20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

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

OR

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

For the fiscal year ended July 31, 2010

OR

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

OR

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

Commission file number 0-15490

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

BRITISH COLUMBIA, CANADA
(Jurisdiction of incorporation or organization)

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

Rene Carrier, President and Chief Executive Officer
Facsimile No.: 604-684-8092
Suite 1020, 800 West Pender Street
Vancouver, British Columbia, Canada, V6C 2V6
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

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

Securities registered or to be registered pursuant to Section 12(g) of the Act
Common shares, no par value

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

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 13,399,426 common shares as of July 31, 2010

Indicate by check mark if the Registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. 
Yes [    ]    No [ x ]

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes [    ]    No [ x ]

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [ x ]  No [    ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
Yes [ x ]  No [     ]

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

[     ]  Large Accelerated Filer      [     ]  Accelerated Filer     [ x ]  Non Accelerated Filer

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

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

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 [ x ]  Item 18 [     ]

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes [     ]  No [ x ]

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

ITEM 1	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	4
ITEM 2	OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3	KEY INFORMATION	5
ITEM 4	INFORMATION ON THE COMPANY	9
ITEM 4A	UNRESOLVED STAFF COMMENTS	11
ITEM 5	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	11
ITEM 6	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	15
ITEM 7	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	21
ITEM 8	FINANCIAL INFORMATION	22
ITEM 9	THE OFFER AND LISTING	23
ITEM 10	ADDITIONAL INFORMATION	24
ITEM 11	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	32
ITEM 12	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	33
ITEM 13	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	33
ITEM 14	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	33
ITEM 15	CONTROLS AND PROCEDURES	33
ITEM 16	[RESERVED]	34
ITEM 16A	AUDIT COMMITTEE FINANCIAL EXPERT	34
ITEM 16B	CODE OF ETHICS	34
ITEM 16C	PRINCIPAL ACCOUNTANT FEES AND SERVICES	34
ITEM 16D	EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES	35
ITEM 16E	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	35
ITEM 16F	CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT	35
ITEM 16G	CORPORATE GOVERNANCE	35
ITEM 17	FINANCIAL STATEMENTS	35
ITEM 18	FINANCIAL STATEMENTS	36
ITEM 19	EXHIBITS	36

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GENERAL

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

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

Except as noted, the information set forth in this Annual Report is as of September 30, 2010, and all information included in this document should only be considered correct as of such date.

NOTE ON FORWARD LOOKING STATEMENTS

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

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

• general economic and business conditions, including changes in interest rates;

• prices of natural resources, costs associated with mineral exploration and other economic conditions;

• natural phenomena;

• actions by government authorities, including changes in government regulation;

• uncertainties associated with legal proceedings;

• changes in the resources market;

• future decisions by management in response to changing conditions;

• the Company's ability to execute prospective business plans; and

• misjudgments in the course of preparing forward-looking statements.

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

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A. DIRECTORS AND SENIOR MANAGEMENT

Not applicable.

B. ADVISERS

Not applicable.

C. AUDITORS

Not applicable.

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ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3 KEY INFORMATION

A. Selected Financial Data

The following tables present selected financial data extracted from the audited consolidated financial statements of Quartz for the last five fiscal years ended July 31, 2010, 2009, 2008, 2007 and 2006. Quartz's annual financial statements have been audited by its current independent registered public accounting firm, Davidson and Company LLP, Chartered Accountants. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). Additional information is presented to show the differences which would result from the application of United States generally accepted accounting principles ("US GAAP") to the Company's financial information. Note 10 to the 2010 annual consolidated financial statements included in this Annual Report provides descriptions of the material measurement differences between Canadian GAAP and US GAAP as they relate to Quartz, and a reconciliation of Quartz's consolidated financial statements to US GAAP.

Selected Financial Data
(Stated in United States dollars)

Balance Sheet	As at July 31
	2010	2009	2008	2007	2006
Total Assets Canadian GAAP US GAAP	$ 264,114 264,113	$ 423,727 423,726	$ 612,511 612,510	$ 712,911 712,910	$ 1,114,031 1,114,030
Total Liabilities Canadian GAAP US GAAP	$ 29,864 29,864	$ 55,838 55,838	$ 20,519 20,519	$ 14,408 14,408	$ 16,664 16,664
Working Capital Canadian GAAP US GAAP	$ 234,249 234,249	$ 367,888 367,888	$ 591,991 591,991	$ 698,502 698,502	$ 1,097,366 1,097,366
Share Capital Canadian GAAP US GAAP	$ 21,269,046 21,269,046	$ 21,269,046 21,269,046	$ 21,269,046 21,269,046	$ 21,269,046 21,269,046	$ 21,269,046 21,269,046
Contributed Surplus Canadian GAAP US GAAP	$ – –	$ – –	$ – –	$ – –	$ – –
Deficit Canadian GAAP US GAAP	$ (21,034,796) (21,034,797)	$(20,901,157) (20,901,158)	$(20,677,054) (20,677,055)	$(20,570,543) (20,570,544)	$(20,171,679) (20,171,680)
Shareholders' Equity Canadian GAAP US GAAP	$ 234,250 234,249	$ 367,889 367,888	$ 591,992 591,991	$ 698,503 698,502	$ 1,097,367 1,097,366

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Statement of Operations	Years ended July 31
	2010	2009	2008	2007	2006
Interest income Canadian GAAP US GAAP	$ 1,790 1,790	$ 4,451 4,451	$ 24,465 24,465	$ 35,741 35,741	$ 26,201 26,201
Loss Canadian GAAP US GAAP	$ (133,639) (133,639)	$ (224,103) (224,103)	$ (106,511) (106,511)	$ (398,864) (398,864)	$ (65,458) (65,458)
Loss from continuing operations Canadian GAAP US GAAP	$ (133,639) (133,639)	$ (224,103) (224,103)	$ (106,511) (106,511)	$ (398,864) (398,864)	$ (65,458) (65,458)
Loss per share Canadian GAAP US GAAP	$ (0.01) (0.01)	$ (0.02) (0.02)	$ (0.01) (0.01)	$ (0.03) (0.03)	$ (0.01) (0.01)
Weighted average number of common shares outstanding Canadian GAAP US GAAP	13,399,426 13,399,426	13,399,426 13,399,426	13,399,426 13,399,426	13,399,426 13,399,426	12,322,741 12,322,741

Reconciliation to US GAAP

As indicated above, note 10 of the audited consolidated financial statements included in this Annual Report provides descriptions of the material differences between Canadian GAAP and US GAAP for the fiscal years ended July 31, 2010, 2009, and 2008. The primary significant difference between Canadian and US GAAP as they relate to the Company is the accounting for exploration costs. 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. There are no material differences between Canadian GAAP and USGAAP on the financial statements of the Company for any of the years presented.

Currency and Exchange Rates

On September 30, 2010, the rate of exchange of the Canadian dollar, based on the daily noon rate in Canada as published by the Bank of Canada, was US$1 = Canadian $1.0300. Exchange rates published by the Bank of Canada are available on its website, www.bankofcanada.ca, are nominal quotations — not buying or selling rates — and are intended for statistical or analytical purposes.

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

	For year ended July 31
	2010	2009	2008	2007	2006
End of Period	$1.0290	$1.0790	$1.0257	$1.0657	$1.1309
Average for the Period	$1.0486	$1.1758	$1.0070	$1.1258	$1.1551
High for the Period	$1.1079	$1.3000	$1.0755	$1.1853	$1.2187
Low for the Period	$0.9961	$1.0253	$0.9170	$1.0372	$1.0990

Month	High	Low
August 2010	$1.0642	$1.0158
July 2010	$1.0660	$1.0284
June 2010	$1.0199	$1.0606
May 2010	$1.0134	$1.0778
April 2010	$0.9961	$1.0201
March 2010	$1.0062	$1.0560

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

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

No assurance that a prospective property of merit will be identified.

The Company does not currently have an active exploration project, but is searching for a new acquisition. 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 a property option or acquisition agreement.

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

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

As the Company does not have revenues, the Company will be dependent upon future financings to continue the Company's plan of operation.

The Company has not generated any revenues since inception. The Company's plan of operations involves the identification of a prospective property of merit. There is no assurance that these activities will result in the establishment of commercially exploitable mineral deposits. Further, any acquisition will most likely be subject to the Company obtaining additional financing, of which there is no assurance. If a property is acquired, further financing will be required to fund exploration efforts, and, even if commercially exploitable mineral deposits are discovered, the Company will require substantial additional financing before the Company is able to achieve revenues from sales of any mineral resources that the Company is able to extract.

The loss of management or other key personnel could harm the Company's business.

