20-F

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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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 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]                             No [   ]

Indicate by check mark whether the Registrant 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 1934 subsequent 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 1
GENERAL

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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ITEM 1           IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

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ITEM 2           OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

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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 31
	2006	2005	2004 (restated(1))	2003 (restated(1))	2002
Total Assets  Canadian GAAP  US GAAP(2)	1,114,031 1,114,030	687,281 687,280	693,697 693,697	520,095 499,094	482,554 481,283
Total Liabilities  Canadian GAAP  US GAAP	16,664 16,664	12,659 12,659	22,849 22,849	28,542 28,542	83,193 83,193
Working Capital  Canadian GAAP  US GAAP	1,097,366 1,097,366	674,621 674,621	670,848 670,848	470,552 470,552	398,090 398,090
Share 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 20,299,896
Contributed 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 31
	2006	2005	2004 (restated(1))	2003 (restated(1))	2002
Interest income  Canadian GAAP  US GAAP	26,201 26,201	15,127 15,127	11,605 11,605	11,762 11,762	2,354 2,354
Income (loss)  Canadian GAAP  US GAAP(2)	(65,458) (65,458)	(85,405) (85,406)	(128,166) (115,251)	7,885 (3,759)	459,843 458,572
Income (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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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 0.05
Weighted 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 Year
Fiscal Year Ended
July 31, 2006	1.1485
July 31, 2005	1.2361
July 31, 2004	1.3355
July 31, 2003	1.4919
July 31, 2002	1.5722

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

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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).

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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			2005			2004
								(restated(1))
Expenses (Income)
Administrative expenses	$	82,247		$	66,864		$	62,963
Exploration(1)		-			-			-
Foreign exchange gain		(53,106	)		(47,485	)		(22,225	)
Interest and other income		(26,201	)		(15,127	)		(11,605	)
Mineral property investigations		-			27,125			44,848
Professional fees		40,290			35,505			16,637
Regulatory and transfer agent		22,228			18,523			22,338
Write-down of mineral property interests(1)		-			-			15,210
Loss for the year – Canadian GAAP	$	(65,458	)	$	(85,405	)	$	(128,166	)
US GAAP Reconciliation
Mineral property acquisition costs(2)		-			(1	)		-
Write-off of mineral property(2)		-			-			12,915
Loss for the year – US GAAP	$	(65,458	)	$	(85,406	)	$	(115,251	)

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).

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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

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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 period
Contractual Obligations	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Long-Term Debt Obligations	Nil	Nil	Nil	Nil	Nil
Capital Finance/Lease	Nil	Nil	Nil	Nil	Nil
Operating Lease	Nil	Nil	Nil	Nil	Nil
Purchase Obligations	Nil	Nil	Nil	Nil	Nil
Other long-term liabilities reflected on the Company’s balance sheet under the GAAP of the primary financial statements	Nil	Nil	Nil	Nil	Nil
Total	Nil	Nil	Nil	Nil	Nil

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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 and Place of Residence	Functions and Area of Experience with the Company
Rene 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.

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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

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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

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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$)
					Awards		Payouts
		Salary (Cdn$)	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 Nil
Jeffrey 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.

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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, 1,339,942 Common 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.

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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.

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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 shares
Rene G. Carrier President and Director	150,000 common shares(2)	1.12%

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Name and Office Held	Securities Beneficially Owned(1)	As a percentage of outstanding shares
Brian F. Causey Director	Nil	Nil
Gordon J. Fretwell Secretary and Director	Nil	Nil
T. 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	1,900,000
Equity compensation plans not approved by security holders	Nil	Nil	Nil
Total	Nil	Nil	1,900,000

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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 Beneficially
Identity of Person or Group	Shares	Owned of Class
Estate 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 Act insiders (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.

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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.

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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	Low
Year			(Cdn$)	(Cdn$)
	Annual
2006	Twelve months	To July 31, 2006	0.70	0.30
2005	Twelve months	To July 31, 2005	0.68	0.23
2004	Twelve months	To July 31, 2004	0.55	0.14
2003	Twelve months	To July 31, 2003	0.28	0.10
2002	Twelve months	To July 31, 2002	0.20	0.04
	By Quarter
2007	First quarter	October 31, 2006	0.60	0.36
2006	Fourth quarter	July 31, 2006	0.70	0.50
	Third quarter	April 30, 2006	0.65	0.36
	Second quarter	January 31, 2006	0.40	0.33
	First quarter	October 31, 2005	0.40	0.30
2005	Fourth quarter	July 31, 2005	0.37	0.23
	Third quarter	April 30, 2005	0.41	0.27
	Second quarter	January 31, 2005	0.51	0.38
	Monthly
	December 2006		0.42	0.36
	November 2006		0.36	0.33
	October 2006		0.40	0.31
	September 2006		0.31	0.31
	August 2006		0.31	0.30
	July 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.

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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.

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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;

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(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.

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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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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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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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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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PART II

ITEM 13           DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

- 41 -

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

Not applicable.

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ITEM 15           CONTROLS AND PROCEDURES

Not applicable.

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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, 2005
Audit Fees	C$18,796	C$ 20,523
Audit Related Fees	—	—
Tax Fees	1,625	2,450
All 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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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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ITEM 18           FINANCIAL STATEMENTS

Not applicable. See Item 17.

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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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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

