tax considerations applicable to a U.S. Holder (as defined below)
arising from and relating to the acquisition, ownership, and disposition of
common shares.

This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a U.S. Holder arising from and
relating to the acquisition, ownership, and disposition of common shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences to such U.S. Holder, including specific tax consequences
to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is
not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any U.S. Holder. This summary does not address the
U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and
local, and foreign tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of common shares. Each prospective U.S. Holder should
consult its own tax advisor regarding the U.S. federal, U.S. federal alternative
minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax
consequences relating to the acquisition, ownership and disposition of common
shares.

No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the "IRS") has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of common shares. This summary is not binding on the
IRS, and the IRS is not precluded from taking a position that is different from,
and contrary to, the positions taken in this summary. In addition, because the
authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of
the conclusions described in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, the Convention Between Canada and the United States of America with
Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended
(the "Canada-U.S. Tax Convention"), and U.S. court decisions that are applicable
and, in each case, as in effect and available, as of the date of this document. Any of the authorities on which
this summary is based could be changed in a material and adverse manner at any
time, and any such change could be applied on a retroactive or prospective basis
which could affect the U.S. federal income tax considerations described in this
summary. This summary does not discuss the potential effects, whether adverse or
beneficial, of any proposed legislation that, if enacted, could be applied on a
retroactive or prospective basis.

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U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a
beneficial owner of common shares that is for U.S. federal income tax purposes:

     an individual who is a citizen or
resident of the U.S.;

     a corporation (or other entity
taxable as a corporation for U.S. federal income tax purposes) organized under
the laws of the U.S., any state thereof or the District of Columbia;

     an estate whose income is subject to
U.S. federal income taxation regardless of its source; or

     a trust that (1) is subject to the
primary supervision of a court within the U.S. and the control of one or more
U.S. persons for all substantial decisions or (2) has a valid election in effect
under applicable Treasury Regulations to be treated as a U.S. person.

Non-U.S. Holders

For purposes of this summary, a "non-U.S. Holder" is a
beneficial owner of common shares that is not a U.S. Holder. This summary does
not address the U.S. federal income tax consequences to non-U.S. Holders arising
from and relating to the acquisition, ownership, and disposition of common
shares. Accordingly, a non-U.S. Holder should consult its own tax advisor
regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences (including
the potential application of and operation of any income tax treaties) relating
to the acquisition, ownership, and disposition of common shares.

U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed

This summary does not address the U.S. federal income tax
considerations applicable to U.S. Holders that are subject to special provisions
under the Code, including, but not limited to, the following: (a) U.S. Holders
that are tax-exempt organizations, qualified retirement plans, individual
retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are
financial institutions, underwriters, insurance companies, real estate
investment trusts, or regulated investment companies; (c) U.S. Holders that are
broker-dealers, dealers, or traders in securities or currencies that elect to
apply a mark-to-market accounting method; (d) U.S. Holders that have a
"functional currency" other than the U.S. Dollar; (e) U.S. Holders that own
common shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (f) U.S. Holders that acquired common shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(g) U.S. Holders that hold common shares other than as a capital asset within
the meaning of Section 1221 of the Code (generally, property held for investment
purposes); or (h) U.S. Holders that own or have owned (directly, indirectly, or
by attribution) 10% or more of the total combined voting power of the
outstanding shares of the Company. This summary also does not address the U.S.
federal income tax considerations applicable to U.S. Holders who are: (a) U.S.
expatriates or former long-term residents of the U.S.; (b) persons that have
been, are, or will be a resident or deemed to be a resident in Canada for
purposes of the Income Tax Act (Canada) (the "Tax Act"); (c) persons that use or
hold, will use or hold, or that are or will be deemed to use or hold common
shares in connection with carrying on a business in Canada; (d) persons whose
common shares constitute "taxable Canadian property" under the Tax Act; or (e)
persons that have a permanent establishment in Canada for the purposes of the
Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions
under the Code, including, but not limited to, U.S. Holders described
immediately above, should consult their own tax advisor regarding the U.S.
federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S.
state and local, and foreign tax consequences relating to the acquisition,
ownership and disposition of common shares.

If an entity or arrangement that is classified as a partnership
(or other "pass-through" entity) for U.S. federal income tax purposes holds
common shares, the U.S. federal income tax consequences to such entity and the
partners (or other owners) of such entity generally will depend on the
activities of the entity and the status of such partners (or owners). This
summary does not address the tax consequences to any such owner. Partners (or
other owners) of entities or arrangements that are classified as partnerships or
as "pass-through" entities for U.S. federal income tax purposes should consult
their own tax advisors regarding the U.S. federal income tax consequences
arising from and relating to the acquisition, ownership, and disposition of
common shares.