The Company's success depends on its management and other key personnel. The loss of the services of one or more of such key personnel could have a material adverse effect on the Company's business. The Company's ability to execute its plan of operations, and hence its success, will depend in large part on the efforts of these individuals. The Company cannot be certain that it will be able to retain such personnel or attract a high caliber of personnel in the future.

The Company has a history of losses and no foreseeable earnings.

Quartz has a history of losses and expects to incur losses in the future, and there can be no assurance that the Company will ever be profitable. The Company anticipates that it will retain any future earnings and other cash resources for the future operation and development of the Company's business. The Company has not paid dividends since incorporation and the Company does not anticipate paying dividends in the foreseeable future. Payment of any future dividends is at the discretion of the Company's Board of Directors after taking into account many factors including the Company's operating results, financial conditions and anticipated cash needs.

7

Going concern assumption.

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

General mining risks.

The mining industry in general is intensely competitive. Even if the Company is successful in identifying and acquiring a prospective property of merit, and commercial quantities of ore are discovered, there is no assurance that a profitable market will ever exist for the sale of any minerals produced by the Company. Factors beyond the control of the Company may affect the marketability of any minerals that are discovered. Mineral prices have fluctuated widely in recent years. Other factors that may affect marketability include government regulations relating to price, royalties, and allowable production, and importing and exporting of minerals. The operations of the Company may require licenses 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 industry in which the Company operates is highly competitive, and the Company may be unable to compete effectively with other companies.

The mineral exploration and mining business is competitive in all of its phases. The Company competes with numerous other companies and individuals, including competitors with greater financial, technical and other resources, in the search for and the acquisition of attractive mineral properties. The Company's ability to acquire properties in the future will depend not only on the Company's ability to develop its present properties, but also on the Company's ability to select and acquire suitable producing properties or prospects for mineral exploration. There is no assurance that the Company will continue to be able to compete successfully with its competitors in acquiring such properties or prospects.

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 the 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. 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 may 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.

If the Company raises additional funding through equity financings, then the Company's current shareholders will suffer dilution.

The Company currently has enough money to fund expected administrative costs and mineral property investigations for the next twelve months. However, additional working capital will be required to fund any significant mineral property acquisitions. Management anticipates that the Company will have to sell additional equity securities including, but not limited to, its common stock, share purchase warrants or some form of convertible security, in order to raise this additional working capital. The effect of additional issuances of equity securities will result in the dilution of existing shareholders' percentage ownership interests.

8

Likely PFIC status has consequences for United States investors.

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

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

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

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

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

ITEM 4 INFORMATION ON THE COMPANY

A. History and Development of the Company

Incorporation

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

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

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

Market for the Company's Securities

The Company's common shares were quoted on NASDAQ SmallCap Market in the United States until May 12, 1994, when the Company ceased to meet the SmallCap Market's minimum listing requirements. The Company's common shares were also listed on The Toronto Stock Exchange until November 10, 1994, when it ceased to meet the Exchange's minimum listing requirements. Prior to November 15, 1989, the shares were also listed on the Vancouver Stock Exchange (a predecessor to the TSX Venture Exchange). The Company voluntarily surrendered its listing on the Vancouver Stock Exchange at that time.

9

After delisting from the NASDAQ SmallCap Market and the Vancouver Stock Exchange, the Company's common shares continued to trade in Canada on the Canadian Dealer Network Inc. (the "CDN", colloquially known as the Canadian "unlisted" market). In October 2000, as a result of an agreement between The Toronto Stock Exchange and the CDN, the Canadian unlisted market ceased to operate, and qualifying issuers that were formerly quoted on the CDN were invited to list on a newly created Tier 3 of the Canadian Venture Exchange (now renamed the TSX Venture Exchange).

On December 23, 2003, the Company was reclassified as a Tier 2 company on the TSX Venture Exchange. On February 17, 2005, the Company transferred its listing to NEX, a separate board of the 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 continued listing standards, due to low levels of business activity.

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 common shares on the OTC Bulletin Board under the symbol QZMRF.

Offices

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's registered office is Suite 1500 – 1055 West Georgia Street, Vancouver, British Columbia V6E 4N7; telephone (604) 689-9111.

B. Business Overview

The Company's Business Strategy and Principal Activities

The Company's business objectives are the acquisition and exploration of mineral properties, with a principal concentration on gold and silver. The Company is actively seeking suitable properties for evaluation and potential acquisition, but does not currently have an active exploration project.

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

The Company sold the Property during the fiscal year ended July 31, 2002, to Seabridge Resources Ltd. and Seabridge Resources Inc. (collectively "Seabridge"). Seabridge subsequently changed its name to Seabridge Gold Inc. At closing, Quartz received 300,000 Seabridge common shares, 200,000 Seabridge common share purchase warrants, US$100,000 and a 1% NSR from any future production on the Property. This transaction was approved by consent of the majority of the Company's shareholders. Also during fiscal 2002, the Company sold the 300,000 common shares of Seabridge that it had received in the disposition of the Property, exercised the 200,000 warrants that it received pursuant to that transaction, and it 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 the 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.

Following the sale of the Property, the Company has continued in its efforts to find a suitable mineral property for potential acquisition and exploration. The Company has not yet found a suitable property for acquisition, but is actively reviewing mineral properties to determine whether there are any properties of merit.

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

C. Organizational Structure

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

D. Property, Plant and Equipment

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

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E. Currency

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

ITEM 4A UNRESOLVED STAFF COMMENTS

None.

ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

OVERVIEW

The Company does not currently have an active exploration project. Accordingly, during the fiscal year ended July 31, 2010, the Company's activities were primarily restricted to conducting property investigations of mineral property interests. These investigations did not lead to any acquisitions. As Quartz is an exploration stage company, it does not have any revenues from its operations to offset its expenditures. Accordingly, the Company's ability to continue its property investigation activities will be contingent upon receiving additional financing.

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

The following discussion should be read in conjunction with the audited consolidated financial statements for the years ended July 31, 2010, 2009 and 2008, and the related notes, accompanying this Annual Report. The Company prepares its consolidated financial statements in accordance with Canadian GAAP. Reference should be made to note 10 to the audited consolidated financial statements for the years ended July 31, 2010, 2009 and 2008, which provides a reconciliation of material measurement differences between Canadian GAAP and US GAAP and their effect on the consolidated financial statements.

Critical Accounting Policies and Estimates

The Company's significant accounting policies are presented in note 3 of the accompanying audited consolidated financial statements for the years ended July 31, 2010, 2009 and 2008, and a reconciliation of material measurement differences between these principles and US GAAP is presented in note 10. The preparation of consolidated financial statements in accordance with Canadian GAAP requires management to select accounting policies and make estimates. Such estimates may have a significant impact on the financial statements. These include:

• the carrying values of mineral properties,

• foreign currency translation, and

• stock-based compensation.

Actual amounts could differ from the estimates used and, accordingly, affect the results of operation.

Mineral property interests

Mineral property acquisition costs, and exploration and development expenditures incurred subsequent to the determination of the feasibility of mining operations, are capitalized until the property to which they relate is placed into production, sold, allowed to lapse or abandoned. Mineral property acquisition costs include the cash consideration and the estimated fair value of common shares and warrants, if any, issued for mineral property interests, pursuant to the terms of the relevant agreement. The value of the common shares issued is the price of the common shares of the Company at the date of the issuance to effect the acquisition. These costs are amortized over the estimated life of the property following commencement of commercial production, or written off if the property is sold, allowed to lapse or abandoned, or when an impairment in value has been determined to have occurred.

Exploration expenses incurred prior to determination of the feasibility of mining operations, including periodic option payments and administrative expenditures are expensed as incurred.

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Foreign currency translation

The Company's functional currency is the United States dollar.

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Monetary assets and liabilities of the Company not denominated in United States are translated into United States dollars at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates unless such items are carried at market, in which case they are translated at the exchange rates in effect on the balance sheet date. Revenues and expenses, except amortization, are translated at the average exchange rates for the period. Amortization is translated at the same exchange rate as the assets to which it relates. Gains or losses on translation are recorded in the statement of operations.

Stock-based compensation

The Company has a share option plan dated January 19, 2007. The Company accounts for all non-cash stock-based payments to non-employees, and employee awards that are direct awards of shares that call for settlement in cash or other assets, or that are share appreciation rights which call for settlement by the issuance of equity instruments, using the fair value method.

Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of non-cash stock-based payments is periodically re-measured until counterparty performance is complete, and any change therein is recognized in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of non-cash stock-based payments to service providers that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.

Consideration received by the Company upon the exercise of share purchase options and warrants, and the stock-based compensation previously credited to contributed surplus related to such options and warrants, is credited to share capital.

