---

UNITED STATES**SECURITIES AND EXCHANGE COMMISSION**
  Washington, 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, 2006(with
  other information to January 5, 2007 except where noted)

OR

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

For the transition period from _______________ to
_______________

OR

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

Date of event requiring this shell company report
_______________

Commission file number **0-15490**

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

NOT APPLICABLE(Translation of Registrants
name into English)

BRITISH COLUMBIA, CANADA(Jurisdiction of
incorporation or organization)

Suite 1020, 800 West Pender Street Vancouver, British
Columbia, Canada, V6C 2V6(Address of principal executive offices)

COMMON SHARES WITHOUT PAR VALUE(Title of
Class)

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
|------------------- | -----------------------------------------
|None                | Not applicable                           

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- ii -

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

**Common Shares without Par Value**
(Title of Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act. **None**

Number of outstanding shares of the Company's only class of
capital stock as at July 31, 2006. **13,399,426 Common Shares
without Par Value**

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]

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 1934during 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 is a large accelerated
  filer, an accelerated filer or non-accelerated filer. See definition of accelerated
  filer and large accelerated filer in Rule 12b 2 of the Exchange
  Act.

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

Indicate by check mark which financial statement item Registrant
  has elected to follow:

Item 17 [X]        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]

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
  DURING THE PAST FIVE YEARS)

Indicate by check mark whether Registrant has filed all documents
  and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
  Exchange Act of 1934subsequent to the distribution of securities under
  a plan confirmed by a court.

NOT APPLICABLE

---



|T A B L E O F   C
      O N T E N T S
|-------------------------------------
|                                     

|        |                                                                                    | Page
|------- | ---------------------------------------------------------------------------------- | ----
|        |                                                                                    |     
|ITEM 1  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                              | 2   
|        |                                                                                    |     
|ITEM 2  | OFFER STATISTICS AND EXPECTED TIMETABLE                                            | 3   
|        |                                                                                    |     
|ITEM 3  | KEY INFORMATION                                                                    | 4   
|        |                                                                                    |     
|ITEM 4  | INFORMATION ON THE COMPANY                                                         | 9   
|        |                                                                                    |     
|ITEM 5  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                       | 11  
|        |                                                                                    |     
|ITEM 6  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                         | 14  
|        |                                                                                    |     
|ITEM 7  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                  | 23  
|        |                                                                                    |     
|ITEM 8  | FINANCIAL INFORMATION                                                              | 25  
|        |                                                                                    |     
|ITEM 9  | THE OFFER AND LISTING                                                              | 26  
|        |                                                                                    |     
|ITEM 10 | ADDITIONAL INFORMATION                                                             | 28  
|        |                                                                                    |     
|ITEM 11 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                         | 38  
|        |                                                                                    |     
|ITEM 12 | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                             | 39  
|        |                                                                                    |     
|ITEM 13 | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                    | 40  
|        |                                                                                    |     
|ITEM 14 | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF PROCEEDS | 41  
|        |                                                                                    |     
|ITEM 15 | CONTROLS AND PROCEDURES                                                            | 42  
|        |                                                                                    |     
|ITEM 16 | AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES AND EXEMPTIONS                    | 43  
|        |                                                                                    |     
|ITEM 17 | FINANCIAL STATEMENTS                                                               | 44  
|        |                                                                                    |     
|ITEM 18 | FINANCIAL STATEMENTS                                                               | 45  
|        |                                                                                    |     
|ITEM 19 | EXHIBITS                                                                           | 46  

---

PART 1GENERAL

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

The Company uses the United States dollar as its reporting
currency. All references in this document to dollars or $ are expressed in
United States dollar, unless otherwise indicated.

Except as noted, the information set forth in this Annual
Report is as of January 5, 2007 and all information included in this document
should only be considered correct as of such date.

NOTE ON FORWARD LOOKING STATEMENTS

Except for the statements of historical fact contained herein,
some information presented in this Annual Report constitutes forward-looking
statements. When used in this Annual Report, the words estimate, project,
believe, anticipate, intend, expect, predict, may, should, the
negative thereof or other variations thereon or comparable terminology are
intended to identify forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Quartz to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
those factors discussed in the section entitled Risk Factors. Although Quartz
has attempted to identify important factors that could cause actual results to
differ materially, there may be other factors that cause actual results not to
be as anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements. Accordingly,
prospective investors should not place undue reliance on forward-looking
statements. The forward-looking statements in this Annual Report speak only as
to the date hereof. Quartz does not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Although the Company believes that the expectations reflected
in the forward-looking statements are reasonable, the Company cannot guarantee
future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States,
the Company does not intend to update any of the forward-looking statements to
conform these statements to actual results.

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- 2 -

ITEM
      1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
      AND ADVISERS


Not applicable.

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- 3 -

ITEM
      2OFFER STATISTICS AND EXPECTED TIMETABLE


Not applicable.

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- 4 -

ITEM 3          
        KEY INFORMATION


A. Selected Financial Data

The following table presents selected financial data derived
from the audited consolidated financial statements of Quartz for the last five
fiscal years ended July 31, 2006, 2005, 2004, 2003, and 2002. This information
should be read in conjunction with the consolidated financial statements for the
three years ended July 31, 2006 included in this Annual Report.

Quartzs annual financial statements have been audited by its
current independent registered public accounting firm, Davidson and Company LLP,
Chartered Accountants. The financial statements have been prepared in accordance
with Canadian generally accepted accounting principles (Canadian GAAP). Note
10 to the annual financial statements provides descriptions of the material
measurement differences between Canadian GAAP and United States generally
accepted accounting principles (US GAAP) as they relate to Quartz and
reconciliation of Quartzs financial statements to US GAAP.

Balance Sheet
        (in US$)
      As at July 312006
      2005
      2004
        (restated(1))
      2003
        (restated(1))
      2002Total Assets ****Canadian
        GAAP ****US
        GAAP(2)
      1,114,031 
        1,114,030
      687,281 
        687,280
      693,697 
        693,697
      520,095 
        499,094
      482,554 
        481,283Total Liabilities ****Canadian
        GAAP ****US
        GAAP
      16,664 
        16,664
      12,659 
        12,659
      22,849 
        22,849
      28,542 
        28,542
      83,193 
        83,193Working Capital ****Canadian
        GAAP ****US
        GAAP
      1,097,366 
        1,097,366
      674,621 
        674,621
      670,848 
        670,848
      470,552 
        470,552
      398,090 
        398,090Share Capital ****Canadian
        GAAP ****US
        GAAP
      21,269,046 
        21,269,046
      20,726,303 
        20,726,303
      20,627,632 
        20,627,632
      20,366,625 
        20,366,625
      20,299,896 
        20,299,896Contributed Surplus ****Canadian
        GAAP ****US
        GAAP
        
      54,540 
        54,540
      64,032 
        64,032
      9,492 
        9,492
        Deficit ****Canadian
        GAAP ****US
        GAAP
      (20,171,679) 
        (20,171,680)
      (20,106,221) 
        (20,106,222)
      (20,020,816) 
        (20,020,816)
      (19,884,564) 
        (19,905,565)
      (19,900,535) 
        (19,901,806)Shareholders Equity ****Canadian
        GAAP ****US
        GAAP
      1,097,367 
        1,097,366
      674,622 
        674,621
      670,848 
        670,848
      491,553 
        470,552
      399,361 
        398,090


Statement of Operations
        (in US$)
      Years ended July 312006
      2005
      2004
        (restated(1))
      2003
        (restated(1))
      2002Interest income ****Canadian
        GAAP ****US
        GAAP
      26,201 
        26,201
      15,127 
        15,127
      11,605 
        11,605
      11,762 
        11,762
      2,354 
        2,354Income (loss) ****Canadian
        GAAP ****US
        GAAP(2)
      (65,458) 
        (65,458)
      (85,405) 
        (85,406)
      (128,166) 
        (115,251)
      7,885 
        (3,759)
      459,843 
        458,572Income (loss) from continuing 
        operations ****Canadian
        GAAP ****US
        GAAP(2)
      (65,458) 
        (65,458)
      (85,405) 
        (85,406)
      (128,166) 
        (115,251)
      7,885 
        (3,759)
      459,843 
        458,572


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- 5 -

Income (loss) per common
      share(4) ****Canadian GAAP ****US GAAP(3)
    (0.01) (0.01)
    (0.01) (0.01)
    (0.01) (0.01)
    0.00 (0.01)
    0.05 0.05Weighted average number of common shares
      outstanding ****Canadian GAAP ****US GAAP
    12,322,741 12,322,741
    11,694,601 11,694,601
    10,091,648 10,091,648
    9,117,231 9,117,231
    8,584,807 8,584,807


Notes:

|(1) | During the year ended July 31, 2005, the Company changed
      its accounting policy from capitalizing (deferring) mineral property
      expenditures to charging these costs to earnings in the period incurred.
      This change in accounting policy is applied retroactively and the amounts
      presented for these prior periods have been restated for this change. The
      effect of this change is to reduce loss for the year ended July 31, 2004
      by $8,086 and to reduce income for the year ended July 31, 2003 by $8,086.
      There was no impact to opening deficit for the year ended July 31, 2005
      and 2006. For more information, see note 4 in the notes to the audited
      consolidated financial statements for the years ended July 31, 2006, 2005,
      and 2004.                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2) | Under US GAAP exploration costs are generally written off
      unless there is a feasibility report which confirms the existence of
      economic ore making the recovery of costs likely. Note 10 of the audited
      consolidated financial statements provides descriptions of the material
      differences between Canadian GAAP and US GAAP for the fiscal years ended
      July 31, 2006, 2005, and 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | Statement of Financial Accounting Standards No. 128
      Earnings per Share(SFAS 128), replaces the presentation of
      primary earnings per share (EPS) with a presentation of both basic and
      diluted EPS for all entities with complex capital structures, including a
      reconciliation of each numerator and denominator. Basic EPS excludes
      dilutive securities and is computed by dividing income available to common
      stockholders by the weighted-average number of common shares outstanding
      for the year. Diluted EPS reflects the potential dilution that could occur
      if dilutive securities were converted into common stock and is computed
      similarly to fully diluted EPS pursuant to previous accounting
      pronouncement. SFAS 128 applied equally to loss per share
      presentations.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(4) | The Company has never paid dividends on its common
      shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

The following foreign exchange information is provided for the
convenience of Canadian readers.

On January 5, 2007, the Bank of Canada closing rate for the
conversion of United States Dollars to Canadian Dollars (Cdn) was US$1.00:Cdn$
1.1755.

The following table sets out the average exchange rates for the
conversion of United States dollars into Canadian dollars for the periods shown
(calculated by using the average of the exchange rates on the last day of each
month in such periods), based on the noon buying rates as posted by the Bank of
Canada.

Average Exchange Rate For the Fiscal
      YearFiscal Year
      EndedJuly 31, 2006
    1.1485July 31, 2005
    1.2361July 31, 2004
    1.3355July 31, 2003
    1.4919July 31, 2002
    1.5722


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- 6 -

The following table sets out the high and low exchange rates,
based on the noon buying rates as posted by the Bank of Canada, for the
conversion of United States dollars into Canadian dollars in effect for the
following months:

Month
    High
    LowJanuary 2007 (until January
      5, 2007)
    1.1755
    1.1649December 2006
    1.1653
    1.1417November 2006
    1.1474
    1.1277October 2006
    1.1385
    1.1153September 2006
    1.1273
    1.1053August 2006
    1.1315
    1.1066July 2006
    1.1416
    1.1061June 2006
    1.1245
    1.0990


B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk
Factors

The securities of Quartz are highly speculative and subject to
a number of risks. A prospective investor or other person reviewing Quartz for a
prospective investor should not consider an investment in Quartz unless the
investor is capable of sustaining an economic loss of the investment.

No Assurance That A Prospective Property Of Merit Will Be
Identified. There is no assurance that a prospective property of merit
will be identified, will be available if identified or that the Company will be
able to enter into an acquisition agreement. Further, any acquisition will most
likely be subject to the Company obtaining additional financing, of which there
is no assurance. Even if a property is acquired, further funds will be required
to fund exploration and development efforts.

The Companys Mineral Property Interests Contain No Known
Ore.The Company does not currently have an active exploration project,
but is searching for a new acquisition. The Company holds a 1% net smelter
return royalty (NSR) on the Quartz Mountain Property, an exploration stage
prospect in Oregon. The Companys interest in the property will be limited to
any future NSR that would be forthcoming if or when any mining commences on the
property. There is currently no known body of commercially viable ore on the
property. Extensive additional exploration work will be required to ascertain if
any mineralization may be economic. Exploration for minerals is a speculative
venture necessarily involving substantial risk. There is no certainty that the
expenditures to be made by the Company on any of its mineral properties will
result in discoveries of commercial quantities of ore.

The Company Has No History of Earnings and No Foreseeable
Earnings.The Company has no history of earnings and, due to the nature
of its business, there can be no assurance that the Company will ever be
profitable. The Company has paid no dividends on its shares since incorporation
and does not anticipate paying dividends or being profitable in the foreseeable
future.

