Filed by Automated Filing Services Inc. (604) 609-0244 - Quartz Mountain Resources Ltd.

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

[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)

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

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

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

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

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.

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

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.

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.

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

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):

(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.

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.

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.

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$)	As at July 31
Balance Sheet (in US$)	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$)	Years ended July 31
Statement of Operations (in US$)	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

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

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.

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:

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

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

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.

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.

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

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.

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.

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

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

	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

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.

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:

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:

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:

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:

“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:

NAMED EXECUTIVE OFFICERS Name and Principal Position	Year	Annual Compensation			Long Term Compensation			All Other Compensation (Cdn$)
		Annual Compensation			Awards		Payouts
		Salary (Cdn$)	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

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.

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.

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.

(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.

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.

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.

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

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.

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.

As a result of their education and experience, each member of the audit committee has familiarity with, an understanding of, or experience in:

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

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

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.

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.

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.

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:

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.

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.

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.

	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

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.

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

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.

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.

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.

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

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

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

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

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

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.

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.

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.

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

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

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.

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:

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.

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.

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:

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”).

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

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.

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.

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.

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.

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.

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

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.

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.

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.

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:

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

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.

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.

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

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

Title of Each Class	Name of each exchange on which registered
None	Not applicable

		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

(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.

	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

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

	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.

		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	)

(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).

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

(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.

	•	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.

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%

(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

(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.

		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%

	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

(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.

(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.

(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.

(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;

(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.

	(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.

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

(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.

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