EX-1.1

EX-1.2

EX-1.3

ARTICLE 26
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED SHARES

Special Rights and Restrictions

26.1	The Preferred shares without par value shall have attached thereto the following special rights and restrictions:
	(a)	The holders of the Preferred shares shall be entitled to receive notices of and to attend and vote at all Meetings of the shareholders of the Company in the same manner and to the same extent as are the holders of the common shares;
	(b)	The holders of the Preferred shares shall be entitled to receive, and the Company shall pay thereon as and when declared by the Board of Directors out of the monies of the Company properly applicable to the payment of dividends, dividends which shall be in the amounts and upon the conditions that shall have been agreed upon by the Board of Directors at the time of issuance and sale of each such share. More specifically, the directors of the Company shall be entitled, upon agreeing to sell a Preferred share, to contract as to the rate of dividend which will be paid on the share, if any, how often the dividends are to be paid, whether they are to be accumulative and whether the rate is fixed for the life of the share or shall be subject to declaration by the Board of Directors each year.
	(c)	The holders of the Preferred shares shall be entitled to exchange them for Common shares in the capital of the Company; provided that when the directors agree to the issuance of any Preferred shares they shall be entitled to specify the terms, conditions and rates during which and upon which the holders of these Preferred shares subject to such specifications shall be entitled to exercise these conversion privileges.
	(d)	The Company may, upon giving notice as hereinafter provided, redeem the whole or any part of the Preferred shares on payment for each share to be redeemed of the amount paid up thereon, together with all dividends declared thereon and unpaid; in case a part only of the then outstanding Preferred shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot in such manner as the directors in their discretion shall decide or, if the directors so determine, may be redeemed pro rata, disregarding fractions, and the directors may make such adjustments as may be necessary to avoid the redemption of fractional parts of shares; not less than thirty (30) days' notice in writing of such redemption shall be given by mailing such notice to the registered holders of the shares to be redeemed, specifying the date and place or places of redemption; if notice of any such redemption be given by the Company in the manner aforesaid and an amount sufficient to redeem the shares be deposited with any trust company or chartered bank in Canada as specified in the notice on or before the date fixed for redemption, dividends on the Preferred shares to be redeemed shall cease after the date so fixed for redemption and the holders thereof shall thereafter have no rights against the Company in respect thereof except, upon the surrender of certificates for such shares, to receive payment therefor out of the money so deposited; after the redemption price of such shares has been deposited with any trust company or chartered bank in Canada, as aforesaid, notice shall be given to the holders of any Preferred shares called for redemption who have failed to present the certificates representing such shares within two (2) months of the date specified for redemption that the money has been so deposited and may be obtained by the holders of the said Preferred shares upon presentation of the certificates representing such shares called for redemption at the said trust company or chartered bank. The Company will redeem such Preferred shares at the price so specified, provided the redemption will not be in breach of any of the provisions of the Business Corporations Act (British Columbia).

- 2 -

(e)	The Preferred shares shall rank, both as regards dividends and return of capital, in priority to all other shares of the Company, but shall not be entitled to any further right to participate in the profits or assets of the Company.
(f)	In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Preferred shares shall be entitled to receive, before any distribution of any part of the property and assets of the Company among the holders of any other shares, an amount equal to one hundred percent (100%) of the amount paid thereon and any dividends declared thereon and unpaid, and no more.
(g)	The directors of the Company may issue the Preferred shares in one or more series. In addition, the directors may, by resolution, alter the Notice of Articles to fix the number of shares in and to determine the designation of the shares of each series; the directors may also, by resolution, alter the Notice of Articles to create, define and attach special rights and restrictions to the shares of each series, subject to the special rights and restrictions attached to the Preferred shares.

EX-12.1

EXHIBIT 12.1

SARBANES-OXLEY CEO CERTIFICATION

I, Rene G. Carrier, President of Quartz Mountain Resources Ltd., certify that:

1.           I have reviewed this Annual Report on Form 20-F of Quartz Mountain Resources Ltd.

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.            The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

(a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)            Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)            Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.            The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the Company’s auditors and the audit committee of Company’s board of directors (or persons performing the equivalent functions):

(a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date:	January 26, 2007
	/s/ Rene Carrier
By:	Rene G. Carrier
Title:	President

EX-12.2

EXHIBIT 12.2

SARBANES-OXLEY CFO CERTIFICATION

I, Jeffrey R. Mason, Principal Accounting Officer of Quartz Mountain Resources Ltd., certify that:

1.            I have reviewed this Annual Report on Form 20-F of Quartz Mountain Resources Ltd.

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.            The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

(a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)            Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)            Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.            The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the Company’s auditors and the audit committee of Company’s board of directors (or persons performing the equivalent functions):

(a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date:	January 26, 2007
	/s/ Jeffrey Mason
By:	Jeffrey R. Mason
Title:	Principal Accounting Officer

EX-13.1

EXHIBIT 13.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Rene G. Carrier, President of Quartz Mountain Resources Ltd. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(i)           the Annual Report on Form 20-F of the Company for the fiscal year ended July 31, 2006 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)          the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	January 26, 2007
	/s/ Rene Carrier
By:	Rene G. Carrier
Title:	President

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 20-F. A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Annual Report on Form 20-F pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-13.2

EXHIBIT 13.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey R. Mason, Principal Accounting Officer of Quartz Mountain Resources Ltd. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(i)           the Annual Report on Form 20-F of the Company for the fiscal year ended July 31, 2006 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)          the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	January 26, 2007
	/s/ Jeffrey Mason
By:	Jeffrey R. Mason
Title:	Principal Accounting Officer

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 20-F. A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Annual Report on Form 20-F pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-99.1

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED
JULY 31, 2006, 2005 AND 2004

(Expressed in United States Dollars, unless otherwise stated)

DAVIDSON & COMPANY LLP Chartered Accountants A Partnership of Incorporated Professionals

INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Quartz Mountain Resources Ltd.

We have audited the consolidated balance sheets of Quartz Mountain Resources Ltd. as at July 31, 2006 and 2005 and the consolidated statements of operations and deficit and cash flows for the years ended July 31, 2006, 2005 and 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at July 31, 2006 and 2005 and the results of its operations and its cash flows for the years ended July 31, 2006, 2005 and 2004 in accordance with Canadian generally accepted accounting principles.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
October 11, 2006

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA –
U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated October 11, 2006 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Accountants
October 11, 2006

A Member of SC INTERNATIONAL
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172

QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Balance Sheets
(Expressed in United States Dollars, unless otherwise stated)

		July 31			July 31
		2006			2005
ASSETS
Current assets
Cash and equivalents	$	1,071,431		$	670,755
Amounts receivable and prepaids		8,922			16,525
Amounts due from related parties (note 7)		33,677			–
		1,114,030			687,280
Mineral property interests (note 5)		1			1
	$	1,114,031		$	687,281
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	16,664		$	8,726
Amounts due to related parties (note 7)		–			3,933
		16,664			12,659
Shareholders' equity
Share capital (note 6)		21,269,046			20,726,303
Contributed surplus (note 6(d))		–			54,540
Deficit		(20,171,679	)		(20,106,221	)
		1,097,367			674,622
Nature and continuance of operations (note 1)
	$	1,114,031		$	687,281

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors

/s/ Rene G. Carrier	/s/ Gordon J. Fretwell
Rene G. Carrier	Gordon J. Fretwell
Director	Director

QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Statements of Operations
(Expressed in United States Dollars, unless otherwise stated)