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 (deficit at July 31, 2006 was approximately $20.17 million),
which casts substantial doubt on the ability of the Company to continue as a
going concern.

General Mining Risks.If the Company should ever
determine ore exists on a property it acquires, then it notes that the mining
industry in general is intensely competitive and there is no assurance that,
even if commercial quantities of ore are discovered, a profitable market may
exist for the sale of minerals produced by the Company. Factors beyond the
control of the Company may affect the marketability of any substances
discovered. Mineral prices, in particular gold and silver prices, have
fluctuated widely in recent years. The marketability of minerals is also
affected by numerous other factors beyond the control of the Company. These
other factors include government regulations relating to price, royalties, and
allowable

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- 7 -

production and importing and exporting of minerals. The operations
  of the Company may require licences and permits from various governmental authorities.
  There can be no assurances that the Company will be able to obtain all necessary
  licences and permits that may be required to carry out exploration, development
  and eventually operations at its projects. The mineral industry is intensely
  competitive in all its phases. The Company competes with many companies possessing
  far greater financial resources and technical facilities than itself for the
  acquisition of mineral concessions, claims, leases and other mineral interests
  as well as for the recruitment and retention of qualified employees.

The Companys Share Price is Volatile.The market
price of a publicly traded stock, especially a junior resource issuer like the
Company, is affected by many variables not directly related to the exploration
success of the Company, including the market in which it is traded, the strength
of the economy generally, the availability and attractiveness of alternative
investments, and the breadth of the public market for the stock. On February 17,
2005, the Company transferred its listing from Tier 2 of the TSX Venture
Exchange to NEX. NEX is a separate board of TSX Venture Exchange, established in
August 2003 to provide a new trading forum for listed companies that have fallen
below the TSX Venture Exchanges ongoing listing standards due to low levels of
business activity or having ceased to carry on active business. The effect of
these and other factors on the market price of the common shares on the NEX
suggests that the Companys shares will continue to be volatile. The ability of
the Company to reactivate itself as a Tier 2 Issuer on the TSX Venture Exchange
is dependent on its ability to acquire a mineral project for active exploration.

The Companys Directors and Officers are Part-Time and
Serve as Directors and Officers of Other Companies.All of the directors
and officers of the Company serve as officers and/or directors of other resource
exploration companies and are engaged in and will continue to be engaged in the
search for additional resource opportunities on their own behalf and on behalf
of other companies. Situations may arise where these directors and officers will
be in direct competition with the Company. Such conflicts, if any, will be dealt
with in accordance with the relevant provisions of British Columbia corporate
and common law. In order to avoid the possible conflict of interest which may
arise between the directors duties to the Company and their duties to the other
companies on whose boards they serve, the directors and officers of the Company
expect that participation in exploration prospects offered to the directors will
be allocated between the various companies that they serve on the basis of
prudent business judgement and on the relative financial abilities and needs of
the companies to participate. The success of the Company and its ability to
continue to carry on operations is dependent upon its ability to retain the
services of certain key employees and members of its board of directors.

Foreign Jurisdiction Risks.The Companys
activities could be subject not only to risks common to operations in the mining
industry, but also the political and economic uncertainties of operating in a
foreign jurisdiction. All laws may result in risk such as possible
misinterpretation of laws, unilateral modification of mining or exploration
rights, operating restrictions, increased taxes, environmental regulation, mine
safety and other risks arising out of sovereignty over mining, any or all of
which could have an adverse impact upon the Company. The Companys operations
may also be affected in varying degrees by political and economic instability,
terrorism, crime, extreme fluctuations in currency exchange rates and inflation.
The Companys operations and exploration activities are subject to federal and
state laws and regulations governing protection of the environment. These laws
are continually changing and, as a general matter, are becoming more
restrictive.

Likely PFIC Status Has Consequences for United States
Investors.Potential investors who are United States (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 and may also be a PFIC in subsequent
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 received on its common shares, or any gain
realized upon a disposition of common shares, as ordinary income and to pay an
interest charge on a portion of such distribution or gain, unless the taxpayer
makes a 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.

Shares of the Company may be Affected Adversely by Penny
Stock Rules.The Companys stock may be subject to U.S. penny stock
rules which may make the stock more difficult to trade on the open market. The
Companys common shares currently trade on the NEX Board of the TSX Venture
Exchange. For further details on the market performance of the

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- 8 -

Companys common stock, see Item 9 The Offer and Listing.
Although the Companys common stock trades on the NEX, the Companys stock may
be subject to U.S. penny stock rules adopted by the United States Securities
and Exchange Commission (the SEC) pursuant to section 15(g) of the
Securities Exchange Act of 1934, as amended. The penny stock rules apply
generally to companies whose common stock trades at less than $5.00 per share,
subject to certain limited exemptions. Such rules require, among other things,
that brokers who trade penny stock to persons other than established
customers complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in
the security, including a risk disclosure document and quote information under
certain circumstances.

Penny stock regulations will tend to reduce market liquidity of
the Companys common stock, because they limit the broker/dealers ability to
trade, and a purchasers ability to sell, the stock in the secondary market.
Many brokers have decided not to trade penny stock because of the requirements
of the "penny stock rules" and, as a result, the number of broker-dealers
willing to act as market makers in such securities is limited. Further, it is
more difficult for a company whose securities are subject to these rules to
obtain coverage for significant news events because major wire services, such as
the Dow Jones News Service, generally do not publish press releases about such
companies.

The low price of the Companys common stock also has a negative
effect on the amount and percentage of transaction costs paid by individual
shareholders. The low price of the Companys common stock also limits the
Companys ability to raise additional capital by issuing additional shares.
There are several reasons for these effects. First, the internal policies of
certain institutional investors prohibit the purchase of low-priced stocks.
Second, many brokerage houses do not permit low-priced stocks to be used as
collateral for margin accounts or to be purchased on margin. Third, some
brokerage house policies and practices tend to discourage individual brokers
from dealing in low-priced stocks. Finally, brokers commissions on low-priced
stocks usually represent a higher percentage of the stock price than commissions
on higher priced stocks. As a result, the Companys shareholders pay transaction
costs that are a higher percentage of their total share value than if the
Companys share price were substantially higher.

The rules described above concerning penny stocks may adversely
affect the market liquidity of the Companys common shares. The Company can
provide no assurances concerning the market liquidity of its stock or that its
stock will not be subject to penny stock rules.

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- 9 -

ITEM 4 **INFORMATION ON THE COMPANY**


A. History and Development of the Company

| | 1. | The legal name of the Company is Quartz Mountain
      Resources Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2. | Quartz Mountain Resources Ltd. was incorporated on August
      3, 1982, in British Columbia, Canada. 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 shares were consolidated on a reverse ten old for
      one new share basis.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 3. | The Companys business office is located at Suite 1020 
      800 West Pender Street, Vancouver, British Columbia V6C 2V6; telephone
      (604) 684-6365. The Company was incorporated under and continues to
      subsist under the laws of the Province of British Columbia. The Companys
      registered office is Suite 1500  1055 West Georgia Street, Vancouver,
      British Columbia V6E 4N7; telephone (604)
689-9111.                                                 

Unless the context requires otherwise, references herein to the
Company or Quartz includes its subsidiaries. The Companys common shares
were quoted on the United States NASDAQ SmallCap Market until May 12, 1994 when
it ceased to meet the minimum listing requirements for this market. The
Companys common shares were listed on The Toronto Stock Exchange until November
10, 1994, when it ceased to meet the minimum listing requirements for listing on
The Toronto Stock Exchange. Prior to November 15, 1989, the shares were also
listed on the Vancouver Stock Exchange. The Company voluntarily removed its
share listing from the Vancouver Stock Exchange (now the TSX Venture Exchange)
at that time. The Company then traded in Canada on the Canadian Unlisted market.
In October 2000, the Canadian Unlisted market was amalgamated into, and became
Tier 3 of, the TSX Venture Exchange. On December 23, 2003, the Company was
reclassified as a Tier 2 company. On February 17, 2005, the Company transferred
its listing to NEX, a separate board of TSX Venture Exchange, established in
August 2003 to provide a new trading forum for listed companies that have fallen
below the TSX Venture Exchanges ongoing listing standards due to low levels of
business activity, or due to having ceased to carry an active business.
Currently, the Companys shares trade on NEX under the symbol QZM.H, and certain
broker-dealers in the United States make market in the Companys shares on the
OTC Bulletin Board under the symbol QZMRF.

The Company is engaged in the acquisition and exploration of
mineral properties, with a principal concentration on gold and silver. 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 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 effort was expended on the exploration and maintenance of these
claims. Interests in this property and other properties were acquired by direct
purchase, lease, and option or through joint ventures. The Company sold the
Quartz Mountain property during the fiscal year ended July 31, 2002, but
retained a 1% net smelter return (NSR) royalty on it.

B.
Business Overview

1*.*The Companys Business Strategy and Principal Activities

The Company is a junior resource exploration issuer, and is in
the business of acquiring interests in (usually by option) and the exploration
of these mineral property interests. During the year ended July 31, 2002, the
Company sold its 100% interest in the Quartz Mountain Gold Property (the
Property), in Lake County, Oregon, to Seabridge Resources Ltd. and Seabridge
Resources Inc. (collectively Seabridge).

At closing, Seabridge issued 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 Property. This transaction was approved by consent
of the majority of the Companys shareholders.

During fiscal 2002, the Company sold the 300,000 common shares
of Seabridge that it received in the disposition of its interest in the Quartz
Mountain property in Oregon and also exercised the 200,000 common share purchase
warrants that it

---

- 10 -

received pursuant to that transaction. The Company subsequently
sold the common shares that it had acquired upon the exercise of the
warrants.

The Company does not expect to generate any royalty revenue
from the Property for several years, and it is not known at this time when any
mining will commence, if at all, on this Property. The Company maintained an
interest in 67 unpatented mining claims essential to the property and leased
land contiguous to these claims. Seabridge or any future owner of the Property
will be responsible for all costs relating to the Property and the Companys
interest in the Property is limited to any future NSR that would be forthcoming
if or when any mining commences on the Property.

In fiscal 2003, Quartz entered into a Letter Option Agreement
to acquire a 100% interest in the Ample-Goldmax Mineral Claims located in the
Lillooet Mining Division, British Columbia. Quartz paid the optionors Cdn$10,000
at the time of signing and issued 25,000 common shares on the date of regulatory
approval. An additional 75,000 common shares were issued in fiscal 2003 and
25,000 common shares were issued in fiscal 2004 pursuant to the option
agreement. During the year ended July 31, 2004, the Company terminated its
option and accordingly, wrote off its interest in the amount of $15,210. The
Company has no further obligations under the option agreement.

The Company continues to review mineral properties to determine
whether there are any properties of merit that could be financed by the
Company.

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.

C. Organizational Structure

The Company conducts its business affairs through its
wholly-owned subsidiaries: Quartz Mountain Gold Inc., a Nevada corporation, and
the latter companys wholly-owned subsidiary Wavecrest Resources Inc., a
Delaware corporation.

D.
Property, Plants and Equipment

The Company has no mining or plant equipment.

E. Currency

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

---

- 11 -

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

The following discussion and analysis should be read in
conjunction with the audited consolidated financial statements of the Company
for the years ended July 31, 2006, 2005, and 2004, and related notes thereto.
The Companys consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles. The material differences
in generally accepted accounting principles in Canada and the United States are
detailed in note 10 of the audited consolidated financial statements.

A.Operating Results

Overview

The Company does not currently have an active exploration
project. Accordingly, during the fiscal year ended July 31, 2006, the Companys
activities were primarily restricted to conducting property investigations of
mineral property interests. These investigations did not lead to any
acquisitions.

Results of Operations

| |                                             |   | Year ended July 31 |  
| | ------------------------------------------- | - | ------------------ | -
| |                                             |   | 2006               |  
| |                                             |   |                    |  
| | Expenses (Income)                           |   |                    |  
| | Administrative expenses                     | $ | 82,247             |  
| | Exploration(1)                              |   | -                  |  
| | Foreign exchange gain                       |   | (53,106            | )
| | Interest and other income                   |   | (26,201            | )
| | Mineral property investigations             |   | -                  |  
| | Professional fees                           |   | 40,290             |  
| | Regulatory and transfer agent               |   | 22,228             |  
| | Write-down of mineral property interests(1) |   | -                  |  
| |                                             |   |                    |  
| | Loss for the year  Canadian GAAP           | $ | (65,458            | )
| |                                             |   |                    |  
| | US GAAP Reconciliation                      |   |                    |  
| | Mineral property acquisition costs(2)       |   | -                  |  
| | Write-off of mineral property(2)            |   | -                  |  
| |                                             |   |                    |  
| | Loss for the year  US GAAP                 | $ | (65,458            | )

Notes:

|(1) | During the year ended July 31, 2005, the Company changed
      its accounting policy from capitalizing (deferring) mineral property
      expenditures to charging these costs to earnings in the period incurred.
      This change in accounting policy was applied retroactively. The effect of
      this change was to reduce loss for the year ended July 31, 2004 by $8,086
      and to reduce income for the year ended July 31, 2003 by $8,086. There was
      no impact to opening deficit for the year ended July 31, 2005 and
    2006.                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | Under Canadian GAAP, mineral property acquisition costs,
      and exploration and development expenditures incurred subsequent to the
      determination of the feasibility of mining operations, are capitalized
      until the property to which they relate have been placed into production,
      sold, allowed to lapse or abandoned (See note 3(d) in the notes to the
      audited consolidated financial statements for the years ended July 31,
      2006, 2005, and 2004 for more information). In contrast, under US GAAP,
      mineral property expenditures are expensed as incurred. (See note 10(a) of
      the notes to the audited consolidated financial statements for the years
      ended July 31, 2006, 2005, and 2004 for more
  information).