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Passive Foreign Investment Company Rules

If the Company were to constitute a "passive foreign investment
company" under the meaning of Section 1297 of the Code (a "PFIC", as defined
below) for any year during a U.S. Holder's holding period, then certain
potentially adverse rules will affect the U.S. federal income tax consequences
to a U.S. Holder resulting from the acquisition, ownership and disposition of
common shares. The Company believes that it was classified as a PFIC during the
tax year ended July 31, 2016, and may be a PFIC in future tax years. The
determination of whether any corporation was, or will be, a PFIC for a tax year
depends, in part, on the application of complex U.S. federal income tax rules,
which are subject to differing interpretations. In addition, whether any
corporation will be a PFIC for any tax year depends on the assets and income of
such corporation over the course of each such tax year and, as a result, cannot
be predicted with certainty as of the date of this document. Accordingly, there
can be no assurance that the IRS will not challenge any determination made by
the Company (or any subsidiary of the Company) concerning its PFIC status. Each
U.S. Holder should consult its own tax advisor regarding the PFIC status of the
Company and any subsidiary of the Company.

In addition, in any year in which the Company is classified as
a PFIC, such holder would be required to file an annual report with the IRS
containing such information as Treasury Regulations and/or other IRS guidance
may require. U.S. Holders should consult their own tax advisors regarding the
requirements of filing such information returns under these rules, including the
requirement to file a IRS Form 8621.

PFIC Status of the Company

The Company generally will be a PFIC if, for a tax year, (a)
75% or more of the gross income of the Company is passive income (the "income
test") or (b) 50% or more of the value of the Company's assets either produce
passive income or are held for the production of passive income, based on the
quarterly average of the fair market value of such assets (the "asset test").
"Gross income" generally includes all sales revenues less the cost of goods
sold, plus income from investments and from incidental or outside operations or
sources, and "passive income" generally includes, for example, dividends,
interest, certain rents and royalties, certain gains from the sale of stock and
securities, and certain gains from commodities transactions.

Active business gains arising from the sale of commodities
generally are excluded from passive income if substantially all (85% or more) of
a foreign corporation's commodities are stock in trade or inventory, depreciable
property used in a trade or business, or supplies regularly used or consumed in
a trade or business and certain other requirements are satisfied.

For purposes of the PFIC income test and asset test described
above, if the Company owns, directly or indirectly, 25% or more of the total
value of the outstanding shares of another corporation, the Company will be
treated as if it (a) held a proportionate share of the assets of such other
corporation and (b) received directly a proportionate share of the income of
such other corporation. In addition, for purposes of the PFIC income test and
asset test described above, and assuming certain other requirements are met,
"passive income" does not include certain interest, dividends, rents, or
royalties that are received or accrued by the Company from certain "related
persons" (as defined in Section 954(d)(3) of the Code), to the extent such items
are properly allocable to the income of such related person that is not passive
income.

Under certain attribution rules, if the Company is a PFIC, U.S.
Holders will generally be deemed to own their proportionate share of the
Company's direct or indirect equity interest in any company that is also a PFIC
(a ''Subsidiary PFIC''), and will be subject to U.S. federal income tax on their
proportionate share of (a) any "excess distributions," as described below, on
the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of
the stock of a Subsidiary PFIC by the Company or another Subsidiary PFIC, both
as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In
addition, U.S. Holders may be subject to U.S. federal income tax on any indirect
gain realized on the stock of a Subsidiary PFIC on the sale or disposition of
common shares. Accordingly, U.S. Holders should be aware that they could be
subject to tax even if no distributions are received and no redemptions or other
dispositions of common shares are made.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC for any tax year during which a U.S.
Holder owns common shares, the U.S. federal income tax consequences to such U.S.
Holder of the acquisition, ownership, and disposition of common shares will
depend on whether and when such U.S. Holder makes an election to treat the
Company and each Subsidiary PFIC, if any, as a "qualified electing fund" or
"QEF" under Section 1295 of the Code (a "QEF Election") or makes a
mark-to-market election under Section 1296 of the Code (a "Mark-to-Market
Election"). A U.S. Holder that does not make either a QEF Election or a
Mark-to-Market Election will be referred to in this summary as a "Non-Electing
U.S. Holder."

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A Non-Electing U.S. Holder will be subject to the rules of
Section 1291 of the Code (described below) with respect to (a) any gain
recognized on the sale or other taxable disposition of common shares and (b) any
excess distribution received on the common shares. A distribution generally will
be an "excess distribution" to the extent that such distribution (together with
all other distributions received in the current tax year) exceeds 125% of the
average distributions received during the three preceding tax years (or during a
U.S. Holder's holding period for the common shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale
or other taxable disposition of common shares (including an indirect disposition
of the stock of any Subsidiary PFIC), and any "excess distribution" received on
common shares or with respect to the stock of a Subsidiary PFIC, must be ratably
allocated to each day in a Non-Electing U.S. Holder's holding period for the
respective common shares. The amount of any such gain or excess distribution
allocated to the tax year of disposition or distribution of the excess
distribution and to years before the entity became a PFIC, if any, would be
taxed as ordinary income. The amounts allocated to any other tax year would be
subject to U.S. federal income tax at the highest tax rate applicable to
ordinary income in each such year, and an interest charge would be imposed on
the tax liability for each such year, calculated as if such tax liability had
been due in each such year. A Non-Electing U.S. Holder that is not a corporation
must treat any such interest paid as "personal interest," which is not
deductible.