		Years ended July 31
		2006			2005			2004
								(Note 4 - Restated
								due to change in
								accounting policy)
Expenses and other
Foreign exchange gain	$	(53,106	)	$	(47,485	)	$	(22,225	)
Interest income		(26,201	)		(15,127	)		(11,605	)
Legal, accounting and audit		40,290			35,505			16,637
Mineral property investigations		–			27,125			44,848
Office and administration		82,247			66,864			62,963
Regulatory, trust and filing		22,228			18,523			22,338
Write-down of mineral property interests (note 5a)		–			–			15,210
Loss for the year	$	65,458		$	85,405		$	128,166
Basic and diluted loss per common share	$	0.01		$	0.01		$	0.01
Weighted average number of common shares outstanding		12,322,741			11,694,601			10,091,648

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Deficit
(Expressed in United States Dollars, unless otherwise stated)

		Years ended July 31
		2006			2005			2004
								(Note 4 - Restated
								due to change in
								accounting policy)
Deficit, beginning of year	$	(20,106,221	)	$	(20,020,816	)	$	(19,892,650	)
Loss for the year		(65,458	)		(85,405	)		(128,166	)
Deficit, end of year	$	(20,171,679	)	$	(20,106,221	)	$	(20,020,816	)

The accompanying notes are an integral part of these consolidated financial statements.

QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars, unless otherwise stated)

		Years ended July 31
Cash provided by (used in)		2006			2005			2004
								(Note 4 - Restated
								due to change in
								accounting policy)
Operating activities
Loss for the year	$	(65,458	)	$	(85,405	)	$	(128,166	)
Items not involving cash
Write-down of mineral property interests		–			–			15,210
Changes in non-cash working capital items
Amounts receivable and prepaids		7,603			(9,214	)		1,430
Accounts payable and accrued liabilities		7,938			(10,752	)		(8,248	)
Advances from/(to) related parties		(37,610	)		561			2,555
		(87,527	)		(104,810	)		(117,219	)
Financing activities
Shares issued net of issuance costs		488,203			89,179			313,252
Increase (decrease) in cash and equivalents
during the year		400,676			(15,631	)		196,033
Cash and equivalents, beginning of year		670,755			686,386			490,353
Cash and equivalents, end of year	$	1,071,431		$	670,755		$	686,386
Components of cash and equivalents are as follows:
Cash	$	13,869		$	7,786		$	22,327
Commercial paper		58,608			68,687			79,959
Bankers acceptances		998,954			594,282			584,100
	$	1,071,431		$	670,755		$	686,386
Supplemental disclosure:
Interest received during the year	$	26,201		$	15,127		$	11,605
Income taxes paid during the year	$	–		$	–		$	–
Non-cash financing activities
Shares issued on acquisition of mineral property interests	$	–		$	–		$	2,295
Fair value of warrants exercised transferred to share capital	$	54,540		$	9,492		$	–

The accompanying notes are an integral part of these consolidated financial statements.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

1.	NATURE AND CONTINUANCE OF OPERATIONS
	Quartz Mountain Resources Ltd. (the “Company”) is a Canadian public company incorporated in British Columbia. The Company is primarily engaged in the acquisition and exploration of mineral properties.
	These consolidated financial statements have been prepared using Canadian generally accepted accounting principles assuming a going concern. At July 31, 2006, the Company had working capital of approximately $1,097,000 (2005 – $675,000). Other than incidental interest income, the Company has no source of revenue and has incurred operating losses since its inception. The ability of the Company to continue as a going concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. There can be no assurance that the Company will be able to secure additional financial resources or achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing or enter into business alliances, the Company will be required to curtail its operations and exploration activities. Failure to continue as a going concern would require that the Company’s assets and liabilities be restated on a basis which could differ significantly from the going concern basis.
2.	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
	These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These consolidated financial statements include the accounts of (i) Quartz Mountain Resources Ltd., (ii) Quartz Mountain Gold Inc., a wholly-owned subsidiary incorporated in the State of Nevada, and (iii) Wavecrest Resources Inc., a wholly-owned subsidiary of Quartz Mountain Gold Inc., incorporated in the State of Delaware.
	All material intercompany balances and transactions have been eliminated upon consolidation.
	The results of applying measurement accounting principles generally accepted in the United States are set out in note 10.
3.	SIGNIFICANT ACCOUNTING POLICIES

(a)	Cash and equivalents
	Cash and equivalents include highly liquid investments with original maturities of three months or less.
	At July 31, 2006, the Company held Canadian-dollar-denominated cash and equivalents totaling Cdn$1,141,607 (2005 – Cdn$735,417).
(b)	Financial instruments
	The Company’s financial instruments consist of cash and equivalents, amounts receivable, accounts payable and accrued liabilities and amounts due from and to related parties. It is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values due to their short term nature.
	The Company maintains its cash and equivalents substantially in Canadian dollars and is subject to currency risk.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

(c)	Allowance for receivables
	The Company establishes an allowance for receivables on a specific account basis. No allowance for receivables was recorded by the Company as at July 31, 2006 and 2005.
(d)	Mineral property interests
	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 is placed into production, sold, allowed to lapse or abandoned. Mineral property acquisition costs include the cash consideration and the fair value of common shares and warrants issued for mineral property interests, pursuant to the terms of the relevant agreement. These costs are amortized over the estimated life of the property following commencement of commercial production, or written off if the property is sold, allowed to lapse or abandoned, or when an impairment in value has been determined to have occurred.
	Exploration expenses incurred prior to determination of the feasibility of mining operations, including periodic option payments and administrative expenditures are expensed as incurred.
	The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
(e)	Asset retirement obligations
	The Company recognizes statutory, contractual or other legal obligations related to the retirement of tangible long-lived assets when such obligations are incurred, if a reasonable estimate of fair value can be made. These obligations are measured initially at fair value and the resulting costs capitalized to the carrying value of the related asset. In subsequent periods, the liability is adjusted for any changes in the amount or timing and for the discounting of the underlying future cash flows. The capitalized asset retirement cost is amortized to operations over the life of the asset.
(f)	Foreign currency translation
	All of the Company’s foreign operations are considered integrated.
	Monetary assets and liabilities of the Company and its integrated foreign operations are translated into United States dollars at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates unless such items are carried at market, in which case they are translated at the exchange rates in effect on the balance sheet date. Revenues and expenses, except amortization, are translated at the average exchange rates for the period. Amortization is translated at the same exchange rate as the assets to which it relates. Gains or losses on translation are recorded in the statement of operations.
(g)	Income taxes
	The Company uses the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are computed based on differences between the carrying amount of existing assets and liabilities on the balance sheet and their corresponding tax values, using the substantively enacted income tax rates expected to apply to taxable income in the years in which the asset is realized or the liability settled.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