---

- 12 -

Years ended July 31, 2006 and July 31, 2005

Loss for the year ended July 31, 2006 was $65,458. This
compares with a loss of $85,405 for the year ended July 31, 2005. The
improvement was mainly due to greater foreign exchange gains in fiscal 2006 and
a decrease in mineral property investigation expenditures.

The increase in foreign exchange gains for the year ended July
31, 2006 was due mainly to the strengthening of the Canadian dollar (in which
most of the Companys cash and cash equivalents are held) against the United
States dollar.

Interest income for the year ended July 31, 2006 was higher
than the comparative year due to higher cash balances on hand.

Years ended July 31, 2005 and July 31, 2004

Loss for the year ended July 31, 2005 decreased to $85,405 from
$128,166, on a restated basis, in fiscal 2004 due to a $15,210 write-down of
mineral property interest relating to the Ample-Goldmax property in fiscal 2004
and greater foreign exchange gains in fiscal 2005. Legal, accounting and audit
costs and office and administration expenses were higher in fiscal 2005 compared
to 2004 as a result of property investigation activities undertaken by the
Company in 2005.

The increase in foreign exchange gains for the year ended July
31, 2005 was due mainly to the strengthening of the Canadian dollar (in which
most of the Companys cash and cash equivalent are held) against the United
States dollar.

Interest income for the year ended July 31, 2005 was higher
than the comparative year due to higher cash balances on hand.

B. Liquidity and Capital Resources

At July 31, 2006, the Company had working capital of
approximately $1,097,000 which is sufficient to fund expected administrative
costs for the next twelve months and to conduct property acquisition
investigation activities. Additional working capital will be required to fund
any major acquisition, in the event that a suitable property is identified. The
Company does not have sufficient funding at this time to conclude a major
acquisition. Any new mineral property acquisition will require additional
financing through the issuance of common shares.

Cash and cash equivalents at July 31, 2006 amounted to
$1,071,431, an increase of $400,676 from the previous year ended July 31, 2005,
when the companys cash and cash equivalents amounted to $670,755. Operating
activities in fiscal 2006 utilized cash of $87,527, which offset $488,203 in
cash received upon the exercise of 1,510,000 share purchase warrants in April
2006. These warrants constituted part of the 1,510,000 units issued in a
non-brokered private placement during the year ended July 31, 2004, to directors
and officers the Company.

Historically, the Company's sole source of funding has been the
issuance of equity securities for cash, primarily through private placements or
the exercise of warrants. The Company's access to exploration financing is
always uncertain, and there can be no assurance of continued access to
significant equity funding.

The mining industry is capital intensive, and there can be no
certainty that the Companys existing cash balances or that the proceeds from
the sale of its common shares will provide sufficient funds for all of the
Companys cash requirements. Should the need arise, the Company may pursue other
financing options or rely on joint venture partners to supply some of the funds
required to explore and develop any properties that may eventually be acquired.
There is no assurance that the Company will be successful in obtaining adequate
financing when it is needed, or that it would be able to obtain any such
financing on terms that are reasonably acceptable to the Company.

The Company retains a 1% net smelter return royalty in the
Quartz Mountain Property which it sold during the year ended July 31, 2002. The
Company does not expect to generate royalty revenue from the Quartz Mountain
Property for several years, and it is not known at this time when any mining
will commence, if at all, on this property. The size of the property is limited
to 67 unpatented mining claims essential to the property and leased land
contiguous to these claims. Seabridge Resources Ltd., the purchaser, is
responsible for all costs relating to the Quartz Mountain Property, and the
Companys interest in the property will be limited to any future NSR that would
be forthcoming if or when any mining commences on the Quartz Mountain Property.

As at January 5, 2007, the Company does not have any unused
banking commitments or lines of credit, which could provide additional working
capital. Any new acquisition must rely financing such as the sale of common
shares to provide

---

- 13 -

sufficient working capital. The Company is in the exploration
and development stage and has not earned any revenue from mining operations and
no revenue is expected to be generated in the foreseeable future.

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.

Financial Instruments

The Company holds its financial instruments predominantly
denominated in Canadian dollars and does not engage in any hedging operations
with respect to currency or in-situ minerals. Funds which are currently in
excess of the Companys current expenditures are invested in low risk, highly
liquid investments with original maturations of three months or less.

The Company does not have any material commitments for capital
expenditures and, accordingly, can remain relatively flexible in gearing its
activities to the availability of funds.

The Company estimates that the cost of maintaining its
corporate administrative activities is approximately $130,000 per year, if the
Company does not commence any exploration programs on any property which it
acquires. This is an estimated minimum annual cost to maintain the Company. Any
exploration program would require funds above these minimum administration costs
which include office, legal, audit, filing, and transfer agent fees.

C. Research Expenditures

The Company does not have a program of intellectual property
development or patenting or licensing issues as its primary activity is the
acquisition and exploration of mineral properties.

D. Trend Information

Average prices for precious metals have increased significantly
since 2004. The average gold price for the year-to-date is US$602/oz. compared
to US$430/oz in 2005. The Companys only property interest is a net smelter
royalty in an exploration property which is a gold prospect. However, since the
exploration property has no known body of commercially viable ore, the Company
expects that the increasing trend in gold prices will have little or no impact
on the Companys ability to attract significant equity financing.

E. Off
 Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on its
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors.

F. Tabular Disclosure of Contractual Obligations

Payments due by periodContractual Obligations
      Total
      Less than 1 year
      1-3 years
      3-5 years
      More than 5 yearsLong-Term Debt Obligations
      Nil
      Nil
      Nil
      Nil
      NilCapital Finance/Lease
      Nil
      Nil
      Nil
      Nil
      NilOperating Lease
      Nil
      Nil
      Nil
      Nil
      NilPurchase Obligations
      Nil
      Nil
      Nil
      Nil
      NilOther long-term liabilities reflected on the 
        Companys balance sheet under the GAAP 
        of the primary financial statements
      Nil
      Nil
      Nil
      Nil
      NilTotal
      Nil
      Nil
      Nil
      Nil
      Nil


---

- 14 -

ITEM 6 **DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**


A.Directors and Senior Management

The following table sets forth the names, functions and areas
of experience in the Company of each of the Companys directors and senior
officers:

Name, Position(s) with the Company andPlace
      of Residence
    Functions and Area of Experience with
      the CompanyRene G. Carrier President and Director North
      Vancouver, British Columbia, Canada
    Director since January 19, 2000. Mr. Carrier
      serves on the Board of Directors, which is responsible for the overall
      management and direction of the Company.Brian F. Causey Director Tsawwassen, British Columbia,
      Canada
    Director since January 30, 2003. Mr. Causey
      serves on the Board of Directors, which is responsible for the overall
      management and direction of the Company.Gordon J. Fretwell Secretary and Director West
      Vancouver, British Columbia, Canada
    Director since January 30, 2003. Mr. Fretwell
      serves on the Board of Directors, which is responsible for the overall
      management and direction of the Company. Mr. Fretwell also serves as the
      secretary of the Company, and is responsible for maintaining the Companys
      corporate records in such capacity.T. Barry Coughlan Director Vancouver, British
      Columbia, Canada
    Director since January 25, 2005. Mr. Coughlan
      serves on the Board of Directors, which is responsible for the overall
      management and direction of the Company.


Directors are elected to serve until the next annual meeting of
shareholders. Executive officers are appointed by the Board of Directors to
serve until terminated by the Board of Directors or until their successors are
appointed.

There are no family relationships between any director,
executive officer or any nominee to be a director or executive officer.

There is no arrangement or understanding with major
shareholders or others pursuant to which any director or officer was selected as
a director or member of senior management.

---

- 15 -

RENE G. CARRIER  President, Director

Rene Carrier is a past Vice-President of Pacific International
Securities Inc. for ten years where he worked until 1991. Since that time he has
been President of Euro-American Capital Corporation, a private company which
specializes in restructuring, administration, and raising venture capital funds
for junior companies.

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

|Company                                 | Positions Held | From           | To            
|--------------------------------------- | -------------- | -------------- | --------------
|                                        |                |                |               
|Quartz Mountain Resources
      Ltd.    | Director       | January 2000   | Present       
|                                        |                |                |               
|                                        | President      | June 2005      | Present       
|                                        |                |                |               
|Continental Minerals
      Corporation  | Director       | February 2001  | Present       
|                                        |                |                |               
|Rockwell Ventures Inc.                  | Director       | April 1993     | Present       
|                                        |                |                |               
|                                        | President      | April 1993     | November 2000 
|                                        |                |                |               
|Acrex Ventures Ltd.                     | Director       | September 2000 | September 2003
|                                        |                |                |               
|Chartwell Technology Inc.               | Director       | June 1991      | Present       
|                                        |                |                |               
|International Royalty
      Corporation | Lead Director  | June 2003      | Present       

BRIAN CAUSEY, B.Comm., C.A. - Director

Brian Causey holds a B.Comm. degree and was admitted to the
Institute of Charted Accountants of British Columbia in 1971. Formerly a partner
of Peat Marwick Thorne (now KPMG LLP) (1969-1977), Mr. Causey is currently
director of Project Finance for Hunter Dickinson Inc., a position he was
appointed to in 2001.

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

|Company                              | Positions Held                              | From         | To     
|------------------------------------ | ------------------------------------------- | ------------ | -------
|                                     |                                             |              |        
|Quartz Mountain Resources
      Ltd. | Director                                    | January 2003 | Present
|                                     |                                             |              |        
|Zenith Transport Ltd.                | President and Chief
      Executive Officer | 1981         | 2001   

T. BARRY COUGHLAN, B.A. - Director

Barry Coughlan is a self-employed businessman and financier who
over the past 23 years has been involved in the financing of publicly traded
companies. His principal occupation is President and Director of TBC Investments
Ltd., a private investment company.

Mr. Coughlan is, or was within the past five years, an officer
and or a director of the following companies:

|Company                                | Positions Held              | From           | To     
|-------------------------------------- | --------------------------- | -------------- | -------
|                                       |                             |                |        
|Quartz Mountain Resources
      Ltd.   | Director                    | January 2005   | Present
|                                       |                             |                |        
|Continental Minerals
      Corporation | Director                    | May 2006       | Present
|                                       |                             |                |        
|Farallon Resources Ltd.                | Director                    | March 1998     | Present
|                                       |                             |                |        
|Great Basin Gold Ltd.                  | Director                    | February 1998  | Present
|                                       |                             |                |        
|Icon Industries Ltd.                   | President, CEO and Director | September 1991 | Present

---

- 16 -

|Company                                                              | Positions Held         | From          | To           
|-------------------------------------------------------------------- | ---------------------- | ------------- | -------------
|                                                                     |                        |               |              
|Taseko Mines Limited                                                 | Director               | February 2001 | Present      
|                                                                     |                        |               |              
|Tri-Gold Resources Corp. (formerly Tri-Alpha
      Investments Ltd.) | President and Director | June 1986     | Present      
|                                                                     |                        |               |              
|AMS Homecare Inc.                                                    | Director               | November 2001 | November 2004
|                                                                     |                        |               |              
|Casamiro Resource Corp                                               | Director               | February 1995 | August 2002  

GORDON J. FRETWELL, B.Comm. LLB.  Director, Secretary

Gordon 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.

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

|Company                                 | Positions Held       | From          | To            
|--------------------------------------- | -------------------- | ------------- | --------------
|                                        |                      |               |               
|Quartz Mountain Resources
      Ltd.    | Director             | January 2003  | Present       
|                                        |                      |               |               
|Continental Minerals
      Corporation  | Director             | February 2001 | Present       
|                                        |                      |               |               
|Northern Dynasty Minerals
      Ltd.    | Director             | June 2004     | Present       
|                                        |                      |               |               
|Rockwell Ventures Inc.                  | Secretary            | March 1998    | Present       
|                                        |                      |               |               
|                                        | Director             | March 1998    | September 2006
|                                        |                      |               |               
|Antarex Metals Ltd.                     | Director             | December 2000 | September 2002
|                                        |                      |               |               
|Bell Resources Corporation              | Director             | June 2001     | Present       
|                                        |                      |               |               
|Benton Resources Corp.                  | Director             | March 2005    | Present       
|                                        |                      |               |               
|Grandcru Resources Corp.                | Director             | December 2002 | Present       
|                                        |                      |               |               
|Icon Industries Limited                 | VP of Legal Services | December 2000 | Present       
|                                        |                      |               |               
|                                        | Director             | July 2004     | Present       
|                                        |                      |               |               
|International Royalty
      corporation | Director             | February 2005 | Present       
|                                        |                      |               |               
|Keegan Resources Inc.                   | Director             | February 2004 | Present       
|                                        |                      |               |               
|Pine Valley Mining Corp.                | Director             | August 2003   | Present       
|                                        |                      |               |               
|Tri-Gold Resources Corp.                | Director             | July 2001     | October 2003  
|                                        |                      |               |               
|                                        | Secretary            | July 2001     | September 2003
|                                        |                      |               |               
|                                        | CFO                  | November 2005 | January 2006  

---

- 17 -

B.Compensation

Named Executive Officer means each the Chief Executive
Officer, the Chief Financial Officer and each of the three most highly
compensated executive officers (other than each Chief Executive Officer and
Chief Financial Officer) who were serving as executive officers at the end of
the most recently completed fiscal year and whose total salary and bonus exceeds
$150,000 and any additional individuals for whom disclosure would have been
provided except that the individual was not serving as an officer of the Company
at the end of the most recently completed financial year end.