If the Company is a PFIC for any tax year during which a
Non-Electing U.S. Holder holds common shares, the Company will continue to be
treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of
whether the Company ceases to be a PFIC in one or more subsequent tax years. A
Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to
recognize gain (which will be taxed under the rules of Section 1291 of the Code
discussed above), but not loss, as if such common shares were sold on the last
day of the last tax year for which the Company was a PFIC.

QEF Election

A U.S. Holder that makes a timely and effective QEF Election
for the first tax year in which its holding period of its common shares begins
generally will not be subject to the rules of Section 1291 of the Code discussed
above with respect to its common shares. A U.S. Holder that makes a timely and
effective QEF Election will be subject to U.S. federal income tax on such U.S.
Holder's pro rata share of (a) the net capital gain of the Company, which will
be taxed as long-term capital gain to such U.S. Holder, and (b) the ordinary
earnings of the Company, which will be taxed as ordinary income to such U.S.
Holder. Generally, "net capital gain" is the excess of (a) net long-term capital
gain over (b) net short-term capital loss, and "ordinary earnings" are the
excess of (a) "earnings and profits" over (b) net capital gain. A U.S. Holder
that makes a QEF Election will be subject to U.S. federal income tax on such
amounts for each tax year in which the Company is a PFIC, regardless of whether
such amounts are actually distributed to such U.S. Holder by the Company.
However, for any tax year in which the Company is a PFIC and has no net income
or gain, U.S. Holders that have made a QEF Election would not have any income
inclusions as a result of the QEF Election. If a U.S. Holder that made a QEF
Election has an income inclusion, such a U.S. Holder may, subject to certain
limitations, elect to defer payment of current U.S. federal income tax on such
amounts, subject to an interest charge. If such U.S. Holder is not a
corporation, any such interest paid will be treated as "personal interest,"
which is not deductible.

A U.S. Holder that makes a timely and effective QEF Election
with respect to the Company generally (a) may receive a tax-free distribution
from the Company to the extent that such distribution represents "earnings and
profits" of the Company that were previously included in income by the U.S.
Holder because of such QEF Election and (b) will adjust such U.S. Holder's tax
basis in the common shares to reflect the amount included in income or allowed
as a tax-free distribution because of such QEF Election. In addition, a U.S.
Holder that makes a QEF Election generally will recognize capital gain or loss
on the sale or other taxable disposition of common shares.

The procedure for making a QEF Election, and the U.S. federal
income tax consequences of making a QEF Election, will depend on whether such
QEF Election is timely. A QEF Election will be treated as "timely" if such QEF
Election is made for the first year in the U.S. Holder's holding period for the
common shares in which the Company was a PFIC. A U.S. Holder may make a timely
QEF Election by filing the appropriate QEF Election documents at the time such
U.S. Holder files a U.S. federal income tax return for such year. If a U.S.
Holder does not make a timely and effective QEF Election for the first year in
the U.S. Holder's holding period for the common shares, the U.S. Holder may
still be able to make a timely and effective QEF Election in a subsequent year
if such U.S. Holder meets certain requirements and makes a "purging" election to
recognize gain (which will be taxed under the rules of Section 1291 of the Code
discussed above) as if such common shares were sold for their fair market value
on the day the QEF Election is effective. If a U.S. Holder owns PFIC stock
indirectly through another PFIC, separate QEF Elections must be made for the
PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC
for the QEF rules to apply to both PFICs.

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A QEF Election will apply to the tax year for which such QEF
Election is timely made and to all subsequent tax years, unless such QEF
Election is invalidated or terminated or the IRS consents to revocation of such
QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent tax
year, the Company ceases to be a PFIC, the QEF Election will remain in effect
(although it will not be applicable) during those tax years in which the Company
is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent
tax year, the QEF Election will be effective and the U.S. Holder will be subject
to the QEF rules described above during any subsequent tax year in which the
Company qualifies as a PFIC.

U.S. Holders should be aware that there can be no assurances
that the Company will satisfy the record keeping requirements that apply to a
QEF, or that the Company will supply U.S. Holders with information that such
U.S. Holders are required to report under the QEF rules, in the event that the
Company is a PFIC. Thus, U.S. Holders may not be able to make a QEF Election
with respect to their common shares. Each U.S. Holder should consult its own tax
advisor regarding the availability of, and procedure for making, a QEF Election.

A U.S. Holder makes a QEF Election by attaching a completed IRS
Form 8621, including a PFIC Annual Information Statement, to a timely filed
United States federal income tax return. However, if the Company cannot provide
the required information with regard to the Company or any of its Subsidiary
PFICs, U.S. Holders will not be able to make a QEF Election for such entity and
will continue to be subject to the rules discussed above that apply to
Non-Electing U.S. Holders with respect to the taxation of gains and excess
distributions.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the
common shares are marketable stock. The common shares generally will be
"marketable stock" if the common shares are regularly traded on (a) a national
securities exchange that is registered with the Securities and Exchange
Commission, (b) the national market system established pursuant to section 11A
of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange
that is regulated or supervised by a governmental authority of the country in
which the market is located, provided that (i) such foreign exchange has trading
volume, listing, financial disclosure, and surveillance requirements, and meets
other requirements and the laws of the country in which such foreign exchange is
located, together with the rules of such foreign exchange, ensure that such
requirements are actually enforced and (ii) the rules of such foreign exchange
effectively promote active trading of listed stocks. If such stock is traded on
such a qualified exchange or other market, such stock generally will be
"regularly traded" for any calendar year during which such stock is traded,
other than in de minimis quantities, on at least 15 days during each calendar
quarter.