A. Operating Results

Results of Operations
(Stated in United States dollars)

		Year ended July 31
		2010			2009			2008
Expenses (Income)
Office and administration	$	95,008		$	113,587		$	93,070
Foreign exchange loss (gain)		(13,470	)		55,267			(29,874	)
Interest income		(1,790	)		(4,451	)		(24,465	)
Mineral property investigations		1,096			7,593			-
Legal, accounting and audit		45,776			24,521			34,779
Regulatory, trust and filing		27,370			27,586			33,001
Shareholder communication		3,400			-			-
Administrative cost (recoveries)		(23,751	)		-			-
Loss for the year – Canadian GAAP	$	(133,639	)	$	(224,103	)	$	(106,511	)
US GAAP Reconciliation
Mineral property acquisition costs(1)		-			-			-
Loss for the year – US GAAP	$	(133,639	)	$	(224,103	)	$	(106,511	)

Notes:

(1)

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. In contrast, under US GAAP, mineral property exploration and development expenditures are expensed as incurred. (See notes 3(b) and 10 to the accompanying audited consolidated financial statements for the years ended July 31, 2010, 2009, and 2008 for more information).

Years ended July 31, 2010 and July 31, 2009

Loss for the year ended July 31, 2010 was $133,639. This compares with a loss of $224,103 for the year ended July 31, 2009. The Company reduced its material exploration and property investigation activity during the current year. The decrease in the loss for the year primarily resulted from foreign exchange gains and a cost recovery from a service provider. The Company recorded a $13,470 foreign exchange gain in the year ended July 31, 2010, compared with a loss of $55,267 in the prior year, related to the Company's holdings of Canadian dollars. In fiscal 2010, the twelve month average rate of Canadian dollar increased to $0.95 to the United States dollar from $0.85 to the United States dollar in 2009.

Office and administration expenses decreased to $95,008 in fiscal 2010 from $113,587 in the prior year, as a result of a reduction in travel and conference attendance fees.

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Legal, accounting and audit expenses increased to $45,776 in fiscal 2010 from $24,521 in the previous year, as a result of fees related to quarterly review engagements and increased legal costs.

Interest income for the year ended July 31, 2010 was $1,790, compared with $4,451 in 2009, due mainly to lower average cash balances (2010 – $251,240; 2009 – $391,040) and significantly lower interest rates.

Years ended July 31, 2009 and July 31, 2008

Loss for the year ended July 31, 2009 was $224,103. This compares with a loss of $106,511 for the year ended July 31, 2008. The Company conducted limited material exploration and property investigation activity during the current year. The increase in loss primarily resulted from foreign exchange. The Company incurred a $55,267 foreign exchange loss in the year ended July 31, 2009, compared with a gain of $29,874 in the prior year, during which the Canadian dollar appreciated against the United States dollar. In fiscal 2009, the twelve month average rate of Canadian dollar declined to $0.85 to the United States dollar from $0.99 to the United States dollar in 2008.

Interest income for the year ended July 31, 2009 was $4,451, compared with $24,465 in 2008, due mainly to lower average cash balances (2009 – $391,040; 2008 – $591,336) and significantly lower interest rates. Office and administration expenses increased to $113,587 in fiscal 2009 from $93,070 in the prior year, as a result of increased activity, regulatory compliance work and travel expenses.

B. Liquidity and Capital Resources

At July 31, 2010, the Company had working capital of approximately $234,000 (2009 - $368,000) which is sufficient to fund expected administrative costs and mineral property investigations for the next twelve months.

Additional working capital will be required to fund any major mineral property acquisition, in the event that a suitable property is identified. The Company does not have sufficient funding at this time to complete a major acquisition. Any new mineral property acquisition will require additional financing, likely through the issuance of common shares.

Cash and cash equivalents at July 31, 2010 amounted to $251,240 (2009 - $391,040). Operating activities in fiscal 2010 utilized cash of $139,800 (2009 - $200,296).

Requirement of Financing

Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company has historically issued common share capital pursuant to private placement financings, in order to fund its activities. 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 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.

As at September 30, 2010, the Company does not have any unused banking commitments or lines of credit, which could provide additional working capital.

Financial Instruments

The Company's holdings of financial instruments are predominantly denominated in Canadian dollars. The Company 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 immediate expenditure requirements 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 $180,000 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, regulatory and stock exchange compliance, and transfer agent fees.

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C. Research Expenditures

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

D. Trend Information

Gold prices increased through the calendar year of 2009, beginning at a low approximately US$810/oz. in mid-January and increasing steadily through the year to a high of over US$1200/oz. in early December, before showing some decline to approximately US$1087/oz. by the calendar year-end. The average gold price for 2009 was approximately US$972/oz.

The average price over the first eight months of the calendar year of 2010 was approximately US$1162/oz.

However, since Quartz has not acquired a mineral property, the Company expects that the increasing trend in gold prices will have little impact on the Company's ability to attract significant equity financing.

E. Off – Balance Sheet Arrangements

Quartz has no off-balance sheet arrangements.

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

(a) any obligation under a guarantee contract that has any of the characteristics identified in paragraph 3 of FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (November 2002) ("FIN 45"), as may be modified or supplemented, excluding the types of guarantee contracts described in paragraphs 6 and 7 of FIN 45;

(b) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets;

(c) any obligation under a derivative instrument that is both indexed to the Company's own stock and classified in stockholders' equity, or not reflected, in the Company's statement of financial position; or

(d) any obligation, including a contingent obligation, arising out of a variable interest (as referenced in FASB Interpretation No. 46, Consolidation of Variable Interest Entities (January 2003), as may be modified or supplemented) in an unconsolidated entity that is held by, and material to, the Company, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, the Company.

F. Tabular Disclosure of Contractual Obligations

As at July 31, 2010, the Company had no material contractual obligations:

	Payments due by period
Contractual Obligations	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Long-Term Debt Obligations	Nil	Nil	Nil	Nil	Nil
Capital Finance/Lease	Nil	Nil	Nil	Nil	Nil
Operating Lease	Nil	Nil	Nil	Nil	Nil
Purchase Obligations	Nil	Nil	Nil	Nil	Nil
Other long-term liabilities reflected on the Company's balance sheet under Canadian GAAP	Nil	Nil	Nil	Nil	Nil
Total	Nil	Nil	Nil	Nil	Nil

G. Safe Harbor

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

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ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Name (1)	Year born	Position	Director Since
Rene G. Carrier	1944	President and Director	January 2000
Brian F. Causey	1946	Director	January 2003
T. Barry Coughlan	1945	Director	January 2005
Gordon J. Fretwell	1953	Secretary and Director	January 2003

(1) To the best of the Company's knowledge, none of such persons has any family relationship with any other and none were elected as a director or appointed as an officer as a result of an arrangement or understanding with a major shareholder, customer, supplier, or any other party.

The following is biographical information on each of the persons listed above.

RENE G. CARRIER – President and Director

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

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

Company	Positions Held	From	To
Quartz Mountain Resources Ltd.	Director	January 2000	Present
	President	June 2005	Present
Amarc Resources Ltd.	Director	May 2008	Present
Chartwell Technology Inc.	Director	June 1991	April 2007
Continental Minerals Corporation	Director	February 2001	Present
Frontera Copper Corporation	Director	February 2009	June 2009
Heatherdale Resources Inc.	Director	November 2009	Present
International Royalty Corporation	Lead Director	June 2003	February 2010
Rockwell Diamonds Inc.	Director	April 1993	November 2008

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

Brian Causey holds a B.Comm. degree and was admitted to the Institute of Charted Accountants of British Columbia in 1971. Formerly a partner of Peat Marwick Thorne (now KPMG LLP) (1975-1977), Mr. Causey is currently Vice-President, Project Finance for Hunter Dickinson Services Inc. (formerly Hunter Dickinson Inc.), a position he was appointed to in 2001.

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

Company	Positions Held	From	To
Quartz Mountain Resources Ltd.	Director	January 2003	Present
Yaletown Capital Corp.	CFO and Director	April 2007	April 2010
Chinook Capital Corp.	Director	April 2007	May 2009
Nanotech Security Corp. (formerly Wireless2 Technologies Inc.)	CFO and Director	October 2009	Present

T. BARRY COUGHLAN, B.A. – Director

Barry Coughlan is a self-employed businessman and financier who has been involved in the financing of publicly traded companies for over 25 years. His principal occupation is President and Director of TBC Ventures Ltd., a private investment company.