At July 31, 2006, Mr. Rene Carrier, the Companys President and
Mr. Jeffrey R. Mason, the Companys Principal Accounting Officer, were the
Named Executive Officers of the Company.

No cash compensation was paid for services provided by these
Named Executive Officers in all capacities to the Company during the year ended
July 31, 2006.

Directors of the Company do not receive any fee or other
compensation for attending meetings of the Board of Directors. The Directors are
however, reimbursed for actual expenses incurred in connection with attending
such meetings. Directors are eligible to receive options to purchase common
shares of the Company.

The Company has not set aside or accrued any funds during the
last fiscal year to provide pension, retirement or similar benefits for any
director, officer, consultant, or employee. The Company has instituted no
pension or retirement benefits and none are proposed at this time.

There are no other arrangements under which directors are or
were compensated by the Company and its subsidiaries during the most recently
completed financial year for their services in their capacity as directors or
consultants. The compensation, in Canadian dollars, paid to the Named Executive
Officers during the Companys three most recently completed financial years is
set out below:

Summary Compensation Table (in Cdn$)

NAMED EXECUTIVE 
        OFFICERS 
        Name and Principal Position
      Year
      Annual Compensation
      Long Term Compensation
      All Other 
        Compensation 
        (Cdn$)Awards
      PayoutsSalary 
        (Cdn$)
      Bonus 
        (Cdn$)
      Other 
        Annual 
        Compen- 
        sation 
        (Cdn$)
      Securities 
        Under Options 
        Granted 
        (#)
      Shares or 
        Units 
        Subject to 
        Resale 
        Restrictions 
        (Cdn$)
      LTIP 
        Payouts 
        (Cdn$)Rene G. Carrier (1)
        Current President and 
        Director
      2006 
        2005 
        2004
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        700 (2)
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        NilJeffrey R. Mason (3)
        Principal Accounting Officer
      2006 
        2005 
        2004
      8,709 
        2,991 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil


Notes:

|(1) | Rene G. Carrier was appointed President of the Company on
      June 16, 2005.                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | This amount represents US$571 paid to Euro-American
      Capital Corporation, a private company controlled by Rene G. Carrier for
      management services in 2005.
|(3) | Jeffrey R. Mason was appointed Principal Accounting
      Officer on January 22, 2005.                                                                               

Stock Options

The only equity compensation plan which the Company has in
place is the share option plan which was previously approved by shareholders on
January 21, 2004. The Plan has been established to provide incentive to
qualified parties to increase their proprietary interest in the Company and
thereby encourage their continuing association with the Company. The Plan is
administered by the directors of the Company. The Plan provides that options
will be issued to directors, officers, employees or consultants of the Company
or a subsidiary of the Company. The Plan is a fixed plan and provides that the
number of Common Shares issuable under the Plan, together with all of the
Company's other previously established or proposed share compensation
arrangements, may not exceed 1,900,000 Common Shares. All options expire on a
date not later than five years after the date of grant of such option.

---

- 18 -

There were no options granted during the most recently
completed financial year.

The Named Executive Officers did not exercise any options
during the most recently completed financial year.

The board of directors of the Company proposes that
shareholders adopt a new share option plan (the New Plan) which will use a
rolling number of shares rather than a fixed number of shares at the
upcoming Annual General Meeting to be held on January 19, 2007. The board of
directors have recommended that under the New Plan, a maximum of 10% of the
issued and outstanding Common Shares of the Company at the time an option is
granted, less any outstanding options, will be reserved for issuance as options
to be granted at the discretion of the Companys board of directors to eligible
optionees (the Optionees) under the New Plan. In other words, while the New
Plan is in effect, there can never be more than 10% of the Companys issued and
outstanding Common Shares reserved for issuance under the New Plan at any point
in time. Currently, the Company has 13,399,426 Common Shares issued and
outstanding. As at the date hereof there are no options outstanding. Initially,
1,339,942Common Shares will be available for options granted under the
New Plan. Options granted under the Existing Plan will be rolled into and be
deemed to be granted under the New Plan. It is the responsibility of the
Companys board of directors to ensure that the provisions of the New Plan are
adhered to. This type of plan is called a rolling plan.

The Company is currently listed on the NEX of the TSX Venture
Exchange (TSXV). The New Plan requires shareholder and TSXV approval.

Eligible Optionees

Under the policies of TSXV, to be eligible for the issuance of
a stock option under the New Plan an Optionee must either be a director,
officer, employee, consultant or an employee of a company providing management
or other services to the Company or a subsidiary at the time the option is
granted.

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

Material Terms of the Plan

The following is a summary of the material terms of the New
Plan:

(a) all options granted under the New
Plan are non-assignable, non-transferable and exercisable for a period of up to
5 years (10 years if the Company becomes a Tier 1 issuer on the TSXV);

(b) for stock options granted to
employees or service providers (inclusive of management company employees), the
Company must ensure that the proposed Optionee is a bona fide employee or
service provider (inclusive of management company employees), as the case may
be, of the Company or any subsidiary;

(c) if an Optionee ceases to be
employed by the Company (other than as a result of termination with cause) or
ceases to act as a director or officer of the Company or a subsidiary of the
Company, any option held by such Optionee may be exercised within 90 days after
the date of such Optionee ceases to be employed or act as an officer or director
(30 days if the Optionee is engaged in Investor Relations Activities and the
Company is a Tier 2 issuer);

(d) the minimum exercise price of an
option granted under the New Plan must not be less than the Discounted Market
Price (as defined in the policies of the TSXV);

(e) 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; and

(f) Options granted under the Existing
Plan will be deemed to have been granted under the New Plan and will be subject
to the terms and conditions of the New Plan.

---

- 19 -

Long-Term Incentive Plan

The Company does not have a long-term incentive plan pursuant
to which cash or non-cash compensation intended to serve as an incentive for
performance (whereby performance is measured by reference to financial
performance or the price of the Companys securities) was paid.

The Company and its subsidiaries have no employment contracts
with any Named Executive Officer.

The Company and its subsidiaries have no compensatory plan or
arrangement in respect of compensation received or that may be received by the
Named Executive Officers in the Companys most recently completed or current
financial year to compensate such executive officers in the event of the
termination of employment (resignation, retirement, change of control) or in the
event of a change in responsibilities following a change in control.

C. Board Practices

All directors were re-elected at the last annual and
extraordinary general meeting held on January 25, 2006 and have a term of office
expiring at the next annual general meeting of the Company expected to be held
January 19, 2007. All officers have a term of office lasting until their removal
or replacement by the Board of Directors.

The Company and its subsidiaries have no directors service
contracts providing for benefits upon termination of employment.

The Company has no compensation or remuneration committee.

Audit Committee

Multilateral Instrument 52-110 of the Canadian Securities
Administrators (MI52-110) requires the Company, as a venture issuer, to
disclose annually in its Information Circular certain information concerning the
constitution of its audit committee and its relationship with its independent
auditor, as set forth in the following:

The Audit Committees Charter

The audit committee has a charter that
sets out its mandate and responsibilities. A copy of the audit committee charter
is filed and available on Sedar.

Composition of the Audit Committee

The members of the audit committee are
Rene G. Carrier, Brian F. Causey and Gordon J. Fretwell. Brian F. Causey is the
only independent member of the audit committee. All members are considered to be
financially literate.

Relevant Education and
Experience

Mr. Carrier is a past Vice-President of
Pacific International Securities Inc. for 10 years, until 1991. Since that time
he has been President of Euro-American Capital Corporation, a private company
which specializes in restructuring and raising venture capital funds for junior
companies.

Mr. Causey holds a B.Comm. degree and
is a Chartered Accountant. He is formerly a partner of Peat Marwick Thorne (now
KPMG LLP), and has since 2001, been the Director of Project Finance for Hunter
Dickinson Inc., a private company which provides geological, corporate
development, administrative and management services to and incurs third party
costs on behalf of the Company.

Mr. Fretwell holds a B.Comm. degree and
graduated from the University of British Columbia with a Bachelor of Law degree.
He is formerly a partner in a large Vancouver law firm, and has, since 1991,
been a self-employed solicitor in Vancouver practicing primarily in the areas of
corporate and securities law.

---

- 20 -

As a result of their education and
experience, each member of the audit 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.                                                                                                                                                                                                             

Audit Committee Oversight

The audit committee has not made any
recommendations to the Board of Directors to nominate or compensate any external
auditor.

Reliance on Certain Exemptions

The Companys auditors, Davidson &
Company LLP, Chartered Accountants, have not provided any material non-audit
services.

Pre-Approval Policies and Procedures

The audit committee has not adopted
specific policies and procedures for the engagement of non-audit services. The
audit committee considers and approves requests and recommendations from
management regarding the use of non-audit services to be provided by the
Companys auditors.

External Auditor Service
Fees

The audit committee has reviewed the
nature and amount of the non-audit services provided by Davidson & Company
to the Company to ensure auditor independence.

D. Employees

At July 31, 2006, and each of the past three years, the Company
has had no employees and has contracted staff on an as-needed basis. The
directors of the Company primarily administer the Companys functions through
the employees of Hunter Dickinson Inc., a private company with certain directors
in common with the Company.

E.
Share Ownership

*(a)******Share
Ownership*

At January 7, 2007, there were 13,399,426 common shares and no
stock options issued and outstanding. Directors and officers of the Company held
the following securities of the Company at January 7, 2007:

Name and Office Held
    Securities Beneficially
      Owned(1)
    As a percentage of outstanding
      sharesRene G. Carrier President and Director
    150,000 common shares(2)
    1.12%


---

- 21 -

Name and Office Held
    Securities Beneficially
      Owned(1)
    As a percentage of outstanding
      sharesBrian F. Causey Director
    Nil
    NilGordon J. Fretwell Secretary and Director
    Nil
    NilT. Barry Coughlan Director
    Nil
    Nil


Notes:

|(1) | This information has been provided by the individual
      directors as provided by them on www.sedi.ca
|--- | -------------------------------------------------------------------------------------------------------
|    |                                                                                                        
|(b) | Share Purchase Plan and Share Option
Plan                                                              

A stock option plan pursuant to the rules of the TSX Venture
Exchange was presented to and approved by shareholders at the Companys Annual
General Meeting held on January 21, 2004. On February 17, 2005, the Company
transferred its listing from Tier 2 of the TSX Venture Exchange to NEX, a
separate board of the TSX Venture Exchange. Therefore, the stock option plan is
subject to certain policies of the TSX Venture Exchange that apply only to
companies listed on the NEX board. Details of the plan are presented below.

(b)          
Share Option Plan

In order to provide incentive to directors, officers,
employees, management and others who provide services to the Company to act in
the best interests of the Company, management of the Company proposed, and
shareholders adopted a new share option plan (the Plan) in January 2004. Under
the Plan, a total of up to 1,900,000 shares of the Company have been reserved
for share incentive options to be granted at the discretion of the Companys
board of directors to eligible optionees (the "Optionees"). At the date of this
Form 20-F there are no options outstanding pursuant to this plan.

Eligible Optionees

Under the policies of TSX Venture Exchange (TSX-V), to be
eligible for the issuance of a stock option under the Plan an Optionee must
either be a director, officer, employee, consultant or an employee of a company
providing management or other services to the Company or its subsidiary 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 company, the company must provide TSX-V with an undertaking that
it will not permit any transfer of its Shares, nor issue further Shares, to any
other individual or entity as long as the incentive stock option remains in
effect without the consent of TSX-V.