	Future income tax assets also result from unused loss carry forwards and other deductions. Future tax assets are recognized to the extent that they are considered more likely than not to be realized. The valuation of future income tax assets is adjusted, if necessary, by the use of a valuation allowance to reflect the estimated realizable amount.
(h)	Share capital
	The Company records proceeds from share issuances net of issue costs. Shares issued for consideration other than cash are valued at the quoted price on the stock exchange on the date that shares are issued pursuant to the relevant agreement.
(i)	Stock-based compensation
	The Company has a share option plan which is described in note 6(e). The Company records all stock- based payments granted using the fair value method.
	Under the fair value method, stock-based payments are measured at the fair value of the consideration received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably measurable and are charged to operations over the vesting period. The offset is credited to contributed surplus.
	Consideration received upon the exercise of stock options is credited to share capital and the related contributed surplus is transferred to share capital.
	During the years ended July 31, 2006, 2005 and 2004, no stock options were granted.
(j)	Loss per share
	Basic loss per share is calculated by dividing the loss available to common shareholders for the period by the weighted average number of shares outstanding during the period.
	The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average price during the period. For all years presented, the impact of stock options and warrants, if any, has been excluded as they would be anti- dilutive.
(k)	Use of estimates
	The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the balance sheet date and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the determination of potential impairment of assets, reclamation obligations and rates for amortization as well as the assumptions used in determining the fair value of non-cash stock-based compensation and warrants. Actual results could differ from those estimates.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

(l)	Variable interest entities
	Effective August 1, 2005, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”) Accounting Guideline 15, Consolidation of Variable Interest Entities ("AcG15") on a prospective basis. AcG15 prescribes the application of consolidation principles for entities that meet the definition of a variable interest entity (“VIE”). An enterprise holding other than a voting interest in a VIE could, subject to certain conditions, be required to consolidate the VIE if it is considered its primary beneficiary whereby it would absorb the majority of the VIE’s expected losses, receive the majority of its expected residual returns, or both. The adoption of this new standard had no effect on these consolidated financial statements as the Company does not have any VIE’s.
(m)	Comparative figures
	Certain of the prior years’ figures have been reclassified to conform to the financial statement presentation adopted for the current year.

4.	CHANGE IN ACCOUNTING POLICY
	Mineral property interest
	During the year ended July 31, 2005, the Company changed its policy from capitalizing (deferring) mineral property exploration expenditures to charging these costs to earnings in the period incurred. This change in accounting policy is applied retroactively and the amounts presented for 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. There was no impact to opening deficit for the year ended July 31, 2005. The impact of this restatement on the July 31, 2004 consolidated financial statements is as follows:

		As
		previously
		reported			Adjustment			As restated
Year ended July 31, 2004:
Write-down of mineral property interests	$	23,296		$	(8,086	)	$	15,210
Loss for the year		136,252			(8,086	)		128,166
Loss (income) per share		0.01			0.00			0.01
Cash provided by (used in) operating activities		(117,219	)		–			(117,219	)
Cash provided by (used in) investing activities		–			–			–

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

5. MINERAL PROPERTY INTERESTS

		Year ended July 31
		2006		2005		2004
Ample-Goldmax Property, British Columbia						(Restated due
						to change
						in accounting
						policy (note 4	))
Acquisition costs
Balance, beginning of year	$	–	$	–	$	12,915
Incurred during the year		–		–		2,295
Written off during the year		–		–		(15,210	)
Balance, end of year		–		–		–
Exploration costs
Balance, beginning of year		–		–		–
Written off during the year		–		–		–
Balance, end of year		–		–		–
Quartz Mountain Property
Net smelter royalty		1		1		–
Total mineral property interests	$	1	$	1	$	–

(a)	Ample-Goldmax Property British Columbia, Canada
	During the year ended July 31, 2003, the Company entered into a Letter Option Agreement to acquire a 100% interest in the Ample-Goldmax Mineral Claims located in the Lillooet Mining Division. The Company 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.
(b)	Quartz Mountain Property Oregon, USA
	During the year ended July 31, 2002, the Company sold 100% of its title, rights and interest in the Quartz Mountain property located in Lake County, Oregon to Seabridge Resources Inc. ("Seabridge") for 300,000 common shares of Seabridge, 200,000 common share purchase warrants of Seabridge, cash of $100,000, and a 1% net smelter return royalty payable to the Company on any production from the Quartz Mountain property.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

6. SHARE CAPITAL

(a)	Authorized share capital
	The Company’s authorized share capital consists of an unlimited number of common shares, without par value and an unlimited number of preferred shares, without par value.
(b)	Issued and outstanding common shares

	Number of	Price		Amount
Common shares issued	Shares	(US$)		(US$)
Balance at July 31, 2003	9,643,315		$	20,366,625
Private placement, net of issue costs (ii)	1,510,000	0.2100		258,712
Ample-Goldmax property option payment (note 5(a))	25,000	0.0920		2,295
Balance at July 31, 2004	11,178,315			20,627,632
Cash received on exercise of warrants (i)	711,111	0.1254		89,179
Fair value of warrants exercised	–			9,492
Balance at July 31, 2005	11,889,426			20,726,303
Cash received on exercise of warrants (ii)	1,510,000	0.3233		488,203
Fair value of warrants exercised	–			54,540
Balance at July 31, 2006	13,399,426		$	21,269,046

(i)

On December 2, 2002, the Company issued 711,111 units at a price of Cdn$0.1125 (US$0.071) per unit for gross proceeds of Cdn$80,000 (net proceeds of US$40,895). Each unit was comprised of one common share and one share purchase warrant. Each warrant entitled the holder to purchase a further common share exercisable until December 2, 2004 at a price of Cdn$0.15. The share purchase warrants issued as part of this private placement had been recorded at an estimated fair value of $9,492. In November 2004, these warrants were exercised by the warrant holders. The estimated fair value of $9,492 was reallocated from contributed surplus to share capital.