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

Company	Positions Held	From	To
Quartz Mountain Resources Ltd.	Director	January 2005	Present
Amarc Resources Ltd.	Director	February 2009	Present
Continental Minerals Corporation	Director	May 2006	December 2006
Farallon Mining Ltd.	Director	March 1998	Present
Great Basin Gold Ltd.	Director	February 1998	Present
ICN Resources Ltd. (formerly, Icon Industries Ltd.)	President, CEO and Director	September 1991	Present
Taseko Mines Limited	Director	February 2001	Present
Quadro Resources Ltd. (formerly Tri- Gold Resources Corp.)	President and Director	June 1986	Present

GORDON J. FRETWELL, B.Comm. LLB. – Secretary and Director

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

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

Company	Positions Held	From	To
Quartz Mountain Resources Ltd.	Director and Secretary	January 2003	Present
Bell Copper Corporation	Secretary	December 2008	Present
	Director	June 2001	Present
Benton Resources Corp.	Director	March 2005	Present
Continental Minerals Corporation	Director	February 2001	Present
Copper Ridge Explorations Inc.	Director and Secretary	September 1999	Present
Coro Mining Corporation	Director	June 2009	Present
Frontera Copper Corporation	Director	February 2009	June 2009
Grandcru Resources Corp.	Director	December 2002	May 2008
ICN Resources Ltd. (formerly, Icon Industries Ltd.)	Secretary	March 2009	Present
	Director	July 2004	March 2009
International Royalty Corporation	Director	February 2005	Present
Keegan Resources Inc.	Director	February 2004	Present
Lignol Energy Corporation	Director	January 2007	Present
Meritus Minerals Ltd.	Director	June 2007	Present
Northern Dynasty Minerals Ltd.	Director	June 2004	Present
Pine Valley Mining Corp.	Director	August 2003	September 2007
Rockwell Diamonds Inc.	Secretary	March 1998	November 2007
	Director	March 1998	September 2006
Quadro Resources Ltd. (formerly Tri- Gold Resources Corp.)	Director	July 2001	October 2003
	Secretary	July 2001	September 2003
	CFO	November 2005	January 2006

B. Compensation

During the Company's financial year ended July 31, 2010, the aggregate cash compensation paid or payable by the Company or its subsidiaries to its directors and senior officers, all of whose financial statements are consolidated with those of the Company, was $7,050.

Rene G. Carrier, President, Jeffrey R. Mason, former Principal Accounting Officer, and Paul Mann, Principal Accounting Officer are each "Named Executive Officers" of the Company for the purposes of the following disclosure.

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The compensation paid to the Named Executive Officers during the Company's three most recently completed financial years is as set out below: Summary Compensation Table

NAMED EXECUTIVE OFFICERS Name and Principal Position	Year	Annual Compensation			Long Term Compensation			All Other Compensation ($)
					Awards		Payouts
		Salary ($)	Bonus ($)	Other Annual Compen- sation ($)	Securities Under Options or SARs Granted (#)	Shares or Units Subject to Resale Restrictions ($)	LTIP Payouts ($)
Rene G. Carrier(1) President	2010 2009 2008	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Jeffrey R. Mason(2) Former Principal Accounting Officer	2010 2009 2008	N/A(2) N/A(2) 2,663	N/A(2) N/A(2) Nil	N/A(2) N/A(2) Nil	N/A(2) N/A(2) Nil	N/A(2) N/A(2) Nil	N/A(2) N/A(2) Nil	N/A(2) N/A(2) Nil
Paul Mann(3) Principal Accounting Officer	2010 2009 2008	7,050 7,291 10,688	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil

Notes:
(1)	Rene G. Carrier was appointed as President of the Company on June 16, 2005.
(2)	Jeffrey Mason was the Principal Accounting Officer of the Company until his resignation in February 2008.
(3)	Paul Mann was appointed as Principal Accounting Officer of the Company after Jeffrey Mason resigned.

Long-Term Incentive Plan Awards

A long term incentive plan ("LTIP") is "a plan providing compensation intended to motivate performance over a period greater than one financial year" and does not include option or stock appreciation rights ("SARs") plans or plans for compensation through shares or units that are subject to restrictions on resale. The Company did not award any LTIPs to any Named Executive Officer during the most recently completed financial year.

Share Options

The only equity compensation plan which the Company has in place is its share option plan (See Item 6EShare Option Plan). 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 and consultants of the Company or a subsidiary of the Company. The Plan 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 10% of the total number of issued and outstanding common shares under the Plan. No option was granted during the 2010 fiscal year and as at July 31, 2010 and the date of this Annual Report, there are no options outstanding. All options expire on a date not later than five years after the date of grant of such option, for an NEX listed company.

Termination of Employment, Change in Responsibilities and Employment Contracts

There is no written employment contract between the Company and any Named Executive Officer. There is no compensatory plan or arrangement, with respect to any Named Executive Officer resulting from the resignation, retirement or any other termination of an officer's employment or from a change of any Named Executive Officer's responsibilities following a change in control.

Pension Plans

There is no defined benefit or actuarial plans in place for the Company.

C. Board Practices

All directors were elected at the annual general meeting of the Company's shareholders held on February 4, 2010. All directors have a term of office expiring at the next annual general meeting of the Company's shareholders, expected to be held in early 2011. All officers have a term of office lasting until their removal or replacement by the Board of Directors.

There were no arrangements, standard of otherwise, pursuant to which directors were compensated by Quartz or its subsidiaries for their services in their capacity as directors, or for committee participation, involvement in special assignments or for services as consultants or experts during the most recently completed financial year.

General

The Board believes that good corporate governance improves corporate performance and benefits all shareholders. The Canadian Securities Administrators (the "CSA") have adopted National Policy 58-201 Corporate Governance Guidelines, which provides non-prescriptive guidelines on corporate governance practices for reporting issuers such as the Company. In addition, the CSA have implemented National Instrument 58-101 Disclosure of Corporate Governance Practices, which prescribes certain disclosure by the Company of its corporate governance practices. This section sets out the Company's approach to corporate governance and addresses the Company's compliance with NI 58-101.

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1. Board of Directors

Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Company's Board of Directors (the "Board"), be reasonably expected to interfere with the exercise of a director's independent judgment.

The Board facilitates its independent supervision over management in a number of ways including: by holding regular meetings without the presence of management; by retaining independent consultants; and by reviewing corporate developments with larger shareholders, analysts and potential industry partners, where it deems necessary.

Brian F. Causey, T. Barry Coughlan and Gordon J. Fretwell are the Company's only independent directors. Rene Carrier is not independent, by virtue of his position with the Company. The Board members have extensive experience as directors of public companies and are sensitive to the related corporate governance and financial reporting obligations associated with such positions. Thus, the Board members are reasonably aware of the obligations of directors and the expectations of independence from management.

2. Other Directorships

The section entitled Item 6 – "Directors, Senior Management and Employees" in this Annual Report gives details of other reporting issuers of which each director is a director or officer.

3. Orientation and Continuing Education

The Company has traditionally retained experienced mining people as directors and hence the orientation needed is minimized. When new directors are appointed, they are acquainted with the Company's business activities and the expectations of directors. Board meetings generally include presentations by the Company's senior management in order to give the directors full insight into the Company's operations.

4. Ethical Business Conduct

The Board has found that the fiduciary duties placed on individual directors by the Company's governing corporate legislation and the common law, and the restrictions placed by applicable corporate legislation on an individual director's participation in decisions of the Board in which the director has an interest, have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

5. Nomination of Directors

The Board considers its size each year when it considers the number of directors required, taking into account the number required to carry out the Board's duties effectively and to maintain a diversity of views and experience.

The Board does not have a nominating committee, and these functions are currently performed by the Board as a whole. However, if there is a change in the number of directors required by the Company, this policy will be reviewed.

6. Compensation

The Board determines the compensation for the executive officers of the Company. The directors receive no cash compensation for acting in their respective capacities as directors of the Company.

7. Other Board Committees

The Board has no compensation or other committees, other than the audit committee.

8. Assessments

The Board monitors the adequacy of information given to directors, communication between the Board and management, and the strategic direction and processes of the Board and its audit committee.

AUDIT COMMITTEE

The Audit Committee's Charter

The audit committee has a charter that sets out its mandate and responsibilities. A copy of the audit committee charter was filed with the Securities and Exchange Commission as an exhibit to the Company's Annual Report filed on Form 20-F for the fiscal year ended July 31, 2004 and is available at www.sec.gov.

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Composition of the Audit Committee

The members of the audit committee are Brian F. Causey, T. Barry Coughlan and Gordon J. Fretwell. All audit committee members are independent. All members are financially literate.

Relevant Education and Experience

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

• the accounting principles used by the Company to prepare its financial statements, and the ability to assess the general application of those principles in connection with estimates, accruals and reserves;

• reviewing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, and

• an understanding of internal controls and procedures for financial reporting.

Audit Committee Oversight

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

The Company's auditor, Davidson & Company LLP, has not provided any material non-audit services during the most recently completed fiscal year with the exception of the review of the Company's interim financial statements for the quarter ended April 30, 2010.