Material Terms of the Plan

The following is a summary of the material terms of the
Plan:

|(a) | all options granted under the Plan are non-assignable and
      non-transferrable and for a period of up to 5
years;
|--- | --------------------------------------------------------------------------------------------------------------------

---

- 22 -

|(b) | for stock options granted to employees or service
      providers (inclusive of management company employees), the Company is
      required to represent that the proposed Optionee is a bona fide employee
      or service provider (inclusive of a management company employee), as the
      case may be, of the Company or of any of its subsidiaries;                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(c) | if an Optionee ceases to be employed by the Company
      (other than as a result of termination with cause) or ceases to act as a
      director or officer of the Company or a subsidiary of the Company, any
      option held by such Optionee may be exercised within 90 days after the
      date such Optionee ceases to be employed as an officer or director or, as
      the case may be, or within 30 days if the Optionee is engaged in investor
      relations activities and ceases to be employed to provide investor
      relations activities;
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(d) | the minimum exercise price of an option granted under the
      Plan must not be less than the Discounted Market Price (as defined in the
      policies of TSX-V); and                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(e) | no Optionee can be granted an option or options to
      purchase more than 5% of the outstanding listed Shares of the Company in a
      one year period.                                                                                                                                                                                                                                                                                                                                                                                                       

Equity Compensation Plan Information

Number of securities to be
      issued upon exercise of outstanding options,
      warrants and rights
    Weighted-average exercise
      price of outstanding options, warrants and rights
    Number of securities
      remaining available for future issuance under equity
      compensation plans (excluding securities reflected in
      column (a))Plan Category
    (a)
    (b)
    (c)Equity compensation plans approved by securityholders 
      share option plan (the Plan)
    Nil
    Nil
    1,900,000Equity compensation plans not approved by security
      holders
    Nil
    Nil
    NilTotal
    Nil
    Nil
    1,900,000


---

- 23 -

ITEM
      7 **MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS


**A.******Major Shareholders**

Quartz 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 its knowledge, the Company is not directly or indirectly owned or
controlled by a corporation or foreign government. As of January 5, 2007, the
Company has authorized an unlimited number of common shares without par value,
of which 13,399,426 were issued and outstanding and unlimited number of
preferred shares without par value, of which no preferred share was issued and
outstanding.

The following table sets forth certain information with respect
to beneficial ownership of the Companys common stock as of January 5, 2007, by
(i) each shareholder known to be the beneficial owner of more than 5% of the
common stock and (ii) the officers and directors as a group indirectly, by any
other corporation or by any foreign government. 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.

Percentage BeneficiallyIdentity of
      Person or Group
    Shares
    Owned of ClassEstate of David S. Jennings (1)
    3,962,424
    29.6%Robert A. Dickinson
    1,500,569
    11.2%


Notes:

| | 1. | Dr. Jennings passed away on May 15, 2005. At the time of
      his death, he was the President, Chief Executive Officer and a director of
      the Company.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

The Companys major shareholders do not have any different
voting rights than other shareholders.

Transfer Agent

The Companys securities 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) 661-0271 in registered
form. However, the majority of such shares are registered in the name of
intermediaries such as brokerage houses and clearing houses (on behalf of their
respective brokerage clients). Quartz does not have knowledge or access to the
identities of the beneficial owners of such shares registered through
intermediaries.

Control

To its knowledge, the Company is not owned or controlled,
directly or indirectly, by any other corporation or foreign government, and
there are no other arrangements which may, at a subsequent date, result in a
change in control of the Company.

All other known shareholders with greater than 5% are brokerage
clearinghouses.

As of January 5, 2007, directors and officers of the Company as
a group (four persons) owned or controlled an aggregate of 150,000 common shares
(1.11%) of the Company.

Insider Reports under the British Columbia Securities Act

Under the British Columbia Securities Actinsiders
(generally officers, directors, holders of 10% or more of the Company's shares)
are required to file insider reports of changes in their ownership within 10
days of a trade in the Company's securities. Electronic copies of such reports
are available for public inspection via the System of

---

- 24 -

Electronic Disclosure for Insiders (or SEDI) established by the
applicable Canadian securities regulatory authorities, and accessible from the
SEDI website (www.sedi.ca).

Geographic Breakdown of Shareholders

The following lists the geographical distribution of shareholders
  at January 5, 2007:

|              | Number of registered |                 
|------------- | -------------------- | ----------------
|Location      | shareholders         | Number of shares
|Canada        | 114                  | 11,485,214      
|United States | 1,536                | 1,438,621       
|Other         | 14                   | 475,587         
|Total         | 1,664                | 13,399,422      

Shares registered in intermediaries were assumed to be held by
residents of the same country in which the clearing-house was located.

**B.******Related Party Transactions**

During the year ended July 31, 2006, the Company entered into
the following transactions with related parties:

|(a) | The Company has paid $69,407 (2005 $57,732; 2004 -
      $19,776) to Hunter Dickinson Inc. (HDI), a private company with certain
      directors in common with the Company, for rent and administrative
      services, professional fees and geological costs.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                   
|(b) | The Company has paid $nil (2005 - $571; 2004 - $606) for
      consulting services to a director.                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                   
|(c) | The Company paid $nil (2005 - $nil; 2004 - $40,580) in
      consulting fees and reimbursement of expenses to a private company
      controlled by a former director and officer of the
  Company.                                                               

The amounts charged to the Company for the services provided
have been determined by negotiation among the parties and, in certain cases, are
covered by signed agreements. These transactions were in the normal course of
operations and were measured at the exchange value, which represented the amount
of consideration established and agreed to by the related parties.

Other than disclosed herein, no director or senior officer, and
no associate or affiliate of the foregoing persons, and no insider has or has
had any material interest, direct or indirect, in any transactions, or in any
other proposed transaction, during the year ended July 31, 2006.

**C.******Interests of Experts and Counsel**

Not applicable.

---

- 25 -

ITEM
      8 **FINANCIAL INFORMATION


**A.******Consolidated Statements and Other Financial Information**

See Item 17 Financial Statements.

Legal Proceedings

The Company is not involved in any litigation or legal
proceedings and to the Companys knowledge, no material legal proceedings
involving the Company or its subsidiaries are to be initiated against the
Company.

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**

The Company had no significant changes in its activities during
the year ended July 31, 2006.

---

- 26 -

ITEM
      9 **THE
      OFFER AND LISTING


**A.******Offer and Listing Details**

**1.******Trading Markets**

The following table sets forth trading data on the Companys
common shares on the NEX board of the TSX Venture Exchange:

Fiscal
    
    Period ended
    High
    LowYear
    
    
    (Cdn$)
    (Cdn$)Annual2006
    Twelve months
    To July 31, 2006
    0.70
    0.302005
    Twelve months
    To July 31, 2005
    0.68
    0.232004
    Twelve months
    To July 31, 2004
    0.55
    0.142003
    Twelve months
    To July 31, 2003
    0.28
    0.102002
    Twelve months
    To July 31, 2002
    0.20
    0.04By Quarter2007
    First quarter
    October 31, 2006
    0.60
    0.362006
    Fourth quarter
    July 31, 2006
    0.70
    0.50Third quarter
    April 30, 2006
    0.65
    0.36Second quarter
    January 31, 2006
    0.40
    0.33First quarter
    October 31, 2005
    0.40
    0.302005
    Fourth quarter
    July 31, 2005
    0.37
    0.23Third quarter
    April 30, 2005
    0.41
    0.27Second quarter
    January 31, 2005
    0.51
    0.38MonthlyDecember 2006
    
    0.42
    0.36November 2006
    
    0.36
    0.33October 2006
    
    0.40
    0.31September 2006
    
    0.31
    0.31August 2006
    
    0.31
    0.30July 2006
    
    0.37
    0.25


The Companys share trading information is also available
through free Internet search services (eg http://finance.yahoo.com, enter QZM-H.V). The trading
prices on the OTC Bulletin Board are similar to the Canadian prices allowing for
a currency exchange factor. The 52-week trading range ending on January 5, 2007,
on the NEX board of the TSX Venture Exchange ranges from Cdn$0.33 to Cdn$0.70.
The closing price on the NEX board of the TSX Venture Exchange on January 5,
2007, was US$0.37

**B.******Plan of Distribution**

Not applicable.

---

- 27 -

**C.******Markets**

Prior to February 17, 2005, the Companys common shares were
listed and traded in Canada on Tier 2 on the TSX Venture Exchange, 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 Venture Exchange, under the
symbol YQZT.V.

On February 17, 2005, the Company transferred its listing to
NEX, a separate board of TSX Venture Exchange, established in August 2003 to
provide a new trading forum for listed companies that have fallen below the TSX
Venture Exchanges ongoing listing standards due to low levels of business
activity, or due to having ceased to carry on active business. Currently, the
Companys common shares trade on NEX under the symbol QZM.H, and certain
broker-dealers in the United States make market in the Companys shares on the
OTC Bulletin Board under the symbol QZMRF.

There are currently no limitations imposed by Canadian federal
or provincial laws on the rights of non-resident or foreign owners of Canadian
securities to hold or vote the securities held. There are no such limitations
imposed by the Companys Notice of Articles, Articles or contracts of which the
management of the Company is aware.

**D.******Selling Shareholders**

Not applicable.

**E.******Dilution**

Not applicable.

**F.******Expenses of the Issue**

Not applicable.

---

- 28 -

**ITEM 10******ADDITIONAL INFORMATION**


**A.******Share Capital**

Not applicable.

**B.******Memorandum and Articles of Association**

At the annual general meeting of the Company held on January
25, 2005, the Companys shareholders adopted special resolutions to authorize
the Company to adopt the following changes to Company Provisions, adoption of
New Articles and the Creation of Preferred Shares as follows:

Changes to Company Provisions

It was resolved that:

|(1) | the Pre-Existing Company Provisions set forth in Table 3
      of the Regulations to the Business Corporations Act(British
      Columbia) be removed and no longer be applied to the Company;                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                          
|(2) | the President or any one director of the Company be
      authorized to instruct its agents to file a notice of Alteration to a
      Notice of Articles with the Registrar of Companies along with all other
      necessary documents and take such further action that may be necessary to
      effect the amendment;
|    |                                                                                                                                                                                                                                                                                                                          
|(3) | the Notice of Alteration shall not be filed with the
      Registrar of Companies unless and until this resolution has been received
      for deposit at the Companys record office; and                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                          
|(4) | the directors of the Company be authorized at any time in
      its absolute discretion, to determine whether or not to proceed with the
      above resolution without further approval, ratification or confirmation by
      the shareholders.                                                                        

Adoption of New Articles

It was resolved that:

|(1) | the existing Articles of the Company be deleted in their
      entirety;                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                     
|(2) | a new form of Articles be adopted in substitution for the
      existing Articles and that such new form of Articles be in compliance with
      Business Corporations Act (British Columbia);                                                                                      
|    |                                                                                                                                                                                                                                                                                     
|(3) | the directors be authorized to make such non-material
      amendments to the Articles tabled at the Meeting as the directors approve
      prior to deposit of the new Articles in the Companys minute book;
    and                                                              
|    |                                                                                                                                                                                                                                                                                     
|(4) | the new form of Articles not take effect until these
      resolutions are deposited at the Companys records office and the Notice
      of Alteration to the Notice of Articles is filed with the Registrar of
      Companies authorizing the creation of the Preferred
  Shares.

Creation of Preferred Shares

It was resolved that:

|(1) | the authorized share structure of the Company be altered
      to alter the authorized share structure to create a class of Preferred
      Shares without par value and without a maximum number, and a class of
      Common Shares without par value and also without a maximum
  number;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                             
|(2) | 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;                                                                                                                       

---

- 29 -

|(3) | there be attached to the class of Preferred Shares the
      special rights and restrictions as set out in Article 26 of the Articles
      of the Company;                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                           
|(4) | any director or officer of the Company be authorized to
      instruct its agents to file a Notice of Alteration to a Notice of Articles
      of the Company to reflect the creation of the Preferred Shares without par
      value; and
|    |                                                                                                                                                                                                                                           
|(5) | the directors be authorized to delay or abandon the
      implementation of these resolutions in their
discretion.                                                                                                                        

**C.******Material Contracts**

Hunter Dickinson Inc. ("HDI") is a private company with certain
directors in common with the Company that provides geological, technical,
corporate development, administrative and management services to, and incur
third party costs on behalf of, the Company on a full cost recovery basis
pursuant to an agreement dated December 31, 1996.

**D.******Exchange Controls**

The Company is a Province of British Columbia, Canada
corporation. 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 the laws of Canada or by the
charter or other constituent documents of the Company on the right of a
non-resident to hold or vote the Common Shares, other than as provided in the
Investment Canada Act (Canada) (the Investment Act). The following
discussion summarizes the material features of the Investment Act for a
non-resident who proposes to acquire a controlling number of the Companys
Common Shares. It is general only, it is not a substitute for independent advice
from an investors own advisor, and it does not anticipate statutory or
regulatory amendments. The Company does not believe the Investment Act will have
any affect on it or on its non-Canadian shareholders due to a number of factors
including the nature of its operations and the Companys relatively small
capitalization.