(ii)

On April 19, 2004, the Company issued 1,510,000 units at a price of Cdn$0.28 (US$0.210) per unit for net proceeds of $258,712. Each unit was comprised of one common share and one share purchase warrant. Each warrant is exercisable until April 19, 2006 and entitles the holder to purchase a further common share at a price of Cdn$0.37. The share purchase warrants issued as part of this private placement had been recorded at an estimated fair value of $54,540. In April 2006, these warrants were exercised by the warrant holders. The estimated fair value of $54,540 was reallocated from contributed surplus to share capital.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

(c)	Share purchase warrants
	The continuity of share purchase warrants (each exercisable into one common share) for the year ended July 31, 2006 is:

	Number
Share purchase warrants issued	of Warrants		Price
Balance at July 31, 2003	711,111		Cdn$0.15
Private placement, April 2004 (note 6(b)(ii))	1,510,000		Cdn$0.37
Balance at July 31, 2004	2,221,111
Exercised (note 6(b)(i))	(711,111	)	Cdn$0.30
Balance at July 31, 2005	1,510,000
Exercised (note 6(b)(ii))	(1,510,000	)	Cdn$0.15
Balance at July 31, 2006	–		–

(d) Contributed surplus

Balance at July 31, 2003 (note 6(b)(i))	$	9,492
Share purchase warrants issued, April 2004 (note 6(b)(ii))		54,540
Balance at July 31, 2004		64,032
Share purchase warrants exercised for common stock (note 6(b)(i))		(9,492	)
Balance at July 31, 2005		54,540
Share purchase warrants exercised for common stock (note 6(b)(ii))		(54,540	)
Balance at July 31, 2006	$	–

(e)	Share purchase options
	At its Annual and Special General Meeting held in January 2004, shareholders of the Company approved a Share Purchase Option Plan in accordance with the policies of the TSXV. Under this plan, the Company is authorized to grant up to 1,900,000 share purchase options to directors, officers, employees and consultants. The exercise price of each option normally equals or exceeds the market price of the Company's shares as calculated on the date of grant. No service provider can be granted an option if that option would result in the service provider receiving shares, in conjunction with any other share compensation arrangement, of greater than 5% of the outstanding listed shares. Options granted are for a term of no greater than five years. Vesting of options is at the discretion of the Board of Directors at the time the options are granted.
	To July 31, 2006, no share purchase options had been granted under this plan. Accordingly, there were no stock options outstanding as at July 31, 2006, 2005 and 2004.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

7. RELATED PARTY BALANCES AND TRANSACTIONS

Balances receivable (payable)				As at July 31
				2006		2005
Hunter Dickinson Inc. (a)			$	33,677	$	(3,933	)
Transactions		Year ended July 31
		2006		2005		2004
Services rendered and expenses reimbursed
Hunter Dickinson Inc. (a)	$	69,407	$	57,732	$	19,776
Euro-American Capital Corporation (b)		–		571		606
Other (c)		–		–		40,580

Related party balances receivable or payable arise from advances by the Company for current and future services rendered to or costs incurred on behalf of the Company by Hunter Dickinson Inc. (“HDI”). The related party balances are non-interest bearing and due on demand.

(a)	HDI is a private company owned equally by nine public companies, one of which is the Company. HDI has certain directors in common with the Company and provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company and its subsidiaries on a full cost recovery basis pursuant to an agreement dated December 31, 1996. These costs are included in office and administration expenses.
	During the year ended July 31, 2003, the Company completed a private placement with HDI of 711,111 units comprised of one common share and one share purchase warrant at a price of Cdn$0.1125 per unit. The share purchase warrants were subsequently exercised in the year ended July 31, 2005 by HDI (note 6(b)(i)).
(b)	Euro-American Capital Corporation is a private company controlled by a director of the Company that provides management services to the Company based on the fair market value of those services.
(c)	During the year ended July 31, 2004, the Company paid $40,580 in consulting fees and reimbursement of expenses to a private company controlled by a former director and officer of the Company. These costs were included in office and administration expenses in fiscal 2004.

	The amounts charged to the Company for the services provided have been determined by negotiation among the parties and in certain cases, by signed agreements. These transactions were in the normal course of operations and were measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.
8.	INCOME TAXES
	At July 31, 2006, the Company had estimated income tax losses available for application against future years’ taxable income of approximately $1,350,099 (2005 – $2,516,000) in the United States which, if unused, will predominantly expire between fiscal years ending 2007 and 2021. The Company also has tax losses in Canada of approximately $457,000 (2005 – $314,000), which if unused, will expire between fiscal 2007 and 2026. The Company also has resource allowance expenditures and capital asset deductions of approximately $3,639,000 (2005 – $2,975,000) and $113,000 (2005 – $93,000), respectively, which carry forward indefinitely. Because of the uncertainty regarding the Company's ability to utilize these

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

amounts in future years, an allowance equal to the amount of the tax asset relating to these amounts has been provided.

A reconciliation of income tax expense at the statutory rate of 36.95% (2005 – 35.6%, 2004 – 35.62%) with reported taxes is as follows:

		Year ended July 31
Income tax expense		2006			2005			2004
Income (loss) before income taxes (recovery)	$	(65,458	)	$	(85,405	)	$	(128,166	)
Income taxes (recovery) at statutory rates		(27,957	)		(30,404	)		(45,652	)
Unrecognized (recognized) benefit of non-
capital losses		27,957			30,404			45,652
Net income taxes (recovery)	$	–		$	–		$	–

Amounts of future tax assets and liabilities are as follows:

Future tax assets and liabilities		July 31			July 31
		2006			2005
Tax benefit of:
Losses carried forward – Canada	$	169,000		$	112,000
Losses carried forward – United States		472,000			881,000
Resource allowance		1,345,000			1,059,000
Property and equipment		42,000			33,000
		2,028,000			2,085,000
Valuation allowance		(2,028,000	)		(2,085,000	)
Future income tax asset (liability)	$	–		$	–

9.	SEGMENTED INFORMATION
	As at and during the years ended July 31, 2006, 2005 and 2004, all of the Company's assets and operations, other than its net smelter royalty, were located in Canada.
10.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
	The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), which differ in certain material aspects from those principles that the Company would have followed had its consolidated financial statements been prepared in accordance with United States generally accepted accounting principles (“US GAAP”). Had the Company followed US GAAP, certain items on the statements of loss and deficit, and balance sheets would have been reported as below:

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

Consolidated statements of operations

		Year ended July 31
		2006			2005			2004
								(Restated due
								to change
								in accounting
								policy (note 4	))
Loss for the year, Canadian GAAP	$	(65,458	)	$	(85,405	)	$	(128,166	)
Mineral property acquisition costs		–			(1	)		–
Write–off of mineral property		–			–			12,915
Loss for the year, US GAAP	$	(65,458	)	$	(85,406	)	$	(115,251	)
Basic and diluted loss per common share,
US GAAP	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average shares outstanding,
basic and diluted, US GAAP		12,322,741			11,694,601			10,091,648