A U.S. Holder that makes a Mark-to-Market Election with respect
to its common shares generally will not be subject to the rules of Section 1291
of the Code discussed above with respect to such common shares. However, if a
U.S. Holder does not make a Mark-to-Market Election beginning in the first tax
year of such U.S. Holder's holding period for the common shares or such U.S.
Holder has not made a timely QEF Election, the rules of Section 1291 of the Code
discussed above will apply to certain dispositions of, and distributions on, the
common shares.

A U.S. Holder that makes a Mark-to-Market Election will include
in ordinary income, for each tax year in which the Company is a PFIC, an amount
equal to the excess, if any, of (a) the fair market value of the common shares,
as of the close of such tax year over (b) such U.S. Holder's tax basis in such
common shares. A U.S. Holder that makes a Mark-to-Market Election will be
allowed a deduction in an amount equal to the excess, if any, of (a) such U.S.
Holder's adjusted tax basis in the common shares, over (b) the fair market value
of such common shares (but only to the extent of the net amount of previously
included income as a result of the Mark-to-Market Election for prior tax years).

A U.S. Holder that makes a Mark-to-Market Election generally
also will adjust such U.S. Holder's tax basis in the common shares to reflect
the amount included in gross income or allowed as a deduction because of such
Mark-to-Market Election. In addition, upon a sale or other taxable disposition
of common shares, a U.S. Holder that makes a Mark-to-Market Election will
recognize ordinary income or ordinary loss (not to exceed the excess, if any, of
(a) the amount included in ordinary income because of such Mark-to-Market
Election for prior tax years over (b) the amount allowed as a deduction because
of such Mark-to-Market Election for prior tax years). Losses that exceed this
limitation are subject to the rules generally applicable to losses provided in
the Code and Treasury Regulations.

A Mark-to-Market Election applies to the tax year in which such
Mark-to-Market Election is made and to each subsequent tax year, unless the
common shares cease to be "marketable stock" or the IRS consents to revocation
of such election. Each U.S. Holder should consult its own tax advisor regarding
the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market
Election with respect to the common shares, no such election may be made with
respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as
owning, because such stock is not marketable. Hence, the Mark-to-Market Election
will not be effective to eliminate the application of the default rules
of Section 1291 of the Code described above with respect to deemed dispositions
of Subsidiary PFIC stock or excess distributions from a Subsidiary PFIC.

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Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed
Treasury Regulations that, subject to certain exceptions, would cause a U.S.
Holder that had not made a timely QEF Election to recognize gain (but not loss)
upon certain transfers of common shares that would otherwise be tax-deferred
(e.g., gifts and exchanges pursuant to corporate reorganizations). However, the
specific U.S. federal income tax consequences to a U.S. Holder may vary based on
the manner in which common shares are transferred.

Certain additional adverse rules may apply with respect to a
U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder
makes a QEF Election. For example, under Section 1298(b)(6) of the Code, a U.S.
Holder that uses common shares as security for a loan will, except as may be
provided in Treasury Regulations, be treated as having made a taxable
disposition of such common shares.

Special rules also apply to the amount of foreign tax credit
that a U.S. Holder may claim on a distribution from a PFIC. Subject to such
special rules, foreign taxes paid with respect to any distribution in respect of
stock in a PFIC are generally eligible for the foreign tax credit. The rules
relating to distributions by a PFIC and their eligibility for the foreign tax
credit are complicated, and a U.S. Holder should consult with its own tax
advisor regarding the availability of the foreign tax credit with respect to
distributions by a PFIC.

The PFIC rules are complex, and each U.S. Holder should consult
its own tax advisor regarding the PFIC rules and how the PFIC rules may affect
the U.S. federal income tax consequences of the acquisition, ownership, and
disposition of common shares.

Ownership and Disposition of Common Shares

The following discussion is subject to the rules described
above under the heading "Passive Foreign Investment Company Rules."

Distributions on Common Shares

A U.S. Holder that receives a distribution, including a
constructive distribution, with respect to a common share will be required to
include the amount of such distribution in gross income as a dividend (without
reduction for any Canadian income tax withheld from such distribution) to the
extent of the current or accumulated "earnings and profits" of the Company, as
computed for U.S. federal income tax purposes. A dividend generally will be
taxed to a U.S. Holder at ordinary income tax rates if the Company is a PFIC. To
the extent that a distribution exceeds the current and accumulated "earnings and
profits" of the Company, such distribution will be treated first as a tax-free
return of capital to the extent of a U.S. Holder's tax basis in the common
shares and thereafter as gain from the sale or exchange of such common shares.
(See "Sale or Other Taxable Disposition of common shares" below). However, the
Company may not maintain the calculations of earnings and profits in accordance
with U.S. federal income tax principles, and each U.S. Holder should therefore
assume that any distribution by the Company with respect to the common shares
will constitute ordinary dividend income. Dividends received on common shares
generally will not be eligible for the "dividends received deduction". In
addition, the Company does not anticipate that its distributions will constitute
qualified dividend income eligible for the preferential tax rates applicable to
long-term capital gains. The dividend rules are complex, and each U.S. Holder
should consult its own tax advisor regarding the application of such rules.