Pre-Approval Policies and Procedures

The Company has procedures for the review and pre-approval of any services performed by its auditors. The procedures require that all proposed engagements of its auditors for audit and non-audit services be submitted to the audit committee for approval prior to the beginning of any such services. The audit committee considers such requests, and, if acceptable to a majority of the audit committee members, pre-approves such audit and non-audit services by a resolution authorizing management to engage the Company's auditors for such audit and 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 regulations of 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.

Exemptions From Certain Canadian Audit Committee Requirements

Pursuant to section 6.1 of National Instrument 52-110 – Audit Committees ("NI 52-110"), as adopted by the Canadian Securities Administrators (including the British Columbia, Alberta and Ontario Securities Commissions which have jurisdiction over the Company, the "CSA"), the Company is exempt from the requirements of Parts 3 and 5 of NI 52-110 for the year ended July 31, 2010, by virtue of the Company being a "venture issuer" (as defined in NI 52-110).

Part 3 of NI 52-110 prescribes certain requirements for the composition of audit committees of non-exempt companies that are reporting issuers under Canadian provincial securities legislation. Part 3 of NI 52-110 requires, among other things that an audit committee be comprised of at three directors, each of whom, is, subject to certain exceptions, independent and financially literate in accordance with the standards set forth in NI 52-110.

Part 5 of NI 52-110 requires an annual information form that is filed by a non-exempt reporting issuer under National Instrument 51-102 – Continuous Disclosure Obligations, as adopted the CSA, to include certain disclosure about the issuer's audit committee, including, among other things: the text of the audit committee's charter; the name of each audit committee member and whether or not the member is independent and financially literate; whether a recommendation of the audit committee to nominate or compensate an external auditor was not adopted by the issuer's board of directors, and the reasons for the board's decision; a description of any policies and procedures adopted by the audit committee for the engagement of non-audit services; and disclosure of the fees billed by the issuer's external auditor in each of the last two fiscal years for audit, tax and other services.

D. Employees

At September 30, 2010 and for each of the past three fiscal 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 Services Inc., a private company with certain directors in common with the Company (see Item 7 – "Major Shareholders and Related PartyTransactions").

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E. Share Ownership

Security Holdings of Directors and Senior Management

As at September 30, 2010, the directors and officers of Quartz and their respective affiliates, directly and indirectly, own or control as a group an aggregate of 150,000 common shares (1.12%) .

As at September 1, 2010, the Company's directors and officers beneficially own the following number of the Company's common shares, options and warrants:

Name of Insider	Securities Beneficially Owned(1)	As a % of outstanding common shares
Rene G. Carrier	150,000 common shares	1.12%
Brian F. Causey	Nil	Nil
Gordon J. Fretwell	Nil	Nil
T. Barry Coughlan	Nil	Nil

Notes:
(1) This information has been provided by the individual directors as provided by them on www.sedi.ca

Share Option Plan

As at September 30, 2010, an aggregate of 1,339,943 common shares were available for issuance pursuant to the Company's share option plan (the "Plan"), described below, which was previously approved by the Company's shareholders on January 19, 2007. No options were outstanding pursuant to Plan.

Share Option Plan

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

The Plan is a "rolling" plan, whereby the maximum number of shares that may be reserved for issuance pursuant to all option awards granted under the Plan is 10% of the Company's outstanding common shares, as calculated at the time that an award is granted. Under the policies of the TSX Venture Exchange (the "TSX-V"), the continuation of the Plan requires shareholder approval by ordinary resolution at each annual general meeting of the Company's shareholders. Accordingly, the Company's shareholders will be asked to confirm the Plan in accordance with the policies of the TSX-V at the Company's annual general meeting, expected to be held in early 2011.

Pursuant to the Plan, if outstanding options are exercised, or expire, or the number of issued and outstanding common shares of the Company increases, the number of options available to grant under the Plan increases proportionately. The exercise price of each option is set by the Board of Directors at the time of grant but cannot be less than the Discounted Market Price (as defined in, and determined in accordance with, the policies of the TSX-V). Options can have a maximum term of five years (or 10 years if the Company becomes a Tier 1 issuer on the TSX-V) and typically terminate 90 days following the termination of the optionee's employment or engagement, except in the case of retirement or death. Vesting of options is at the discretion of the Board of Directors at the time the options are granted.

Eligible Optionees

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

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

Limitations on Awards

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

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ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

Major Shareholders

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

As of September 30, 2010, Quartz had authorized unlimited common shares without par value, of which 13,399,426 were issued and outstanding. The following table sets forth certain information with respect to beneficial ownership of the Company's common stock as of September 30, 2010 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.

Identity of Person or Group	Shares	Percentage Beneficially Owned of Class
Robert A. Dickinson	1,490,569	11.1%
Aziz Shariff	1,141,352	8.5%
Dave Copeland	837,315	6.2%
Jeffrey Mason	837,315	6.2%
Ron Thiessen	837,315	6.2%
Scott Cousens	837,315	6.2%

All of the common shares have the same voting rights.

Geographic Breakdown of Shareholders

As of September 30, 2010, Quartz's register of shareholders indicates that Quartz's common shares are held as follows:

Location	Number of registered shareholders of record	Number of shares	Percentage of total shares
Canada	32	12,070,320	90.08%
United States	445	1,293,896	9.66%
Other	4	35,210	0.26%
Total	481	13,399,426	100.0%

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

Transfer Agent

The Company's common shares are recorded on the books of its transfer agent, Computershare Trust Company of Canada, located at 4th Floor, 510 Burrard Street, Vancouver, B.C. V6C 3B9; telephone (604) 661-0271 in registered form. However, the majority of the Company's common shares are registered in the name of intermediaries such as brokerage houses and clearing houses (on behalf of their respective brokerage clients). Quartz does not have knowledge or access to the identities of the beneficial owners of such shares registered through intermediaries.

Control

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

Insider Reports under the British Columbia Securities Act

Since the Company a reporting issuer under the Securities Acts of British Columbia, Alberta and Ontario, certain "insiders" of the Company (including its directors, certain executive officers, and persons who directly or indirectly beneficially own, control or direct more than 10% of its common shares) are generally required to file insider reports of changes in their ownership of Quartz's common shares within ten days following the trade (to be reduced to five days for all trades occurring after October 31, 2010) under National Instrument 55-104 – Insider Reporting Requirements and Exemptions, as adopted by the CSA, and the Securities Act (Ontario). Copies of such reports are available for public inspection at the offices of the British Columbia Securities Commission, 9th Floor, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2, (604) 899-6500 or at the British Columbia Securities Commission web site, www.bcsc.bc.ca. In British Columbia, all insider reports must be filed electronically 10 days following the date of the trade at www.sedi.ca. The public is able to access these reports at www.sedi.ca.

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B. Related Party Transactions

Except as disclosed below, Quartz has not, since the beginning of its last fiscal year ended July 31, 2010, and does not propose to:

(1) enter into any transactions which are material to Quartz, or a related party or any transactions unusual in their nature or conditions involving goods, services or tangible or intangible assets to which Quartz or any of its former subsidiaries was a party;

(2) make any loans or guarantees directly or through any of its former subsidiaries to or for the benefit of any of the following persons:

(a) enterprises directly or indirectly through one or more intermediaries, controlling or controlled by or under common control with Quartz;

(b) associates of Quartz (unconsolidated enterprises in which Quartz has significant influence or which has significant influence over Quartz) including shareholders beneficially owning 10% or more of the outstanding shares of Quartz;

(c) individuals owning, directly or indirectly, shares of Quartz that gives them significant influence over Quartz and close members of such individuals' families;

(d) key management personnel (persons having authority in responsibility for planning, directing and controlling the activities of Quartz including directors and senior management and close members of such directors' and senior managements' families); or

(e) enterprises in which a substantial voting interest is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.

Hunter Dickinson Services Inc. ("HDSI")

Management and administrative services agreement

As an umbrella organization, HDSI provides, both cost and expertise advantages to the companies through access to a shared multidisciplinary team of mining and financial professionals. This includes: management capability, geological, engineering and environmental expertise, financial acumen, and administrative and support services. In addition, HDSI organizes and shares leased premises and office and technical equipment for staff to perform their duties Quartz's business relationship with HDSI consists of utilizing the services described above. HDSI provides these services to Quartz which includes the services of Quartz's President, pursuant to a standard (within the group) Geological Management and Administration Services Agreement with Hunter Dickinson Services Inc., dated June 1, 2008 (the "Geological Management and Administration Services Agreement") and amended July 2, 2010. Because of cross membership of many of the boards of directors within the group, certain members of management and the Board of Directors of Quartz are also members of the board of directors of HDSI.