Consolidated balance sheets

		July 31, 2006			July 31, 2005
Total assets, Canadian GAAP	$	1,114,031		$	687,281
Mineral property acquisition costs expensed per US GAAP		(1	)		(1	)
Total assets – US GAAP	$	1,114,030		$	687,280
Current liabilities, Canadian GAAP and US GAAP	$	16,664		$	12,659
Shareholders’ equity, Canadian GAAP		1,097,367			674,622
Mineral property acquisition costs		(1	)		(1	)
Shareholders’ equity, US GAAP		1,097,366			674,621
Total liabilities and shareholders’ equity, US GAAP	$	1,114,030		$	687,280

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

Consolidated statements of cash flows

		Year ended July 31
		2006			2005			2004
								(Restated due
								to change
								in accounting
								policy (note 4	))
Cash flows used in operating activities, Canadian
GAAP	$	(87,527	)	$	(104,810	)	$	(117,219	)
Adjustments to mineral properties		–			–			–
Cash flows used in operating activities, US GAAP		(87,527	)		(104,810	)		(117,219	)
Cash flows provided by investing activities,
Canadian and US GAAP		–			–			–
Cash flows provided by financing activities,
Canadian and US GAAP		488,203			89,179			313,252
Increase (decrease) in cash and equivalents during
the year		400,676			(15,631	)		196,033
Cash and equivalents, beginning of year		670,755			686,386			490,353
Cash and equivalents, end of year	$	1,071,431		$	670,755		$	686,386

(a)	Mineral properties
	Under Canadian GAAP, the Company accounts for mineral properties as described in note 3(d).
	In March 2004, the Emerging Issues Task Forces (“EITF”) reached a consensus that mineral interests covered by leases should be considered tangible assets. On April 30, 2004, the FASB issued a FASB Staff Position (“FSP”) amending SFAS 141 and SFAS 142, “Goodwill and Other Intangible Assets”, to provide that certain mineral use rights are considered tangible assets and that mineral use rights should be accounted based on their substance. The FSP is effective for the first reporting period beginning after April 29, 2005, with early adoption permitted.
	In March 2004, in its report on “Mining Assets: Impairment and Business Combinations” the EITF reached a consensus that an entity should include the cash flows associated with value beyond proven and probable reserves in estimates of future cash flows (both undiscounted and discounted) used for determining whether a mining asset is impaired under Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”.
	Under U.S. GAAP, the recoverability of capitalized mineral properties exploration expenditures are generally considered insupportable until a commercially mineable deposit is determined; therefore, all mineral properties exploration expenditures are expenses as incurred. As the Company does not have reports on proven and probable reserves on any of its mineral properties, all exploration expenditures incurred, other than its acquisition costs, and its other mineral properties have been expensed as incurred.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

(b)	Asset retirement obligation
	Under United States GAAP, Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") requires companies to record the fair value of the liability for closure and removal costs associated with the legal obligation upon retirement or removal of any tangible long–lived asset, effective for years beginning on or after January 1, 2003. Under this standard, the initial recognition of the liability is capitalized as part of the asset cost and depreciated over its estimated useful life. The Company has determined that there were no asset retirement obligations as at July 31, 2006.
	For Canadian GAAP purposes, effective August 1, 2004, the Company retroactively adopted the provisions of CICA Handbook Section 3110 (“HB3110”). HB3110 requires essentially the same accounting treatment of asset retirement obligations as SFAS 143. Consequently, the Company believes there is no difference in asset retirement obligations under United States GAAP and Canadian GAAP for the Company upon the adoption of this standard, and there is no effect on amounts previously reported.

(c)	Other presentation items
	Pursuant to US GAAP, the Company would be considered an exploration stage company as it is devoting its efforts to establishing a commercially viable mineral property. However, the identification of the Company as such for accounting purposes does not impact the measurement principles applied in these consolidated financial statements.

(d) Recent accounting pronouncements

(i)	In March 2005, the EITF issued EITF 04-6, "Accounting for Stripping Costs in the Mining Industry". The consensus indicated that costs of removing overburden and waste materials ("stripping costs") after production begins, represent variable production costs and should be considered a component of mineral inventory cost subject to the guidance in Chapter 4 of Accounting Research Bulletin No. 43, "Restatement and Revision of Accounting Research Bulletins". EITF 04-6 is effective for fiscal years beginning after December 15, 2005 and upon adoption, can be applied by either retroactively restating prior periods or using a cumulative catch-up adjustment. The Company believes this Statement will have no impact on the financial statements of the Company once adopted.
(ii)	In May 2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3.” SFAS 154 replaces APB Opinion No. 20, “Accounting Changes,” and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements” and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 31, 2005. The Company does not believe the adoption of SFAS 154 will have a material effect on its consolidated financial position, results of operations or cash flows.
(iii)	In November 2005, the FASB issued FASB Staff Position No. SFAS 115-1 and SFAS 124-1 (“FSP SFAS 115-1 and 124-1”), which addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. FSP SFAS 115-1 and 124-1 also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

	unrealized losses that have not been recognized as other-than-temporary impairments. The guidance in FSP SFAS 115-1 and 124-1 amends FASB Statements No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and No. 124, “Accounting for Certain Investments Held by Not-for-Profit Organizations,” and APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” The guidance in FSP SFAS 115-1 and 124-1 shall be applied to the first reporting period beginning after December 15, 2005. The adoption of FSP SFAS 115-1 and 124-1 has not had a significant impact on the Company’s consolidated financial position, results of operations and cash flows.
(iv)	In February 2006, the FASB issued FASB Staff Position (“FSP”) FAS 123R-4 “Classification of Options and Similar Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent Event.” FSP FAS 123(R)-4 addresses the classification of options and similar instruments issued as employee compensation that allow for cash settlement upon the occurrence of a contingent event and amends paragraphs 32 and A229 of SFAS 123(R). The Company is required to apply the guidance in FSP FAS123(R)-4 in the quarterly period ending April 30, 2006. The adoption of FSP FAS123(R)-4 has not had a significant impact on the Company’s consolidated financial position or results of operations.
(v)	In February 2006, the FASB issued SFAS 155 “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140.” This Statement amends FASB 133, “Accounting for Derivative Instruments and Hedging Activities,” and SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS 155 resolves issues addressed in Statement 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. SFAS 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and amends SFAS 140 to eliminate the prohibition on a qualifying special- purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the Company’s first fiscal year that begins after September 15, 2006, with earlier adoption permitted. The Company is currently evaluating the impact of SFAS 155 on its consolidated financial position, results of operations and cash flows.
(vi)	In March 2006, the FASB issued SFAS No. 156 (“FAS 156”), “Accounting for Servicing of Financial Assets—An Amendment of FASB Statement No. 140.” Among other requirements, FAS 156 requires a company to recognize a servicing asset or servicing liability when it undertakes an obligation to service a financial asset by entering into a servicing contract under certain situations. Under FAS 156 an election can also be made for subsequent fair value measurement of servicing assets and servicing liabilities by class, thus simplifying the accounting and provide for income statement recognition of potential offsetting changes in the fair value of servicing assets, servicing liabilities and related derivative instruments. FAS 156 is effective for fiscal years beginning after September 15, 2006. The Company does not expect the adoption of FAS 156 will have a material impact on its financial position or results of operations.
(vii)	In July 2006, the FASB issued Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN 48”), which is a change in accounting for income taxes. FIN 48 specifies how tax benefits for uncertain tax positions are to be recognized, measured, and derecognized in financial statements; requires certain disclosures of