Sale or Other Taxable Disposition of Common Shares

Upon the sale or other taxable disposition of common shares, a
U.S. Holder generally will recognize capital gain or loss in an amount equal to
the difference between the U.S. Dollar value of cash received plus the fair
market value of any property received and such U.S. Holder's tax basis in such
common shares sold or otherwise disposed of. A U.S. Holder's tax basis in common
shares generally will be such holder's U.S. Dollar cost for such common shares.
Gain or loss recognized on such sale or other disposition generally will be
long-term capital gain or loss if, at the time of the sale or other disposition,
the common shares have been held for more than one year.

Preferential tax rates currently apply to long-term capital
gain of a U.S. Holder that is an individual, estate, or trust. There are
currently no preferential tax rates for long-term capital gain of a U.S. Holder
that is a corporation. Deductions for capital losses are subject to significant
limitations under the Code.

Additional Tax on Passive Income

For tax years beginning after December 31, 2012, certain
individuals, estates and trusts whose income exceeds certain thresholds will be
required to pay a 3.8% Medicare surtax on "net investment income" including,
among other things, dividends and net gain from dispositions of property (other
than property held in a trade or business). U.S. Holders should consult with
their own tax advisors regarding the effect, if any, of this tax on their
ownership and disposition of common shares.

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Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign
currency, or on the sale, exchange or other taxable disposition of common
shares, generally will be equal to the U.S. Dollar value of such foreign
currency based on the exchange rate applicable on the date of receipt
(regardless of whether such foreign currency is converted into U.S. Dollars at
that time). A U.S. Holder will have a basis in the foreign currency equal to its
U.S. Dollar value on the date of receipt. Any U.S. Holder who converts or
otherwise disposes of the foreign currency after the date of receipt may have a
foreign currency exchange gain or loss that would be treated as ordinary income
or loss, and generally will be U.S. source income or loss for foreign tax credit
purposes. Each U.S. Holder should consult its own U.S. tax advisor regarding the
U.S. federal income tax consequences of receiving, owning, and disposing of
foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that
pays (whether directly or through withholding) Canadian income tax with respect
to dividends paid on the common shares generally will be entitled, at the
election of such U.S. Holder, to receive either a deduction or a credit for such
Canadian income tax. Generally, a credit will reduce a U.S. Holder's U.S.
federal income tax liability on a Dollar-for-Dollar basis, whereas a deduction
will reduce a U.S. Holder's income subject to U.S. federal income tax. This
election is made on a year-by-year basis and applies to all foreign taxes paid
(whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a U.S. Holder's U.S. federal income tax liability that such U.S. Holder's
"foreign source" taxable income bears to such U.S. Holder's worldwide taxable
income. In applying this limitation, a U.S. Holder's various items of income and
deduction must be classified, under complex rules, as either "foreign source" or
"U.S. source." Generally, dividends paid by a foreign corporation should be
treated as foreign source for this purpose, and gains recognized on the sale of
stock of a foreign corporation by a U.S. Holder should be treated as U.S. source
for this purpose, except as otherwise provided in an applicable income tax
treaty, and if an election is properly made under the Code. However, the amount
of a distribution with respect to the common shares that is treated as a
"dividend" may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit
rules are complex, and each U.S. Holder should consult its own U.S. tax advisor
regarding the foreign tax credit rules.

Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury Regulations,
certain categories of U.S. Holders must file information returns with respect to
their investment in, or involvement in, a foreign corporation. For example,
recently enacted legislation generally imposes new U.S. return disclosure
obligations (and related penalties) on individuals who are U.S. Holders that
hold certain specified foreign financial assets in excess of $50,000. The
definition of specified foreign financial assets includes not only financial
accounts maintained in foreign financial institutions, but also, unless held in
accounts maintained by a financial institution, any stock or security issued by
a non-U.S. person, any financial instrument or contract held for investment that
has an issuer or counterparty other than a U.S. person and any interest in a
foreign entity. U.S. Holders may be subject to these reporting requirements
unless their common shares are held in an account at a domestic financial
institution. Penalties for failure to file certain of these information returns
are substantial. U.S. Holders should consult with their own tax advisors
regarding the requirements of filing information returns, including the
requirement to file an IRS Form 8938.