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

During the fiscal year ended July 31, 2010, the Company paid $69,156 (2009 - $127,153; 2008 –$95,754) to HDSI for services and reimbursements of third party disbursements pursuant to this agreement.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8 FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

Item 17 of this Form 20-F contains Quartz's audited consolidated annual financial statements as at and for the years ending July 31, 2010, 2009 and 2008.

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Legal Proceedings

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

Dividend Policy

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

B. Significant Changes

There have been no significant changes to the accompanying financial statements since July 31, 2010, except as disclosed in this Annual Report on Form 20-F.

ITEM 9 THE OFFER AND LISTING

A.	Offer and Listing Details
1.	Trading Markets

The following tables set forth for the periods indicated the price history of the Company's common shares on the NEX board of the TSX Venture Exchange and on the OTC Bulletin Board:

	TSX Venture Exchange		OTCBB
Fiscal year ended July 31,	High (Cdn$)	Low (Cdn$)	High (US$)	Low (US$)
2010	0.30	0.15	0.30	0.13
2009	0.50	0.12	0.43	0.08
2008	0.75	0.42	0.72	0.39
2007	0.68	0.36	0.66	0.29
2006	0.70	0.29	0.68	0.22

	TSX Venture Exchange		OTCBB
FISCAL Quarter	High (Cdn$)	Low (Cdn$)	High (US$)	Low (US$)
Q4, 2010	0.24	0.17	0.23	0.16
Q3, 2010	0.26	0.23	0.24	0.22
Q2, 2010	0.30	0.24	0.24	0.22
Q1, 2010	0.30	0.15	0.30	0.13
Q4, 2009	0.16	0.12	0.15	0.09
Q3, 2009	0.16	0.14	0.14	0.10
Q2, 2009	0.18	0.13	0.14	0.08
Q1, 2009	0.50	0.14	0.43	0.11
	TSX Venture Exchange		OTCBB
Month	High (Cdn$)	Low (Cdn$)	High (US$)	Low (US$)
August 2010	0.20	0.18	0.16	0.16
July 2010	0.21	0.17	0.19	0.16
June 2010	0.23	0.21	0.20	0.19
May 2010	0.24	0.23	0.23	0.19
April 2010	0.25	0.25	0.23	0.23
March 2010	0.25	0.23	0.23	0.22

B. Plan of Distribution

Not applicable.

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C. Markets

On February 17, 2005, the Company transferred its listing to NEX, a separate board of TSX Venture Exchange. 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.

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.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10 ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Quartz's original corporate constituting documents comprised of the Memorandum and Articles of Association were registered with the British Columbia Registrar of Companies under Corporation No. BC0253743. A copy of the Company's original Articles of Association was filed as an exhibit with Quartz's initial registration statement on Form 20-F.

In March 2004, the Company Act (British Columbia) (the "BCCA") was replaced by the Business Corporations Act (British Columbia) (the "BCA"). All companies incorporated under the BCCA were required to complete a transition application to the BCA by March 29, 2006. The directors of the Company authorized the Company to file a transition application with the Registrar of Companies and to comply with the BCA.

Under the BCA, every "pre-existing company' remained subject to certain "Pre-existing Company Provisions" contained in the BCCA unless such provisions were removed with the approval of the shareholders. In order to take full advantage of the flexibility offered by the BCA, the shareholders adopted a special resolution on January 25, 2006 authorizing the removal of the Pre-existing Company Provisions and the adoption by the Company of a new form of Articles that incorporates provisions permitted under the BCA. The articles of a company, among other things, set out rules for the conduct of its business and affairs.

The Company subsequently filed a Notice of Articles with the Registrar of Companies on February 17, 2006. The Notice of Articles and the Articles constitute the constating documents of the Company, and have superseded the Memorandum and Articles of Association.

Borrowing Powers

Under the original Articles of Association, the Company could borrow money, issue bonds, debentures and other debt obligations and mortgage, charge, or give security on the undertaking, or on the whole or any part of the property and assets, of the Company (both present and future). Under the BCA, companies are also permitted, without restriction (other than general corporate governance principles), to guarantee repayment of money by any other person or the performance of any obligation of any other person. This change reflected the modernization of corporate legislation to effectively respond to increasingly complex financial transactions that companies may enter into in the course of their business. As a result, the Company's Articles now provide that the Company may guarantee the repayment of money by any other person or the performance of any obligation of any other person.

Share Certificates

Under the original Articles of Association, a shareholder was entitled to a share certificate representing the number of shares of the Company held. Under the BCA, a shareholder is entitled to a share certificate representing the number of shares of the Company held or a written acknowledgement of the shareholder's right to obtain such a share certificate. As a result, the Articles now provide for this additional right. The addition of the ability to issue a written acknowledgement is very useful for public companies such as the Company, since it permits flexibility in corporate and securities transmissions.

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Indemnity Provisions

Under the BCCA, the Company could only indemnify directors where it obtained prior court approval, except in certain limited circumstances. The original Articles of Association provided for the Company to indemnify directors, subject to the provisions of the BCCA. Under the BCA, the Company is permitted (and is, in some circumstances, required) to indemnify a past or present director or officer of the Company or an associated corporation without obtaining prior court approval in respect of an "eligible proceeding". An "eligible proceeding" includes any legal proceeding relating to the activities of the individual as a director or officer of the Company. However, under the BCA, the Company is prohibited from paying an indemnity if:

(a) the party did not act honestly and in good faith with a view to the best interests of the Company;

(b) the proceeding was not a civil proceeding and the party did not have reasonable grounds for believing that his or her conduct was lawful; and

(c) the proceeding is brought against the party by the Company or an associated corporation.

As a result, the Articles require the Company to indemnify directors, officers and other persons, subject to the limits imposed under the BCA.

Alternate Directors

The original Articles of Association permitted a director to appoint another director as his alternate. The Company's Articles now permit a director to appoint anyone as his alternate, as long as that person is qualified to act as a director.

Amendment of Articles and Notice of Articles

The Articles provide that the general authority required to amend all provisions of the Company's Articles and the Notice of Articles, other than as set out in the BCA as specifically requiring a special resolution, can be effected as an ordinary or by directors' resolution. The Company's Articles provide that the Company may amend provisions of the Articles and Notice of Articles relating to certain aspects of its Shares and authorized share structure by ordinary resolution. A share consolidation or a share split and name change of the Company can only be done by a resolution of the directors. The default provision under the BCA is a special resolution where the Articles are silent as to the type of resolution required. The Articles also provide that the attachment, variation and deletion of special rights and restrictions to any class of shares may be authorized by ordinary resolution. If the amendment prejudices or interferes with the rights or special rights attached to any class of issued shares, by the provisions of the BCA, the consent of the holders of that class of shares by a "special separate resolution" is required.

All special resolutions of the Company must be adopted by a majority of two-thirds of votes cast.

Shareholders' Meetings

In addition to reflecting the present notice and other provisions of the BCA relating to shareholders' meetings, the Articles provide that shareholders' meetings may be held at such place as is determined by the directors.

The Articles permit the giving of notice to shareholders, directors and officers by fax or e-mail in addition to regular mail or personal delivery.

Officers

Under the original Articles of Association, the Company was required to have at least a President and Secretary as officers, and separate individuals were required to hold those positions. In addition, the Chairman and President were required to be directors. However, under the BCA, those requirements no longer exist, and as a result, the Articles do not provide for such restrictions.

Disclosure of Interest of Directors

The Articles reflect the provisions of the BCA relating to the disclosure of interest by directors, which superseded more the cumbersome and outdated provisions contained under the BCCA.

Creation of Preferred Shares

Under the original Articles of Association, the creation of a new class of shares required the approval of the shareholders of the Company by a special resolution adopted by a majority of three-quarters of votes cast .

The authorized share structure of the Company now includes, in addition to a class of common shares without par value and without a maximum number, a class of Preferred Shares without par value and without a maximum number. The Preferred Shares may be issued in series on such terms as determined by the Company's directors in accordance with the class rights and restrictions.

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The special rights and restrictions attaching to the Preferred Shares are set forth in Article 26 of the Articles, and effectively provide the directors with wide latitude to create a series of Preferred Shares which may be convertible into Common Shares, and have attached to them rights that rank ahead of common shares in respect of entitlement to assets and dividends.

C. Material Contracts

Quartz's only material contract as of September 30, 2010 is:

• Geological Management and Administrative Services Agreement with HDSI, dated for reference June 1, 2008. See Item 7B.

D. Exchange Controls

Quartz is incorporated pursuant to the laws of the Province of British Columbia, Canada. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares, other than withholding tax requirements. Any such remittances to United States residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. See "Taxation", below. There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (Canada) ("Investment Act").

The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire common shares of the Company. It is general only, it is not a substitute for independent legal advice from an investor's own advisor, and it does not anticipate statutory or regulatory amendments.