The Investment Act generally prohibits implementation of a
reviewable investment by an individual, government or agency thereof,
corporation, partnership, trust or joint venture (each an entity) that is not
a Canadian as defined in the Investment Act (a non-Canadian), unless after
review the Director of Investments appointed by the minister responsible for the
Investment Act is satisfied that the investment is likely to be of net benefit
to Canada. The size and nature of a proposed transaction may give rise to an
obligation to notify the Director to seek an advance ruling. An investment in
the Common Shares by a non-Canadian (other than a WTO Investor as that term is
defined in the Investment Act and which term includes entities which are
nationals of or are controlled by nationals of member states of the World Trade
Organization) when the Company was not controlled by a WTO Investor, would be
reviewable under the Investment Act if it was an investment to acquire control
of the Company and the value of the assets of the Company, as determined in
accordance with the regulations promulgated under the Investment Act, was over a
certain figure, or if an order for review was made by the federal cabinet on the
grounds that the investment related to Canadas cultural heritage or national
identity, regardless of the value of the assets of the Company. An investment in
the Common Shares by a WTO Investor, or by a non-Canadian when the Company was
controlled by a WTO Investor, would be reviewable under the Investment Act if it
was an investment to acquire control of the Company and the value of the assets
of the Company, as determined in accordance with the regulations promulgated
under the Investment Act, was not less than a specified amount, which for 2005
exceeds CAD$250 million. A non-Canadian would acquire control of the Company for
the purposes of the Investment Act if the non-Canadian acquired a majority of
the Common Shares. The acquisition of less than a majority but one-third or more
of the Common Shares would be presumed to be an acquisition of control of the
Company unless it could be established that, on the acquisition, the Company was
not controlled in fact by the acquiror through the ownership of the Common
Shares.

---

- 30 -

The foregoing assumes the Company will not engage in the
production of uranium or own an interest in a producing uranium property in
Canada, or provide any financial service or transportation service, as the rules
governing these businesses are different.

Certain transactions relating to the Common Shares would be
exempt from the Investment Act, including:

| | (a) | an acquisition of the Common Shares by a person in the
      ordinary course of that persons business as a trader or dealer in
      securities,                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                             
| | (b) | an acquisition of control of the Company in connection
      with the realization of security granted for a loan or other financial
      assistance and not for a purpose related to the provisions of the
      Investment Act, and                                                       
| |     |                                                                                                                                                                                                                                                                                             
| | (c) | an acquisition of control of the Company by reason of an
      amalgamation, merger, consolidation or corporate reorganization following
      which the ultimate direct or indirect control in fact of the Company,
      through the ownership of the Common Shares, remained
  unchanged.

**E.******Taxation**

Certain Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the principal
Canadian federal income tax consequences of acquiring, holding and disposing of
shares of common stock of Quartz for a shareholder of Quartz who is not a
resident of Canada but is a resident of the United States and who will acquire
and hold shares of common stock of Quartz as capital property for the purposes
of the Income Tax Act (Canada) (the Canadian Tax Act). This summary
does not apply to a shareholder who carries on business in Canada through a
permanent establishment situated in Canada or performs independent personal
services in Canada through a fixed base in Canada if the shareholders holding
in Quartz is effectively connected with such permanent establishment or fixed
base. This summary is based on the provisions of the Canadian Tax Act and the
regulations thereunder and on an understanding of the administrative practices
of Canada Revenue Agency, and takes into account all specific proposals to amend
the Canadian Tax Act or regulations made by the Minister of Finance of Canada as
of the date hereof. It has been assumed that there will be no other relevant
amendment of any governing law although no assurance can be given in this
respect. This discussion is general only and is not, nor is it intended to
provide a detailed analysis of the income tax implications of any particular
shareholders interest. Investors are advised to obtain independent advice from
a shareholders own Canadian and U.S. tax advisors with respect to income tax
implications pertinent to their particular circumstances.

The provisions of the Canadian Tax Act are subject to income
tax treaties to which Canada is a party, including the Canada-United States
Income Tax Convention (1980), as amended (the Convention).

Dividends on Common Shares and Other Income

Under the Canadian Tax Act, a non-resident of Canada is
generally subject to Canadian withholding tax at the rate of 25 percent on
dividends paid or deemed to have been paid to him or her by a corporation
resident in Canada. Quartz is responsible for withholding of tax at the source.
The Convention limits the rate to 15 percent if the shareholder is a resident of
the United States and the dividends are beneficially owned by and paid to such
shareholder and to 5 percent if the shareholder is also a corporation that
beneficially owns at least 10 percent of the voting stock of the payor
corporation.

The amount of a stock dividend (for tax purposes) would
generally be equal to the amount by which the paid up or stated capital of
Quartz had increased by reason of the payment of such dividend. Quartz will
furnish additional tax information to shareholders in the event of such a
dividend. Interest paid or deemed to be paid on Quartzs debt securities held by
non-Canadian residents may also be subject to Canadian withholding tax,
depending upon the terms and provisions of such securities and any applicable
tax treaty.

The Convention generally exempts from Canadian income tax
dividends paid to a religious, scientific, literary, educational or charitable
organization or to an organization constituted and operated exclusively to
administer a

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pension, retirement or employee benefit fund or plan, if the
organization is a resident of the United States and is exempt from income tax
under the laws of the United States.

Dispositions of Common Shares

Under the Canadian Tax Act, a taxpayers capital gain or
capital loss from a disposition of a share of common stock of Quartz is the
amount, if any, by which his or her proceeds of disposition exceed (or are
exceeded by, respectively) the aggregate of his or her adjusted cost base of the
share and reasonable expenses of disposition. The capital gain or loss must be
computed in Canadian currency using a weighted average adjusted cost base for
identical properties. The capital gains net of losses included in income are as
follows. For gains net of losses realized before February 28, 2000, as to 75%.
For gains net of losses realized after February 27, 2000 and before October 18,
2000, as to 66 2/3%. For gains net of losses realized after October 17, 2000, as
to 50%. There are special transitional rules to apply capital losses against
capital gains that arose in different periods. The amount by which a
shareholders capital loss exceeds the capital gain in a year may be deducted
from a capital gain realized by the shareholder in the three previous years or
any subsequent year, subject to certain restrictions in the case of a corporate
shareholder.

Under the Canadian Tax Act, a non-resident of Canada is subject
to Canadian tax on taxable capital gains, and may deduct allowable capital
losses, realized on a disposition of taxable Canadian property. Shares of
common stock of Quartz will constitute taxable Canadian property of a
shareholder at a particular time if the shareholder used the shares in carrying
on business in Canada, or if at any time in the five years immediately preceding
the disposition 25% or more of the issued shares of any class or series in the
capital stock of Quartz belonged to one or more persons in a group comprising
the shareholder and persons with whom the shareholder and persons with whom the
shareholder did not deal at arms length and in certain other circumstances.

The Convention relieves United States residents from liability
for Canadian tax on capital gains derived on a disposition of shares unless

(a) the value of the shares is derived
principally from real property in Canada, including the right to explore for
or exploit natural resources and rights to amounts computed by reference to
production,

(b) the shareholder was resident in
Canada for 120 months during any period of 20 consecutive years preceding, and
at any time during the 10 years immediately preceding, the disposition and the
shares were owned by him when he or she ceased to be resident in Canada, or

(c) the shares formed part of the
business property of a permanent establishment that the holder has or had in
Canada within the 12 months preceding the disposition.

United States Tax Consequences

United States Federal Income Tax Consequences

The following is, in the opinion of Quartz after consultation
with its professional advisors, a discussion of material United States federal
income tax consequences, under current law, generally applicable to a U.S.
Holder (as hereinafter defined) of common shares of Quartz. This discussion does
not address all potentially relevant federal income tax matters and it does not
address consequences peculiar to persons subject to special provisions of
federal income tax law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local or foreign tax consequences, (see Taxation  Canadian Federal
Income Tax Consequences above). Accordingly, holders and prospective holders of
common shares of Quartz are urged to consult their own tax advisors about the
specific federal, state, local, and foreign tax consequences to them of
purchasing, owning and disposing of common shares of Quartz, based upon their
individual circumstances.

The following discussion is based upon the sections of the
Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations,
published Internal Revenue Service (IRS) rulings, published administrative
positions of the IRS and court decisions that are currently applicable, any or
all of which could be materially and adversely changed, possibly on a
retroactive basis, at any time and which are subject to differing
interpretations.

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This discussion does not consider the potential effects, both
adverse and beneficial, of any proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time.

U.S. Holders

As used herein, a U.S. Holder means a holder of common shares
of Quartz who is a citizen or individual resident of the United States, a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, an entity created or
organized in or under the laws of the United States or of any political
subdivision thereof which has elected to be treated as a corporation for United
States federal income tax purposes (under Treasury Regulation Section 301.7701
-3), an estate whose income is taxable in the United States irrespective of
source or a trust subject to the primary supervision of a court within the
United States and control of a United States fiduciary as described in Section
7701(a)(30) of the Code. This summary does not address the tax consequences to,
and U.S. Holder does not include, persons subject to specific provisions of
federal income tax law, such as tax-exempt organizations, qualified retirement
plans, individual retirement accounts and other tax-deferred accounts, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, non-resident alien individuals, persons or
entities that have a functional currency other than the U.S. dollar,
shareholders subject to the alternative minimum tax, shareholders who hold
common shares as part of a straddle, hedging or conversion transaction, and
shareholders who acquired their common shares through the exercise of employee
stock options or otherwise as compensation for services. This summary is limited
to U.S. Holders who own common shares as capital assets and who own (directly
and indirectly, pursuant to applicable rules of constructive ownership) no more
than 5% of the value of the total outstanding stock of Quartz. This summary does
not address the consequences to a person or entity holding an interest in a
shareholder or the consequences to a person of the ownership, exercise or
disposition of any options, warrants or other rights to acquire common shares.
In addition, this summary does not address special rules applicable to United
States persons (as defined in Section 7701(a)(30) of the Code) holding common
shares through a foreign partnership or to foreign persons holding common shares
through a domestic partnership.

Distribution on Common Shares of Quartz

In general, U.S. Holders receiving dividend distributions
(including constructive dividends) with respect to common shares of Quartz are
required to include in gross income for United States federal income tax
purposes the gross amount of such distributions, equal to the U.S. dollar value
of such distributions on the date of receipt (based on the exchange rate on such
date), to the extent that Quartz has current or accumulated earnings and
profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holders federal income tax liability or,
alternatively, may be deducted in computing the U.S. Holders federal taxable
income by those who itemize deductions. (See more detailed discussion at
Foreign Tax Credit below). To the extent that distributions exceed current or
accumulated earnings and profits of Quartz, they will be treated first as a
return of capital up to the U.S. Holders adjusted basis in the common shares
and thereafter as gain from the sale or exchange of property. Preferential tax
rates for long-term capital gains are applicable to a U.S. Holder that is an
individual, estate or trust. There are currently no preferential tax rates for
long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is
not converted by the recipient into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Generally any gain or loss recognized upon a
subsequent sale or other disposition of the foreign currency, including the
exchange for U.S. dollars, will be ordinary income or loss. However, an
individual whose realized gain does not exceed $200 will not recognize that
gain, provided that there are no expenses associated with the transaction that
meet the requirements for deductibility as a trade or business expense (other
than travel expenses in connection with a business trip) or as an expense for
the production of income.

Dividends paid on the common shares of Quartz generally will
not be eligible for the dividends received deduction provided to corporations
receiving dividends from certain United States corporations. A U.S. Holder which
is a corporation and which owns shares representing at least 10% of the voting
power and value of Quartz may, under certain circumstances, be entitled to a 70%
(or 80% if the U.S. Holder owns shares representing at least 20% of the voting
power and value of Quartz) deduction of the United States source portion of
dividends received from Quartz (unless Quartz qualifies as a foreign personal
holding company or a passive foreign investment company, as

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defined below). Quartz does not anticipate that it will earn
any United States income, however, and therefore does not anticipate that any
U.S. Holder will be eligible for the dividends received deduction.

Under current Treasury Regulations, dividends paid on Quartzs
common shares, if any, generally will not be subject to information reporting
and generally will not be subject to U.S. backup withholding tax. However,
dividends and the proceeds from a sale of Quartzs common shares paid in the
U.S. through a U.S. or U.S. related paying agent (including a broker) will be
subject to U.S. information reporting requirements and may also be subject to
the 28% U.S. backup withholding tax, unless the paying agent is furnished with a
duly completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a refund or a credit against the U.S.
Holders U.S. federal income tax liability, provided the required information is
furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of common shares of Quartz may
be entitled, at the option of the U.S. Holder, to either receive a deduction or
a tax credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayers income subject to tax. This election is made on a year-by-year basis
and generally applies to all foreign taxes paid by (or withheld from) the U.S.
Holder during that year. There are significant and complex limitations which
apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the U.S. Holders United States income
tax liability that the U.S. Holders foreign source income bears to his or its
worldwide taxable income. In the determination of the application of this
limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.
In addition, this limitation is calculated separately with respect to specific
classes of income such as passive income, high withholding tax interest,
financial services income, shipping income, and certain other
classifications of income. Dividends distributed by Quartz will generally
constitute passive income or, in the case of certain U.S. Holders, financial
services income for these purposes. The availability of the foreign tax credit
and the application of the limitations on the credit are fact specific, and U.S.
Holders of common shares of Quartz should consult their own tax advisors
regarding their individual circumstances.