Payments made within the U.S. or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or other taxable
disposition of, common shares will generally be subject to information reporting
and backup withholding tax, at the rate of 28% (and increasing to 31% for
payments made after December 31, 2012), if a U.S. Holder (a) fails to furnish
such U.S. Holder's correct U.S. taxpayer identification number (generally on
Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c)
is notified by the IRS that such U.S. Holder has previously failed to properly
report items subject to backup withholding tax, or (d) fails to certify, under
penalty of perjury, that such U.S. Holder has furnished its correct U.S.
taxpayer identification number and that the IRS has not notified such U.S.
Holder that it is subject to backup withholding tax. However, certain exempt
persons generally are excluded from these information reporting and backup
withholding rules. Backup withholding is not an additional tax. Any amounts
withheld under the U.S. backup withholding tax rules will be allowed as a credit
against a U.S. Holder's U.S. federal income tax liability, if any, or will be
refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.
Each U.S. Holder should consult its own tax advisor regarding the information
reporting and backup withholding rules.

49

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|F. | DIVIDENDS AND PAYING
AGENTS
|-- | ---------------------------

Not applicable.

|G. | STATEMENT BY EXPERTS
|-- | --------------------

Not applicable.

|H. | DOCUMENTS ON DISPLAY
|-- | --------------------

Exhibits attached to this Form 20-F are also available for
viewing on EDGAR at http://www.sec.gov/, or at the offices of the
Company, 15th Floor - 1040 West Georgia Street, Vancouver, British Columbia V6E
4H1 or on request of the Company at 604-684-6365, attention: Investor Relations
Department. Copies of the Company's IFRS financial statements and other
continuous disclosure documents required under the British Columbia Securities
Act are available for viewing on the internet at www.sedar.com.

|I. | SUBSIDIARY INFORMATION
|-- | ----------------------

Not applicable.

|ITEM 11 | QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK
|------- | ----------------------------------------------------------------

|A. | TRANSACTION RISK AND CURRENCY RISK
    MANAGEMENT
|-- | -------------------------------------------------

The Company is exposed in varying degrees to a variety of
financial instrument related risks. The Board approves and monitors the risk
management processes, inclusive of documented treasury policies, counterparty
limits, and controlling and reporting structures.

|B. | EXCHANGE RATE SENSITIVITY
|-- | -------------------------

The Company incurs substantially all of its expenditures in
Canada and substantially all of its cash and cash equivalents held are
denominated in Canadian dollars. Consequently the Company is not subject to
material foreign exchange risk.

|C. | INTEREST RATE RISK AND EQUITY PRICE
  RISK
|-- | ------------------------------------------

The Company is subject to interest rate risk with respect to
its investments in cash and cash equivalents. The Company's policy is to invest
cash at fixed rates of interest and cash reserves are to be maintained in cash
and cash equivalents in order to maintain liquidity, while achieving a
satisfactory return for shareholders. Fluctuations in interest rates when the
cash and cash equivalents mature impact interest income earned.

|D. | COMMODITY PRICE RISK
|-- | --------------------

While the value of the Company's resource properties, if any,
can always be said to relate to the price of precious metals and the outlook for
same, the Company does not have any resource properties or operating mines and
hence does not have any hedging or other commodity based operational risks
respecting to its business activities.

|ITEM 12 | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
      SECURITIES
|------- | ------------------------------------------------------------

Not applicable.

50

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|ITEM 13 | DEFAULTS, DIVIDEND ARREARAGES AND
      DELINQUENCIES
|------- | -----------------------------------------------------

Not applicable.

|ITEM 14 | MATERIAL MODIFICATIONS TO THE RIGHTS OF
      SECURITY HOLDERS AND USE **OF PROCEEDS**
|------- | --------------------------------------------------------------------------------------

Not applicable.

|ITEM 15 | CONTROLS AND PROCEDURES
|------- | -----------------------

|A. | DISCLOSURE CONTROLS AND
  PROCEDURES
|-- | ------------------------------------

At the end of the period covered by this annual report on Form
20-F, an evaluation was carried out with the participation of the Company's
management, including the President and Chief Executive Officer ("CEO") and the
Chief Financial Officer ("CFO"), of the effectiveness of the Company's
disclosure controls and procedures (as defined in Rules 13a  15(e) and 15d
15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")). Based on that evaluation, the President and CEO and the CFO have
concluded that as of the end of the period covered by this annual report on Form
20-F, the Company's disclosure controls and procedures were effective in
providing reasonable assurance that: (i) information required to be disclosed by
the Company in reports that it files or submits to the SEC under the Exchange
Act was recorded, processed, summarized and reported within the time periods
specified in applicable rules and forms, and (ii) material information required
to be disclosed in the Company's reports filed under the Exchange Act was
accumulated and communicated to the Company's management, including the
President and CEO and the CFO, as appropriate, to allow for accurate and timely
decisions regarding required disclosure.

|B. | MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER
      FINANCIAL REPORTING
|-- | -----------------------------------------------------------------------------

The Company's management, including the President and CEO and
CFO, is responsible for establishing and maintaining adequate internal control
over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act. The Company's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation and fair presentation of financial
statements for external purposes in accordance with IFRS. The Company's internal
control over financial reporting includes those policies and procedures
that:

| |  | pertain to the maintenance of records that, in reasonable
      detail, accurately and fairly reflect the transactions and dispositions of
      the assets of the Company;                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with IFRS, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and
| |  | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      Company's assets that could have a material effect on the financial
      statements.                                                                                                 

With the participation of the President and CEO and CFO,
management conducted an evaluation of the design and operation of the Company's
internal control over financial reporting as of July 31, 2016, based on the
criteria set forth in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. This
evaluation included review of the documentation of controls, evaluation of the
design effectiveness of controls, testing of the operating effectiveness of
controls and a conclusion on this evaluation. Based on this evaluation,
management concluded in its report that the Company's internal control over
financial reporting was effective as of July 31, 2016.