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2006, 2005 and 2004

(Expressed in United States Dollars, unless otherwise stated)

	uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the balance sheet; and provides transition and interim period guidance, among other provisions. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of FIN 48 will have a material impact on its financial position or results of operations.
(viii)	In September 2006, the FASB issued SFAS No. 157 (“FAS 157”), “Fair Value Measurements.” Among other requirements, FAS 157 defines fair value and establishes a framework for measuring fair value and also expands disclosure about the use of fair value to measure assets and liabilities. FAS 157 is effective beginning the first fiscal year that begins after November 15, 2007. The Company is currently evaluating the impact of FAS 157 on its financial position and results of operations.
(ix)	In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), which provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The guidance is applicable for fiscal years ending after November 15, 2006. The Company does not believe SAB 108 will have a material impact on its consolidated financial statements.

EX-99.2

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

T A B L E   O F   C O N T E N T S

1.1	Date	2
1.2	Overview	2
1.3	Selected Annual Information	3
1.4	Summary of Quarterly Results	4
1.5	Results of Operations	5
1.6	Liquidity	5
1.7	Capital Resources	6
1.8	Off-Balance Sheet Arrangements	6
1.9	Transactions with Related Parties	6
1.10	Fourth Quarter	6
1.11	Proposed Transactions	6
1.12	Critical Accounting Estimates	6
1.13	Changes in Accounting Policies including Initial Adoption	7
1.14	Financial Instruments and Other Instruments	7
1.15	Other MD&A Requirements	7
1.15.1	Additional Disclosure for Venture Issuers Without Significant Revenue	7
1.15.2	Disclosure of Outstanding Share Data	8
1.15.3	Disclosure Controls and Procedures	8

- 1 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.1      Date

This Management Discussion and Analysis (“MD&A”) should be read in conjunction with the audited consolidated financial statements as at July 31, 2006 of Quartz Mountain Resources Ltd. (“Quartz Mountain” or the “Company”). All dollar amounts herein are expressed in United States Dollars unless stated otherwise.

This MD&A is prepared as of November 8, 2006.

1.2      Overview

Quartz Mountain Resources Ltd. is a mineral exploration company. It does not currently have an active exploration project but, with the assistance of Hunter Dickinson Inc. (“HDI”), reviews mineral properties to determine whether there are any properties of merit that could be financed by the Company.

The Company’s objective is to acquire an exploration project with significant upside potential. In assessing and rating projects, several key criteria are considered. The known mineralization is viewed in accordance to the geological setting and target model. An assessment is made of the project’s ultimate size potential. The project’s location is evaluated with respect to political, safety and investment risks, in addition to the ease of doing business. The deal structure is also examined and rated for its potential benefit to the Company's shareholders. High priority projects are evaluated in follow-up field inspections.

The Company has access to the full resources of HDI, an experienced exploration and development firm with in-house geologists, engineers and environmental specialists, to assist in its technical review of the various opportunities. However, the Company does not have the right to require HDI to bring to the Company all corporate opportunities which come to HDI's attention.

Since February 2005, the Company has traded on the NEX Exchange. The Company’s trading symbol is QZM.H. In the United States, the company’s shares trade on the over the counter bulletin board under the symbol QRMRF.PK.

- 2 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.3      Selected Annual Information

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles, and are expressed in United States dollars except number of common shares.

Consolidated Balance Sheets		As at July 31		As at July 31		As at July 31
		2006		2005		2004
						(restated due to
						change in accounting
						policy)
Current assets	$	1,114,030	$	687,280	$	693,697
Mineral properties		1		1		–
Total assets		1,114,031		687,281		693,697
Current liabilities		16,664		12,659		22,849
Shareholders’ equity		1,097,367		674,622		670,848
Total liabilities and shareholders’ equity	$	1,114,031	$	687,281	$	693,697

Operations		Year ended			Year ended			Year ended
		July 31			July 31			July 31
		2006			2005			2004
					(restated due to			(restated due to
					change in accounting			change in accounting
					policy)			policy)
Legal, accounting and audit	$	40,290		$	35,505		$	16,637
Mineral property investigations		–			27,125			44,848
Office and administration		82,247			66,864			62,963
Regulatory, trust and filing		22,228			18,523			22,338
Write-down of mineral property interests		–			–			15,210
Subtotal		144,765			148,017			161,996
Foreign exchange gain		(53,106	)		(47,485	)		(22,225	)
Interest income		(26,201	)		(15,127	)		(11,605	)
Loss for the year	$	65,458		$	85,405		$	128,166
Basic and diluted loss per share	$	0.01		$	0.01		$	0.01
Weighted average number of common shares outstanding		12,322,741			11,694,601			10,091,648

- 3 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.4      Summary of Quarterly Results

Expressed in United States dollars. Minor differences are due to rounding.