Disposition of Common Shares of Quartz

In general, U.S. Holders will recognize gain or loss upon the
sale of common shares of Quartz equal to the difference, if any, between (i) the
amount of cash plus the fair market value of any property received, and (ii) the
shareholders tax basis in the common shares of Quartz. Preferential tax rates
apply to long-term capital gains of U.S. Holders that are individuals, estates
or trusts. In general, gain or loss on the sale of common shares of Quartz will
be long-term capital gain or loss if the common shares are a capital asset in
the hands of the U.S. Holder and are held for more than one year. Deductions for
net capital losses are subject to significant limitations. For U.S. Holders that
are not corporations, any unused portion of such net capital loss may be carried
over to be used in later tax years until such net capital loss is thereby
exhausted. For U.S. Holders that are corporations (other than corporations
subject to Subchapter S of the Code), an unused net capital loss may be carried
back three years and carried forward five years from the loss year to be offset
against capital gains until such net capital loss is thereby exhausted.

Other Considerations

Set forth below are certain material exceptions to the
above-described general rules describing the United States federal income tax
consequences resulting from the holding and disposition of common shares:

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total
combined voting power or the total value of Quartzs outstanding shares is
owned, directly or indirectly (pursuant to applicable rules of constructive
ownership), by five or fewer individuals who are citizens or residents of the
United States and 60% or more of Quartzs gross income for such year is derived
from certain passive sources (e.g., from certain interest and dividends), Quartz
may be treated as a foreign personal holding company. In that event, U.S.
Holders that hold common shares would be required to include in gross income for
such year their allocable portions of such passive income to the extent Quartz
does not

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actually distribute such income. Quartz does not believe that
it currently qualifies as a foreign personal holding company. However, there can
be no assurance that Quartz will not be considered a foreign personal holding
company for the current or any future taxable year.

Foreign Investment Company

If 50% or more of the combined voting power or total value of
Quartzs outstanding shares is held, directly or indirectly, by citizens or
residents of the United States, United States domestic partnerships or
corporations, or estates or trusts other than foreign estates or trusts (as
defined by Code Section 7701(a)(31)), and Quartz is found to be engaged
primarily in the business of investing, reinvesting, or trading in securities,
commodities, or any interest therein, it is possible that Quartz may be treated
as a foreign investment company as defined in Section 1246 of the Code,
causing all or part of any gain realized by a U.S. Holder selling or exchanging
common shares to be treated as ordinary income rather than capital gain. Quartz
does not believe that it currently qualifies as a foreign investment company.
However, there can be no assurance that Quartz will not be considered a foreign
investment company for the current or any future taxable year.

Passive Foreign Investment Company

United States income tax law contains rules governing passive
foreign investment companies (PFIC) which can have significant tax effects on
U.S. Holders of foreign corporations. These rules do not apply to non-U.S.
Holders. Section 1297 of the Code defines a PFIC as a corporation that is not
formed in the United States if, for any taxable year, either (i) 75% or more of
its gross income is passive income, which includes interest, dividends and
certain rents and royalties or (ii) the average percentage, by fair market value
(or, if the corporation is not publicly traded and either is a controlled
foreign corporation or makes an election, by adjusted tax basis), of its assets
that produce or are held for the production of passive income is 50% or more.
Quartz appears to have been a PFIC for the fiscal year ended May 31, 2005, and
at least certain prior fiscal years. In addition, Quartz expects to qualify as a
PFIC for the fiscal year ending May 31, 2006 and may also qualify as a PFIC in
future fiscal years. Each U.S. Holder of Quartz is urged to consult a tax
advisor with respect to how the PFIC rules affect such U.S. Holders tax
situation.

Each U.S. Holder who holds stock in a foreign corporation
during any year in which such corporation qualifies as a PFIC is subject to
United States federal income taxation under one of three alternative tax regimes
at the election of such U.S. Holder. The following is a discussion of such
alternative tax regimes applied to such U.S. Holders of Quartz. In addition,
special rules apply if a foreign corporation qualifies as both a PFIC and a
controlled foreign corporation (as defined below) and a U.S. Holder owns,
actually or constructively, 10% or more of the total combined voting power of
all classes of stock entitled to vote of such foreign corporation (See more
detailed discussion at Controlled Foreign Corporation below).

A U.S. Holder who elects to treat Quartz as a qualified
electing fund (QEF) will be subject, under Section 1293 of the Code, to
current federal income tax for any taxable year to which the election applies in
which Quartz qualifies as a PFIC on his pro rata share of Quartzs (i) net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), which will be taxed as long-term capital gain, and (ii) ordinary
earnings (the excess of earnings and profits over net capital gain), which will
be taxed as ordinary income, in each case, for the shareholders taxable year in
which (or with which) Quartzs taxable year ends, regardless of whether such
amounts are actually distributed. A U.S. Holders tax basis in the common shares
will be increased by any such amount that is included in income but not
distributed.

The procedure a U.S. Holder must comply with in making an
effective QEF election, and the consequences of such election, will depend on
whether the year of the election is the first year in the U.S. Holders holding
period in which Quartz is a PFIC. If the U.S. Holder makes a QEF election in
such first year, i.e., a timely QEF election, then the U.S. Holder may make
the QEF election by simply filing the appropriate documents at the time the U.S.
Holder files his tax return for such first year. If, however, Quartz qualified
as a PFIC in a prior year during the U.S. Holders holding period, then, in
order to avoid the Section 1291 rules discussed below, in addition to filing
documents, the U.S. Holder must elect to recognize under the rules of Section
1291 of the Code (discussed herein), (i) any gain that he would otherwise
recognize if the U.S. Holder sold his stock on the qualification date or (ii) if
Quartz is a controlled foreign corporation, the U.S. Holders pro rata share of
Quartzs post-1986 earnings and profits as of the qualification date. The
qualification date is the first day of Quartzs first tax year in which Quartz
qualified as a QEF with respect to such U.S. Holder. For purposes of this
discussion, a U.S. Holder who makes (i) a

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timely QEF election, or (ii) an untimely QEF election and
either of the above-described gain-recognition elections under Section 1291 is
referred to herein as an Electing U.S. Holder. A U.S. Holder who holds common
shares at any time during a year of Quartz in which Quartz is a PFIC and who is
not an Electing U.S. Holder (including a U.S. Holder who makes an untimely QEF
election and makes neither of the above-described gain-recognition elections) is
referred to herein as a Non-Electing U.S. Holder. An Electing U.S. Holder (i)
generally treats any gain realized on the disposition of his Company common
shares as capital gain; and (ii) may either avoid interest charges resulting
from PFIC status altogether, or make an annual election, subject to certain
limitations, to defer payment of current taxes on his share of Quartzs annual
realized net capital gain and ordinary earnings subject, however, to an interest
charge. If the U.S. Holder is not a corporation, any interest charge imposed
under the PFIC regime would be treated as personal interest that is not
deductible.

In order for a U.S. Holder to make (or maintain) a valid QEF
election, Quartz must provide certain information regarding its net capital
gains and ordinary earnings and permit its books and records to be examined to
verify such information. Quartz intends to make the necessary information
available to U.S. Holders to permit them to make (and maintain) QEF elections
with respect to Quartz. Quartz urges each U.S. Holder to consult a tax advisor
regarding the availability of, and procedure for making, the QEF election.

A QEF election, once made with respect to Quartz, applies to
the tax year for which it was made and to all subsequent tax years, unless the
election is invalidated or terminated, or the IRS consents to revocation of the
election. If a QEF election is made by a U.S. Holder and Quartz ceases to
qualify as a PFIC in a subsequent tax year, the QEF election will remain in
effect, although not applicable, during those tax years in which Quartz does not
qualify as a PFIC. Therefore, if Quartz again qualifies as a PFIC in a
subsequent tax year, the QEF election will be effective and the U.S. Holder will
be subject to the rules described above for Electing U.S. Holders in such tax
year and any subsequent tax years in which Quartz qualifies as a PFIC. In
addition, the QEF election remains in effect, although not applicable, with
respect to an Electing U.S. Holder even after such U.S. Holder disposes of all
of his or its direct and indirect interest in the shares of Quartz. Therefore,
if such U.S. Holder reacquires an interest in Quartz, that U.S. Holder will be
subject to the rules described above for Electing U.S. Holders for each tax year
in which Quartz qualifies as a PFIC.

In the case of a Non-Electing U.S. Holder, special taxation
rules under Section 1291 of the Code will apply to (i) gains realized on the
disposition (or deemed to be realized by reasons of a pledge) of his Quartz
common shares and (ii) certain excess distributions, as defined in Section
1291(b), by Quartz.

A Non-Electing U.S. Holder generally would be required to pro
rate all gains realized on the disposition of his Quartz common shares and all
excess distributions on his Quartz common shares over the entire holding period
for the common shares. All gains or excess distributions allocated to prior
years of the U.S. Holder (excluding any portion of the holders period prior to
the first day of the first year of Quartz (i) which began after December 31,
1986, and (ii) for which Quartz was a PFIC) would be taxed at the highest tax
rate for each such prior year applicable to ordinary income. The Non-Electing
U.S. Holder also would be liable for interest on the foregoing tax liability for
each such prior year calculated as if such liability had been due with respect
to each such prior year. A Non-Electing U.S. Holder that is not a corporation
must treat this interest charge as personal interest which, as discussed
above, is wholly non-deductible. The balance, if any, of the gain or the excess
distribution will be treated as ordinary income in the year of the disposition
or distribution, and no interest charge will be incurred with respect to such
balance. In certain circumstances, the sum of the tax and the PFIC interest
charge may exceed the amount of the excess distribution received, or the amount
of proceeds of disposition realized, by the U.S. Holder.

If Quartz is a PFIC for any taxable year during which a
Non-Electing U.S. Holder holds Quartz common shares, then Quartz will continue
to be treated as a PFIC with respect to such Quartz common shares, even if it is
no longer definitionally a PFIC. A Non-Electing U.S. Holder may terminate this
deemed PFIC status by electing to recognize gain (which will be taxed under the
rules discussed above for Non-Electing U.S. Holders) as if such Quartz common
shares had been sold on the last day of the last taxable year for which it was a
PFIC.

Effective for tax years of U.S. Holders beginning after
December 31, 1997, U.S. Holders who hold (actually or constructively) marketable
stock of a foreign corporation that qualifies as a PFIC may elect to mark such
stock to the market annually (a mark-to-market election). If such an election
is made, such U.S. Holder will generally not be subject to the special taxation
rules of Section 1291 discussed above. However, if the mark-to-market election
is

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made by a Non-Electing U.S. Holder after the beginning of the
holding period for the PFIC stock, then the Section 1291 rules will apply to
certain dispositions of, distributions on and other amounts taxable with respect
to Quartz common shares. A U.S. Holder who makes the mark-to-market election
will include in income for each taxable year for which the election is in effect
an amount equal to the excess, if any, of the fair market value of the common
shares of Quartz as of the close of such tax year over such U.S. Holders
adjusted basis in such common shares. In addition, the U.S. Holder is allowed a
deduction for the lesser of (i) the excess, if any, of such U.S. Holders
adjusted tax basis in the common shares over the fair market value of such
shares as of the close of the tax year, or (ii) the excess, if any, of (A) the
mark-to-market gains for the common shares in Quartz included by such U.S.
Holder for prior tax years, including any amount which would have been treated
as a mark-to-market gain for any prior tax year but for the Section 1291 rules
discussed above with respect to Non-Electing U.S. Holders, over (B) the
mark-to-market losses for shares that were allowed as deductions for prior tax
years. A U.S. Holders adjusted tax basis in the common shares of Quartz will be
adjusted to reflect the amount included in or deducted from income as a result
of a mark-to-market election. A mark-to-market election applies to the taxable
year in which the election is made and to each subsequent taxable year, unless
Quartz common shares cease to be marketable, as specifically defined, or the IRS
consents to revocation of the election. Because the IRS has not established
procedures for making a mark-to-market election, U.S. Holders should consult
their tax advisors regarding the manner of making such an election. No view is
expressed regarding whether common shares of Quartz are marketable for these
purposes or whether the election will be available.

Under Section 1291(f) of the Code, the IRS has issued Proposed
Treasury Regulations that, subject to certain exceptions, would treat as taxable
certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally
not otherwise taxed, such as gifts, exchanges pursuant to corporate
reorganizations, and transfers at death. Generally, in such cases the basis of
Quartz common shares in the hands of the transferee and the basis of any
property received in the exchange for those common shares would be increased by
the amount of gain recognized. Under the Proposed Treasury Regulations, an
Electing U.S. Holder would not be taxed on certain transfers of PFIC stock, such
as gifts, exchanges pursuant to corporate reorganizations, and transfers at
death. The transferees basis in this case will depend on the manner of the
transfer. In the case of a transfer by an Electing U.S. Holder upon death, for
example, the transferees basis is generally equal to the fair market value of
the Electing U.S. Holders common shares as of the date of death under Section
1014 of the Code. The specific tax effect to the U.S. Holder and the transferee
may vary based on the manner in which the common shares are transferred. Each
U.S. Holder of Quartz is urged to consult a tax advisor with respect to how the
PFIC rules affect his or its tax situation.