This annual report does not include an attestation report of
the Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to rules that permit the
Company to provide only management's report in this annual report.

51

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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the period covered by this Annual Report on Form 20-F,
no changes occurred in the Company's internal control over financial reporting
that have materially affected, or are reasonably likely to materially affect,
the Company's internal control over financial reporting.

LIMITATIONS OF CONTROLS AND PROCEDURES

The Company's management, including its President and CEO and
CFO, does not expect that its disclosure controls and procedures or internal
controls and procedures will prevent all errors and all fraud. A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
controls. The design of any system of controls is also based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.

|ITEM 16  | [RESERVED]                      
|-------- | --------------------------------
|         |                                 
|ITEM 16A | AUDIT COMMITTEE FINANCIAL EXPERT

The members of the Audit and Risk Committee are David Mordant
and Gordon J. Fretwell. The Board of Directors has determined that Mr. Fretwell
qualifies as a "financial expert" under the rules of the Securities and Exchange
Commission, based on his education and experience. Messrs. Mordant and Fretwell
are "independent", as that term is defined in section 803 of the NYSE MKT
Company Guide.

Each Audit and Risk Committee member is able to read and
understand fundamental financial statements.

|ITEM 16B | CODE OF ETHICS
|-------- | --------------

The Company's board of directors has adopted a written Code of
Ethics governing directors, officers and employees. The Code of Ethics sets
forth written standards that are designed to deter wrongdoing and to meet the
Company's core vision: to become a successful and innovative mining and mineral
exploration corporation.

In order to achieve the Company's vision the following values
are to be included in all activities:

| |  | Responsibly explore for and develop mineral
      resources;                                            
| | - | --------------------------------------------------------------------------------------------------------
| |  | Be respectful of the environment;                                                                       
| |  | Be an industry leader and participate in
      industry organizations devoted to improving the industry;
| |  | Be a strong and honest competitor;                                                                      
| |  | Be a responsible corporate citizen and
      contribute to the community;                               
| |  | Deal fairly with our customers, suppliers and
      joint venture participants;                         
| |  | Provide a safe and rewarding work environment;
      and                                                
| |  | Deliver value to shareholders.                                                                          

The board of directors monitors compliance with the Code of
Ethics by ensuring that all Company personnel have read and understood the Code
of Ethics, and by charging management with bringing to the attention of the
board of directors any issues that arise with respect to the Code of Ethics.

A copy of the Code of Ethics was filed with the Securities and
Exchange Commission as an exhibit to the Company's Annual Report filed on Form
20-F for the fiscal year ended July 31, 2012 and is available at
www.sec.gov. The Company will also provide a copy of the Code of Ethics
to any person without charge, upon request. Requests can be sent by mail to:
15th Floor, 1040 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4H8; or submitted by telephone at
604-684-6365, attention: Investor Relations Department.

52

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During the most recently completed fiscal year, the Company has
neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including
any implicit waiver) form any provision of its Code of Ethics.

|ITEM 16C | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The following table discloses the aggregate fees billed for
each of the last two fiscal years for professional services rendered by the
Company's audit firm, Davidson & Company LLP for various services.

Services:
    Year endedJuly 31, 2016
    July 31, 2015Audit Fees (1)
    $ 22,000
    $ 22,000Audit Related Fees (2)
    
    Tax Fees (3)
    
    All Other Fees (4)
    
    Total
    $ 22,000
    $ 22,000


Notes:

|(1) | "Audit Fees" include fees necessary to perform the annual
      audit and quarterly reviews of the Company's consolidated financial
      statements. Audit Fees include fees for review of tax provisions and for
      accounting consultations on matters reflected in the financial statements.
      Audit Fees also include audit or other attest services required by
      legislation or regulation, such as comfort letters, consents, reviews of
      securities filings and statutory audits.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | "Audit-Related Fees" include services that are
      traditionally performed by the auditor. These audit-related services
      include employee benefit audits, due diligence assistance, accounting
      consultations on proposed transactions, internal control reviews and audit
      or attest services not required by legislation or regulation.                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | "Tax Fees" include fees billed for professional services
      rendered by the principal accountant for tax compliance, tax advice, and
      tax planning.                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(4) | "All Other Fees" include fees billed for products and
      services provided by the principal accountant, other than the services
      reported in (1), (2) or (3) above.                                                                                                                                                                                                                                                                                                                               