		Jul 31			Apr 30			Jan 31			Oct 31			Jul 31			Apr 30			Jan 31			Oct 31
		2006			2006			2006			2005			2005			2005			2005			2004
Current assets	$	1,114,030		$	1,133,713		$	652,357		$	693,187		$	687,280		$	687,643		$	770,694		$	721,880
Mineral properties		1			1			1			1			1			–			–			–
Total assets		1,114,031			1,133,714			652,358			693,188			687,281			687,643			770,694			721,880
Current liabilities		16,664			1,379			12,658			16,163			12,659			9,927			60,710			38,864
Shareholders’ equity		1,097,367			1,132,335			639,700			677,025			674,622			677,716			709,984			683,016
Total liabilities
and shareholders’ equity		1,114,031			1,133,714			652,358			693,188			687,281			687,643			770,694			721,880
Working capital		1,097,366			1,132,334			639,699			677,024			674,621			677,716			709,984			683,016
Expenses
Foreign exchange loss (gain)		12,683			(21,974	)		(21,820	)		(21,995	)		(16,999	)		8,407			14,088			(52,981	)
Interest income		(11,605	)		(5,003	)		(5,209	)		(4,384	)		(3,653	)		(5,516	)		(2,832	)		(3,126	)
Legal, accounting and audit		16,019			630			22,948			693			5,326			893			19,058			10,228
Mineral property
investigations		–			–			–			–			–			6,005			–			21,120
Office and administration		14,637			17,404			28,351			21,855			17,206			16,797			21,189			11,672
Regulatory, trust and filing		3,234			4,511			13,055			1,428			1,214			5,682			10,708			919
Loss (income) for the period	$	34,968		$	( 4,432	)	$	37,325		$	(2,403	)	$	3,094		$	32,268		$	62,211		$	(12,168	)
Basic and diluted
loss (income) per share	$	0.00		$	0.00		$	0.00		$	(0.00	)	$	0.00		$	0.00		$	0.01		$	(0.00	)
Weighted average number
of common shares
outstanding (thousands)		12,323			11,960			11,889			11,889			11,889			11,889			11,828			11,178

- 4 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.5      Results of Operations

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.

1.6      Liquidity

At July 31, 2006, the Company had working capital of approximately $1,097,000 which is sufficient to fund expected administrative costs and mineral property investigations for the next twelve months. The working capital for the year ended July 31, 2006 is approximately $423,000 greater than the previous year ended July 31, 2005. The increase was mainly due to the proceeds from the exercise of warrants in April 2006.

Additional working capital will be required to fund any significant mineral property acquisitions. The Company does not have the funding at this time to acquire a major mineral property acquisition, but has sufficient funding to investigate a potential acquisition. Any new mineral property acquisition will require additional financing, likely through the issuance of common shares.

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 issuance 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 acquisitions. There is no assurance that the Company will be successful in obtaining the funds it may require for its programs or that the terms of any financing obtained will be acceptable.

Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company has issued common share capital in each of the past few years, pursuant to such private placement financings and also upon the exercise of warrants. The Company's access to exploration financing when the financing is not transaction specific is always uncertain. There can be no assurance of continued access to significant equity funding.

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.

- 5 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.7      Capital Resources

The Company had no commitments for capital expenditures as at July 31, 2006.

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

1.8      Off-Balance Sheet Arrangements

None.

1.9      Transactions with Related Parties

Hunter Dickinson Inc. ("HDI") is a private company with certain directors in common with the Company. HDI provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company and its subsidiaries on a full cost recovery basis pursuant to an agreement dated December 31, 1996. For the year ended July 31, 2006, the Company paid HDI $69,407 (2005 – $57,732) for such services.

Exploration advances to and from HDI have occurred in the normal course of business, due to in-progress and near-term planned project investigation and administrative work. There are no specific terms of repayment.

Euro-American Capital Corporation (“Euro-American”) is a private company controlled by a director of the Company that provides management services to the Company. During the year ended July 31, 2006, nil was charged by Euro-American compared to $571 in the corresponding period of fiscal 2005.

1.10     Fourth Quarter

The loss for the quarter ended July 31, 2006 was $34,968 compared to $3,094 in the comparable quarter in fiscal 2005. The increase was due primarily to the increase in foreign exchange loss for the quarter.

The increase in foreign exchange loss for the quarter was due mainly to the weakening of the Canadian dollar (in which most of the Company’s cash and cash equivalents are held) against the United States dollar.

Higher interest income for the quarter was due to higher cash balances on hand.

1.11     Proposed Transactions

There are no proposed asset or business acquisitions or dispositions, other than those in the ordinary course, before the board of directors for consideration.

1.12     Critical Accounting Estimates

Not applicable. The Company is a venture issuer.

- 6 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.13     Changes in Accounting Policies including Initial Adoption

Mineral property interest

During the year ended July 31, 2005, the Company changed its 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 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 retained earnings for the year ended July 31, 2005. The impact of this restatement on the July 31, 2004 consolidated financial statements is presented in note 4 thereof.

1.14     Financial Instruments and Other Instruments

None.

1.15     Other MD&A Requirements

Additional information relating to the Company, is available on SEDAR at www.sedar.com.

1.15.1   Additional Disclosure for Venture Issuers Without Significant Revenue

(a) capitalized or expensed exploration and development costs;

The required disclosure is presented in note 3(d) and note 5 of the accompanying financial statements.

(b) expensed research and development costs;

Not applicable.

(c) deferred development costs;

Not applicable.

(d) general and administration expenses;

The required disclosure is presented in the consolidated statements of operations.

(e) any material costs, whether capitalized, deferred or expensed, not referred to in (a) through (d);

None.

- 7 -

QUARTZ MOUNTAIN RESOURCES LTD.

YEAR ENDED JULY 31, 2006

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.15.2    Disclosure of Outstanding Share Data

The following details the share capital structure as at November 8, 2006, which is the date of this MD&A. These figures may be subject to minor accounting adjustments prior to possible presentation in future consolidated financial statements.

		Exercise
	Expiry date	price	Number
Common shares			13,399,426
Warrants			–

1.15.3    Disclosure Controls and Procedures

The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the applicable time periods and to ensure that required information is gathered and communicated to the Company’s management so that decisions can be made about timely disclosure of that information. The Company’s Director and Principal Accounting Officer evaluated the Company’s disclosure controls and procedures for the year ended July 31, 2006 and have found those disclosure controls and procedures to be adequate for the above purposes.

There have been no significant changes in the Company's disclosure controls or in other factors that could significantly affect disclosure controls subsequent to the date the Company carried out its evaluation.

During the Company's most recently completed fiscal year ended July 31, 2006, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to affect, its internal control over financial reporting.

This discussion includes certain statements that may be deemed "forward-looking statements". All statements in this discussion, other than statements of historical facts, which address future property investigation, future production, exploration and exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, the availability of mineral properties for investigation, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward- looking statements.

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