The Investment Act is a federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts or joint ventures (each an "entity"). Non-Canadians proposing to establish a new Canadian business or acquire control of an existing Canadian business must file either an application for review (before completing the investment) or a post-closing notification (within 30 days of implementation of the investment) to the Director of Investments, who is appointed by the Minister of Industry. Whether a post-closing notification or a full application for review will be required will depend on the type of Canadian business involved and the value of the business. If an investment is reviewable under the Investment Act, the Investment Act prohibits implementation of the investment unless the Minster of Industry is satisfied that the investment is likely to be of net benefit to Canada.

A non-Canadian would acquire control of the Company for the purposes of the Investment Act through the acquisition of common shares if the non-Canadian acquired a majority of the common shares of the Company. Further, the acquisition of less than a majority but one third or more of the common shares of the Company 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 acquirer through the ownership of common shares.

For a direct acquisition that would result in an acquisition of control of the Company, subject to the exception for "WTO-investors" that are controlled by persons who are resident in World Trade Organization ("WTO") member nations, a proposed investment would be reviewable where the value of the acquired assets is CAD $5 million or more, 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.

For a proposed indirect acquisition that would result in an acquisition of control of the Company through the acquisition of a non-Canadian parent entity, the investment would be reviewable where (a) the value of the Canadian assets acquired in the transaction is CAD $50 million or more, or (b) the value of the Canadian assets is greater than 50% of the value of all of the assets acquired in the transaction and the value of the Canadian assets is CAD $5 million or more.

In the case of a direct acquisition by or from a "WTO investor", the threshold is significantly higher, and is adjusted for inflation each year. The 2010 threshold is CAD$299 million. Other than the exception noted below, an indirect acquisition involving a WTO investor is not reviewable under the Investment Act.

The higher WTO threshold for direct investments and the exemption for indirect investments do not apply where the relevant Canadian business is carrying on the following businesses that have been deemed to be sensitive: (i) the production of uranium and the ownership of an interest in a producing uranium property in Canada; (ii) the provision of any "financial service"; (iii) the provision of any "transportation service"; or (iv) a "cultural business".

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Certain transactions relating to common shares of the Company are exempt from the Investment Act, including

(a) acquisition of common shares of the Company by a person in the ordinary course of that person's business as a trader or dealer in securities,

(b) 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 on the Investment Act, and

(c) 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 common shares, remained unchanged.

E. Taxation

Canadian Federal Income Tax Consequences

The following, in management's understanding, summarizes the material Canadian federal income tax consequences generally applicable to the holding and disposition of common shares by a holder (in this summary, a "U.S. Holder") who, (a) for the purposes of the Income Tax Act (Canada) (the "Tax Act"), is not resident in Canada, deals at arm's length with Quartz, holds the common shares as capital property and does not use or hold the common shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) for the purposes of the Canada-United States Income Tax Convention, 1980 (the "Treaty"), is a resident solely of the United States, has never been a resident of Canada, and has not held or used (and does not hold or use) common shares in connection with a permanent establishment or fixed base in Canada. This summary does not apply to traders or dealers in securities, limited liability companies, tax-exempt entities, insurers, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), or any other U.S. Holder to which special considerations apply.

This summary is based on the current provisions of the Tax Act, including all regulations thereunder, the Treaty, all proposed amendments to the Tax Act, the regulations and the Treaty publicly announced by the Government of Canada to the date hereof, and the current administrative practices of the Canada Revenue Agency. It has been assumed that all currently proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or administrative practice, although no assurances can be given in these respects. This summary does not take into account provincial, U.S., state or other foreign income tax law or practice. The tax consequences to any particular U.S. Holder will vary according to the status of that holder as an individual, trust, corporation, partnership or other entity, the jurisdictions in which that holder is subject to taxation, and generally according to that holder's particular circumstances. Accordingly, this summary is not, and is not to be construed as, Canadian tax advice to any particular U.S. Holder.

Dividends

Dividends paid or deemed to be paid to a U.S. Holder by Quartz will be subject to Canadian withholding tax. Under the Treaty, the rate of withholding tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross amount of the dividend (or 5% if the U.S. Holder is a corporation and beneficially owns at least 10% of Quartz's voting shares). Quartz will be required to withhold the applicable withholding tax from any such dividend and remit it to the Canadian government for the U.S. Holder's account.

Disposition

A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of a common share in the open market unless the share is "taxable Canadian property" to the holder thereof and the U.S. Holder is not entitled to relief under the Treaty. A common share will be taxable Canadian property to a U.S. Holder if, at any time during the 60 months preceding the disposition, the U.S. Holder or persons with whom the U.S. Holder did not deal at arm's length alone or together owned, or had rights to acquire, 25% or more of Quartz's issued shares of any class or series.

A U.S. Holder whose common shares do constitute taxable Canadian property, and who might therefore be liable for Canadian income tax under the Tax Act, will generally be relieved from such liability under the Treaty unless the value of such shares at the time of disposition is derived principally from real property situated in Canada.

United States Tax Consequences

United States Federal Income Tax Consequences

The following is, in management's understanding, 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 should 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.

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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.

U.S. Holders

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

Distribution on Common Shares of Quartz

In general, U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of Quartz are required to include in gross income for United States federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that Quartz has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of Quartz, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the common shares and thereafter as gain from the sale or exchange of property. Subject to the passive foreign investment company rules discussed below, preferential tax rates for long-term capital gains are applicable to a U.S. Holder which 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 limited 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.

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

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of Quartz may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to two specific classes of income: "passive income, and "general income". Dividends distributed by Quartz will generally constitute "passive income" for these purposes. Prior to January 1, 2007, there were nine specific classes of income rather than the two stated here. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and U.S. Holders of common shares of Quartz should consult their own tax advisors regarding their individual circumstances.

Disposition of Common Shares of Quartz

In general, U.S. Holders will recognize gain or loss upon the sale of common shares of Quartz equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder's tax basis in the common shares of Quartz. Unless Quartz is a passive foreign investment company, as defined below, preferential tax rates apply to long-term capital gains of U.S. Holders which 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 which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

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

Passive Foreign Investment Company

United States income tax law contains rules governing "passive foreign investment companies" ("PFIC") which can have significant tax effects on U.S. Holders of foreign corporations. These rules do not apply to non-U.S. Holders. Section 1297 of the Code defines a PFIC as a corporation that is not formed in the United States if, for any taxable year, either (i) 75% or more of its gross income is "passive income," which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of "passive income" is 50% or more. In the event that Quartz qualifies as a PFIC for the fiscal year ending July 31, 2009, or 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).

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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 Quartz 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.

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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 as ordinary income 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 advisor 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 dilution 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 or the lower tier PFIC). 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.

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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.

Controlled Foreign Corporation

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

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

Exhibits attached to this Form 20-F are also available for viewing on EDGAR at www.sec.gov, or at the offices of the Company, Suite 1020 - 800 West Pender Street, Vancouver, British Columbia V6C 2V6 or on request of the Company at 604-684-6365, attention: Investor Relations Department. Copies of the Company's Canadian GAAP financial statements and other continuous disclosure documents required under the British Columbia Securities Act are available for viewing on the internet at www.sedar.com.

I. Subsidiary Information

Not applicable.

ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A. Transaction Risk and Currency Risk Management

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

B. Exchange Rate Sensitivity

The Company is exposed to foreign exchange risk as its operating expenses are primarily incurred in Canadian dollars. The results of the Company's operations are subject to currency transaction risk and currency translation risk. The operating results and financial position of the Company are reported in United States dollars in the Company's consolidated financial statements. The fluctuation of the Canadian dollar in relation to the United States dollar will consequently have an impact upon the losses incurred by the Company and may also affect the value of the Company's assets and the amount of shareholders' equity.

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The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

As at July 31, 2010 the Company held financial assets and financial liabilities denominated in Canadian dollars in the equivalent amount of US dollars of $252,398 (2009 - $132,008) and $9,864 (2009 -$55,838), respectively.

C. Interest Rate Risk and Equity Price Risk

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

As at July 31, 2010 the Company held cash and cash equivalents in financial institutions in the amount of $251,240 (2009 - $391,040)

D. Commodity Price Risk

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

ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

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

Not applicable.