From time to time, management of the Company recommends to and
requests approval from the Audit and Risk Committee for non-audit services to be
provided by the Company's auditors. The Audit and Risk Committee routinely
considers such requests at committee meetings, and if acceptable to a majority
of the Audit and Risk Committee members, pre-approves such non-audit services by
a resolution authorizing management to engage the Company's auditors for such
non-audit services, with set maximum dollar amounts for each itemized service.
During such deliberations, the Audit and Risk Committee assesses, among other
factors, whether the services requested would be considered "prohibited
services" as contemplated by the SEC, and whether the services requested and the
fees related to such services could impair the independence of the auditors. No
material non-audit services were provided by the Company's auditors during the
year ended July 31, 2016.

|ITEM 16D | EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT
      COMMITTEES
|-------- | ------------------------------------------------------------

Not applicable.

|ITEM 16E | PURCHASES OF EQUITY SECURITIES BY THE ISSUER
      AND AFFILIATED **PURCHASERS**
|-------- | --------------------------------------------------------------------------------

During the year ended July 31, 2016, the Company did not
purchase any of its issued and outstanding common shares pursuant to any
repurchase program or otherwise.

53

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|ITEM 16F | CHANGE IN REGISTRANT'S CERTIFYING
      ACCOUNTANT
|-------- | --------------------------------------------------

None.

|ITEM 16G | CORPORATE GOVERNANCE
|-------- | --------------------

Not applicable.

|ITEM 16H | MINE SAFETY DISCLOSURE
|-------- | ----------------------

Not applicable.

|ITEM 17 | FINANCIAL STATEMENTS
|------- | --------------------

Not applicable. See Item 18.

|ITEM 18 | FINANCIAL STATEMENTS
|------- | --------------------

See Exhibit 99.1.

|ITEM 19 | EXHIBITS
|------- | --------

The following Exhibits have been filed with the Company's
Annual Report on Form 20-F in previous years:

Exhibit Number
    Description of Exhibit
    Note1.1
    Transition Application dated October 11, 2005
    Incorporated by reference from our Annual Report on Form
      20-F for the year ended July 31, 2005, filed on January 10, 2006.1.2
    Notice of Articles dated October 11, 2005
    Incorporated by reference from our Annual Report on Form
      20-F for the year ended July 31, 2005, filed on January 10, 2006.1.3
    Notice of Alteration of Articles dated October 11, 2005
    Incorporated by reference from our Annual Report on Form
      20-F for the year ended July 31, 2005, filed on January 10, 2006.1.4
    Notice of Alteration dated February 17, 2006
    Incorporated by reference from our Annual Report on Form
      20-F for the year ended July 31, 2006, filed on January 29, 2007.1.5
    Notice of Articles dated February 17, 2006
    Incorporated by reference from our Annual Report on Form
      20-F for the year ended July 31, 2006, filed on January 29, 2007.1.7
    Articles, as amended the Companys Annual General
      Meeting, held on February 24, 2014.
    Incorporated by reference from our Annual Report on Form
      20-F for the year ended July 31, 2014, filed on October 17, 2014.


54

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|Exhibit Number | Description of Exhibit                                                                    | Note                                                                                                                                   
|-------------- | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|4.2            | Services Agreement between Hunter Dickinson
      Inc. and the Company dated July 2, 2010 | Incorporated by reference from our Annual
      Report on Form 20-F for the year ended July 31, 2010, filed on October 28,
      2010. 
|6.1            | Stock Option Plan approved by
      Shareholders on March 15, 2012                        | Incorporated by reference from our
      Annual Report on Form 20-F for the year ended July 31, 2012, filed on
      November 30, 2012.
|6.2            | Audit and Risk Committee Charter                                                          | Incorporated by reference from our
      Annual Report on Form 20-F for the year ended July 31, 2012, filed on
      November 30, 2012.
|10.1           | Articles approved by Shareholders on
      March 15, 2012                                 | Incorporated by reference from our
      Annual Report on Form 20-F for the year ended July 31, 2012, filed on
      November 30, 2012.
|16B.           | Code of Ethics and Trading
      Restrictions                                             | Incorporated by reference from our
      Annual Report on Form 20-F for the year ended July 31, 2012, filed on
      November 30, 2012.

The following exhibits are filed with this Annual Report on
Form 20-F:

Exhibit Number
    Description of Exhibit11.1
    Settlement agreement between Bearclaw and HDSI dated January 15, 2016 :12.1
    Section 302 Certification of the Chief Executive Officer12.2
    Section 302 Certification of the Chief Financial Officer13.1
    Section 906 Certification of the Chief Executive Officer13.2
    Section 906 Certification of the Chief Financial Officer10.2
    Articles approved by Shareholders on February 24, 201499.1
    Independent Auditors Report, dated October 3rd, 2016;
      Statements of financial position as at July 31, 2016, and July 31,
      2015;
      Statements of comprehensive loss for the years ended July 31, 2016,
      July 31, 2015 and July 31, 2014;
      Statements of cash flows for the years ended July 31, 2016, July 31,
      2015 and July 31, 2014; and
      Statements of changes in equity for the years ended July 31, 2016, July
      31, 2015 and July 31, 2014;
      Notes to audited annual financial statements


55

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