Whether or not a U.S. Holder makes a timely QEF election with
respect to common shares of Quartz, certain adverse rules may apply in the event
that both Quartz and any foreign corporation in which Quartz directly or
indirectly holds shares is a PFIC (a lower-tier PFIC). Pursuant to certain
Proposed Treasury Regulations, a U.S. Holder would be treated as owning his or
its proportionate amount of any lower-tier PFIC shares, and generally would be
subject to the PFIC rules with respect to such indirectly-held PFIC shares
unless such U.S. Holder makes a timely QEF election with respect thereto. Quartz
intends to make the necessary information available to U.S. Holders to permit
them to make (and maintain) QEF elections with respect to each subsidiary of
Quartz that is a PFIC.

Under the Proposed Treasury Regulations, a U.S. Holder who does
not make a timely QEF election with respect to a lower-tier PFIC generally would
be subject to tax (and the PFIC interest charge) on (i) any excess distribution
deemed to have been received with respect to his or its lower-tier PFIC shares
and (ii) any gain deemed to arise from a so-called indirect disposition of
such shares. For this purpose, an indirect disposition of lower-tier PFIC shares
would generally include (i) a disposition by Quartz (or an intermediate entity)
of lower-tier PFIC shares, and (ii) any other transaction resulting in a
diminution of the U.S. Holders proportionate ownership of the lower-tier PFIC,
including an issuance of additional common shares by Quartz (or an intermediate
entity). Accordingly, each prospective U.S. Holder should be aware that he or it
could be subject to tax even if such U.S. Holder receives no distributions from
Quartz and does not dispose of its common shares. Quartz strongly urges each
prospective U.S. Holder to consult a tax advisor with respect to the adverse
rules applicable, under the Proposed Treasury Regulations, to U.S. Holders of
lower-tier PFIC shares.

Certain special, generally adverse, rules will apply with
respect to Quartz common shares while Quartz is a PFIC unless the U.S. Holder
makes a timely QEF election. For example under Section 1298(b)(6) of the Code, a
U.S.

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- 37 -

Holder who uses PFIC stock as security for a loan (including a
margin loan) will, except as may be provided in regulations, be treated as
having made a taxable disposition of such shares.

Controlled Foreign Corporation

If more than 50% of the total combined voting power of all
classes of shares entitled to vote or the total value of the shares of Quartz is
owned, actually or constructively, by citizens or residents of the United
States, United States domestic partnerships or corporation, or estates or trusts
other than foreign estates or trusts (as defined by Code Section 7701(a)(31)),
each of which own, actually or constructively, 10% or more of the total combined
voting power of all classes of shares entitled to vote of Quartz (United States
Shareholder), Quartz could be treated as a controlled foreign corporation
(CFC) under Subpart F of the Code. This classification would effect many
complex results, one of which is the inclusion of certain income of a CFC which
is subject to current U.S. tax. The United States generally taxes United States
Shareholders of a CFC currently on their pro rata shares of the Subpart F income
of the CFC. Such United States Shareholders are generally treated as having
received a current distribution out of the CFCs Subpart F income and are also
subject to current U.S. tax on their pro rata shares of increases in the CFCs
earnings invested in U.S. property. The foreign tax credit described above may
reduce the U.S. tax on these amounts. In addition, under Section 1248 of the
Code, gain from the sale or exchange of shares by a U.S. Holder of common shares
of Quartz which is or was a United States Shareholder at any time during the
five-year period ending on the date of the sale or exchange is treated as
ordinary income to the extent of earnings and profits of Quartz attributable to
the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC,
the foreign corporation generally will not be treated as a PFIC with respect to
United States Shareholders of the CFC. This rule generally will be effective for
taxable years of United States Shareholders beginning after 1997 and for taxable
years of foreign corporations ending with or within such taxable years of United
States Shareholders. Special rules apply to United States Shareholders who are
subject to the special taxation rules under Section 1291 discussed above with
respect to a PFIC. Because of the complexity of Subpart F, a more detailed
review of these rules is outside of the scope of this discussion. Quartz does
not believe that it currently qualifies as a CFC. However, there can be no
assurance that Quartz will not be considered a CFC for the current or any future
taxable year.

**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 at the offices of the Company, Suite 1020, 800 West Pender Street,
Vancouver, British Columbia V6C 2V6 or on request of the Company. Copies of the
Companys financial statements and other continuous disclosure documents
required under the British Columbia Securities Act are available for
viewing at www.SEDAR.com.

**I.******Subsidiary Information**

Not applicable.

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- 38 -

ITEM
      11 **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


**A.******Transaction Risk and Currency Risk Management**

The Companys operations do not employ financial instruments or
derivatives and given that the Company keeps its excess funds in high-grade
short-term instruments it does not have significant or unusual financial market
risks.

**B.******Exchange Rate Sensitivity**

A significant portion of Quartz's administrative operations are
in Canada.

The Company typically holds most of its funds in Canadian
dollars and reports the results of its operations in United States dollars so is
therefore affected by exchange rate risk.

The Company does not hedge this risk, and it does not consider
this exposure to be material in the context of its operations.

**C.******Interest Rate Risk and Equity Price Risk**

The Company is equity financed and does not have any debt.

**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 operating mines and hence does not have any
hedging or other commodity based operations risks respecting its business
activities.

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- 39 -

ITEM
      12 **DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES


**A.******Debt Securities**

Not applicable.

**B.******Warrants and Rights**

At January 5, 2007, the Company had no warrants or options
outstanding.

**C.******Other Securities**

Not applicable.

**D.******American Depositary Shares**

Not applicable.

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- 40 -

PART II

ITEM
      13 **DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES


Not applicable.

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- 41 -

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


Not applicable.

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- 42 -

ITEM
      15 **CONTROLS AND PROCEDURES


Not applicable.

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- 43 -

ITEM
      16 **AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES AND EXEMPTIONS


**A.******Audit Committee Financial Expert**

The Board of Directors has determined that Mr. Brian Causey is
a member of the audit committee of the Company who qualifies as a "financial
expert based on his education and experience. Mr. Causey is "independent", as
the term is defined in Item 401(e) of Regulation S-B.

**B.******Code of Ethics**

The Company has adopted a Code of Ethics that applies to the
Company's chief executive officer, the chief financial officer, and other
members of senior management.

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.

**C.******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 for various services. The figures in the table below are
expressed in Canadian Dollars.

Services:
    Year ended**July 31, 2006**
    July 31, 2005Audit Fees
    C$18,796
    C$ 20,523Audit Related Fees
    
    Tax Fees
    1,625
    2,450All Other Fees
    
    C$20,421
    C$ 22,973


Audit related fees are comprised of fees billed for assurance
and advisory services related to the annual audit which are not reported under
audit fees.

From time to time, management of the Company recommends to and
requests approval from the audit committee for non-audit services to be provided
by the Company's auditors. The audit committee routinely considers such requests
at committee meetings, and if acceptable to a majority of the audit 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 committee assesses, among other factors, whether the services
requested would be considered "prohibited services" as contemplated by the US
Securities and Exchange Commission, and whether the services requested and the
fees related to such services could impair the independence of the auditors.

**D.******Exemptions from Listing Standards for Audit Committees**

Not applicable.

**E.******Purchases of Equity Securities by the Issuer and Affiliated
Purchasers**

None.

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- 44 -

PART III

ITEM
      17 **FINANCIAL STATEMENTS


The following financial statements are filed as part of this
annual report:

|(1) | Report of the Independent Registered Public Accounting
      Firm on the consolidated balance sheets as at July 31, 2006 and 2005;
      consolidated statements of operations and deficit, and cash flows for the
      years ended July 31, 2006, 2005, and 2004;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                    
|(2) | Consolidated balance sheets as at July 31, 2006 and
      2005;                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                    
|(3) | Consolidated statements of operations and deficit for
      each of the years ended July 31, 2006, 2005, and 2004;                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                    
|(4) | Consolidated statements of cash flows for the years ended
      July 31, 2006, 2005, and 2004;                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                    
|(5) | Notes to the consolidated financial statements, of which
      note 10 includes a reconciliation to United States generally accepted
      accounting principles.                                                                                                  

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- 45 -

ITEM
      18 **FINANCIAL STATEMENTS


Not applicable. See Item 17.

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- 46 -

ITEM
      19 **EXHIBITS


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

|Type of  |                                                                                                                                                                                                                                                        
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Document | Description                                                                                                                                                                                                                                            
|         |                                                                                                                                                                                                                                                        
|1        | Certificate of Incorporation and Memorandum, as amended,
      June 5, 1986, (incorporated by reference to Exhibit 3 to the Companys
      Statement of Form 10, Commission File No. 0-15490).                                                        
|         |                                                                                                                                                                                                                                                        
|1        | Articles July 28, 1982, (incorporated by reference to
      Exhibit 3 to the Companys Statement on Form 10, Commission File No.
      0-15490).                                                                                                       
|         |                                                                                                                                                                                                                                                        
|1        | Certificate of Change of Name, November 5, 1997.                                                                                                                                                                                                       
|         |                                                                                                                                                                                                                                                        
|1        | Articles, July 28, 1982 (incorporated by reference to
      Exhibit 4 to the Companys Registration Statement on Form 10, Commission
      file No. 0-15490).                                                                                          
|         |                                                                                                                                                                                                                                                        
|1        | Transition Application dated October 11, 2005                                                                                                                                                                                                          
|         |                                                                                                                                                                                                                                                        
|1        | Notice of Articles dated October 11, 2005.                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                        
|1        | Notice of Alteration of Articles dated October 11, 2005                                                                                                                                                                                                
|         |                                                                                                                                                                                                                                                        
|10       | Quartz Mountain Resources Ltd. Stock Incentive Plan, as
      amended (incorporated by reference to Exhibit 4 to the Companys Form S-8
      Registration Statement dated November 27, 1989, Commission File No.
      33-32388).                     
|         |                                                                                                                                                                                                                                                        
|10       | Indemnity Agreement dated February 1989, between the
      Company and David S. Jennings (incorporated by reference to Exhibit 10(a)
      to the Companys Form S-8 Registration No. 33-32388).                                                       
|         |                                                                                                                                                                                                                                                        
|10       | Letter Agreement dated August 21, 1995, between Wavecrest
      Resources, Inc. and Newmont Exploration Limited. (Incorporated by
      reference to Exhibit 10.1 to the Companys Form 8-K dated August 21,
      1995).                              
|         |                                                                                                                                                                                                                                                        
|10       | Exploration, Development and Mining Operations Agreement
      dated December 31, 1995, between Newmont Exploration Limited and the
      Company. (Incorporated by reference to Exhibit 10.1 to the Companys Form
      10-QSB dated April 30, 1996.)
|         |                                                                                                                                                                                                                                                        
|10       | Audit Committee Charter (incorporated by reference to
      Exhibit 10.1 to the Companys annual report on Form 20-F for the year
      ended July 31, 2004.)                                                                                          
|         |                                                                                                                                                                                                                                                        
|10       | Audit Committee Charter                                                                                                                                                                                                                                

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- 47 -

|Type of  |                                                                                                                                                                                                                                       
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Document | Description                                                                                                                                                                                                                           
|         |                                                                                                                                                                                                                                       
|10       | Geological and Management Services Agreement between
      Hunter Dickinson Inc. and the Company (incorporated by reference to
      Exhibit 10.2 to the Companys annual report on Form 20-F for the year
      ended July 31, 2005).
|         |                                                                                                                                                                                                                                       
|10.1     | Code of Ethics                                                                                                                                                                                                                        

Exhibits included as part of this Form 20-F are as follows:

|Type of  |                                                                                                                                                                                                                                                                                              
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Document | Description                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                              
|1.1      | Transition
      Application dated February 17, 2006.                                                                                                                                                                                                                                        
|         |                                                                                                                                                                                                                                                                                              
|1.2      | Notice
      of Articles dated February 17, 2006.                                                                                                                                                                                                                                            
|         |                                                                                                                                                                                                                                                                                              
|1.3      | Special
      rights and restrictions of Preferred Shares                                                                                                                                                                                                                                    
|         |                                                                                                                                                                                                                                                                                              
|12.1     | Section 302 Certification of Chief
      Executive Officer                                                                                                                                                                                                                                   
|         |                                                                                                                                                                                                                                                                                              
|12.2     | Section 302 Certification of Chief
      Financial Officer                                                                                                                                                                                                                                   
|         |                                                                                                                                                                                                                                                                                              
|13.1     | Section 906 Certification of Chief
      Executive Officer                                                                                                                                                                                                                                   
|         |                                                                                                                                                                                                                                                                                              
|13.2     | Section 906 Certification of Chief
      Financial Officer                                                                                                                                                                                                                                   
|         |                                                                                                                                                                                                                                                                                              
|99.1     | Consolidated
      balance sheets as at July 31, 2006 and 2005; consolidated statements of
      operations and deficit, and cash flows for each of the years ended July
      31, 2006, 2005, and 2004, together with Report of Independent Registered
      Public Accounting Firm thereon;
|         |                                                                                                                                                                                                                                                                                              
|99.2     | Management's
      Discussion and Analysis                                                                                                                                                                                                                                                   

The Company certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

QUARTZ MOUNTAIN RESOURCES LTD.

*/s/ Rene Carrier*

Per:       Rene G Carrier
             
President

Dated:   January 25, 2007

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