ITEM 15 CONTROLS AND PROCEDURES

The management of the Company is responsible for establishing and maintaining adequate internal controls over financial reporting. The Company's internal control system was designed to provide reasonable assurance to the Company's management and the board of directors regarding the preparation and fair presentation of published financial statements. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company's management, with the participation of the Chief Executive Officer and the Principal Accounting Officer, has evaluated the effectiveness of internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that internal control over financial reporting was effective as of July 31, 2010, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

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There have been no changes in the Company's internal control over financial reporting during the period covered by this report that could have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, with the participation of our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon that evaluation, our Chief Executive Officer and Principal Accounting Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed in reports that we file or submit under the Exchange Act, and to ensure that required information is gathered and communicated to the Company's management so that decisions can be made about timely disclosure of that information. While our Chief Executive Officer and our Principal Accounting Officer believe that our disclosure controls and procedures provide a reasonable level of assurance of effectiveness, they do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met.

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

The members of the audit committee are Brian F. Causey, T. Barry Coughlan and Gordon J. Fretwell. The Board of Directors has determined that Mr. Causey qualifies as a "financial expert" under the rules of the Securities and Exchange Commission, based on his education and experience. Mr. Causey is "independent", as that term is defined in section 803 of the NYSE Amex Company Guide. Mr. Causey is an accredited Chartered Accountant in Canada.

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

ITEM 16B CODE OF ETHICS

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

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

a)	Responsibly explore for and develop mineral resources;
b)	Be respectful of the environment;
c)	Be an industry leader and participate in industry organizations devoted to improving the industry;
d)	Be a strong and honest competitor;
e)	Be a responsible corporate citizen and contribute to the community;
f)	Deal fairly with our customers, suppliers and joint venture participants;
g)	Provide a safe and rewarding work environment; and
h)	Deliver value to shareholder.

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

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

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

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Services:	Year ended
	July 31, 2010	July 31, 2009
Audit Fees (1)	C$ 25,000	C$ 22,000
Audit Related Fees (2)	–	–
Tax Fees (3)	C$ 3,000	C$ 3,000
All Other Fees (4)	–	–
	C$ 28,000	C$ 25,000

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

From time to time, management of the Company recommends to and requests approval from the audit 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 SEC, and whether the services requested and the fees related to such services could impair the independence of the auditors. No material non-audit services were provided by the Company's auditors during the year ended July 31, 2010.

ITEM 16D EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

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

In the year ended July 31, 2010, the Company did not purchase any of its issued and outstanding common shares pursuant to any repurchase program or otherwise.

ITEM 16F CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

None.

ITEM 16G CORPORATE GOVERNANCE

Not applicable.

ITEM 17 FINANCIAL STATEMENTS

The following attached financial statements are incorporated herein:

(1) Report of the Independent Registered Public Accounting Firm on the consolidated balance sheets as at July 31, 2010 and 2009 and the consolidated statements of operations and deficit, and cash flows for each of the years in the three year period ended July 31, 2010;

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(2) Consolidated balance sheets as at July 31, 2010 and 2009;

(3)Consolidated statements of operations and shareholders’ equity for each of the years in the three year period ended July 31, 2010;

(4) Consolidated statements of cash flows for the periods referred to in (3) above;

(5) Notes to the consolidated financial statements.

ITEM 18 FINANCIAL STATEMENTS

Not applicable. See Item 17.

ITEM 19 EXHIBITS

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

Exhibit Number	Description of Exhibit	Note
1.1	Transition Application dated October 11, 2005	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2005, filed on January 10, 2006.
1.2	Notice of Articles dated October 11, 2005	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2005, filed on January 10, 2006.
1.3	Notice of Alteration of Articles dated October 11, 2005	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2005, filed on January 10, 2006.
1.4	Notice of Alteration dated February 17, 2006	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2006, filed on January 29, 2007.
1.5	Notice of Articles dated February 17, 2006	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2006, filed on January 29, 2007.
11.1	Code of Ethics	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2005, filed on January 10, 2006.
99.1	Audit Committee Charter	Incorporated by reference from our Annual Report on Form 20-F for the year ended July 31, 2005, filed on January 10, 2006.

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

Exhibit Number	Description of Exhibit
1.6	Articles
4.1	Quartz Mountain Resources Ltd. Stock Incentive Plan, approved by shareholders January 2007.
4.5	Geological and Management Services Agreement between Hunter Dickinson Inc. and the Company dated July 2, 2010
12.1	Section 302 Certification of the Chief Executive Officer

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Exhibit Number	Description of Exhibit
12.2	Section 302 Certification of the Principal Accounting Officer
13.1	Section 906 Certification of the Chief Executive Officer
13.2	Section 906 Certification of the Principal Accounting Officer
99.1	Consolidated balance sheets as at July 31, 2010 and 2009; consolidated statements of operations and shareholder's equity, and cash flows for each of the years in the three year period ended July 31, 2010, together with the Report of Independent Registered Public Accounting Firm thereon;

SIGNATURES

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

QUARTZ MOUNTAIN RESOURCES LTD.

/s/ Rene G Carrier

RENE G CARRIER

Director and President

Per:    Rene G Carrier

          President

Dated: September 30, 2010

37

EX-1.6

Incorporation number: BC0253743

QUARTZ MOUNTAIN RESOURCES LTD.
(the “Company”)

ARTICLES

ARTICLE 1 INTERPRETATION	2
ARTICLE 2 SHARES AND SHARE CERTIFICATES	2
ARTICLE 3 ISSUE OF SHARES	4
ARTICLE 4 SHARE REGISTERS	5
ARTICLE 5 SHARE TRANSFERS	5
ARTICLE 6 TRANSMISSION OF SHARES	6
ARTICLE 7 PURCHASE OF SHARES	7
ARTICLE 8 BORROWING POWERS	7
ARTICLE 9 ALTERATIONS	8
ARTICLE 10 MEETINGS OF SHAREHOLDERS	9
ARTICLE 11 PROCEEDINGS AT MEETINGS OF SHAREHOLDERS	11
ARTICLE 12 VOTES OF SHAREHOLDERS	15
ARTICLE 13 DIRECTORS	19
ARTICLE 14 ELECTION AND REMOVAL OF DIRECTORS	20
ARTICLE 15 ALTERNATE DIRECTORS	23
ARTICLE 16 POWERS AND DUTIES OF DIRECTORS	24
ARTICLE 17 DISCLOSURE OF INTEREST OF DIRECTORS	25
ARTICLE 18 PROCEEDINGS OF DIRECTORS	26
ARTICLE 19 EXECUTIVE AND OTHER COMMITTEES	28
ARTICLE 20 OFFICERS	30
ARTICLE 21 INDEMNIFICATION	31
ARTICLE 22 DIVIDENDS	32
ARTICLE 23 DOCUMENTS, RECORDS AND REPORTS	34
ARTICLE 24 NOTICES	34
ARTICLE 25 SEAL	36
ARTICLE 26 SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED SHARES	36

Authorized by Annual and Special General Meeting minutes held on January 25, 2006.
Notice of Alteration e-filed with the BC Registrar of Companies office on February 17, 2006 at 3:58 Pacific Time.

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ARTICLE 1

INTERPRETATION

Definitions

1.1                     In these Articles, unless the context otherwise requires:

(a)           “board of directors”, “directors” and “board” mean the directors or sole director of the Company for the time being;

(b)           “Act” means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;

(c)           “legal personal representative” means the personal or other legal representative of the shareholder;

(d)           “registered address” of a shareholder means the shareholder’s address as recorded in the central securities register;

(e)           “seal” means the seal of the Company, if any;

(f)           “share” means a share in the capital of the Company; and

(g)           “special majority” means the majority of votes described in §11.2 which is required to pass a special resolution.

Act and Interpretation Act Definitions Applicable

1.2                     The definitions in the Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and except as the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Act will prevail. If there is a conflict between these Articles and the Act, the Act will prevail.

ARTICLE 2

SHARES AND SHARE CERTIFICATES

Authorized Share Structure

2.1                     The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.

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Form of Share Certificate

2.2           Each share certificate issued by the Company must comply with, and be signed as required by, the Act.

Shareholder Entitled to Certificate or Acknowledgment

2.3           Each shareholder is entitled on request, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholder’s name or (b) a non-transferable written acknowledgment of the shareholder’s right to obtain such a share certificate, provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate or acknowledgment and delivery of a share certificate or acknowledgment for a share to one of several joint shareholders or to one of the shareholders’ duly authorized agents will be sufficient delivery to all.

Delivery by Mail

2.4           Any share certificate or non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

Replacement of Worn Out or Defaced Certificate or Acknowledgement

2.5           If a share certificate or a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate is worn out or defaced, the Company must, on production of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as are deemed fit:

(a)           cancel the share certificate or acknowledgment; and

(b)           issue a replacement share certificate or acknowledgment.

Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment

2.6           If a share certificate or a non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate is lost, stolen or destroyed, the Company must issue a replacement share certificate or acknowledgment, as the case may be, to the person entitled to that share certificate or acknowledgment, if it receives:

(a)           proof satisfactory to it of the loss, theft or destruction; and

(b)           any indemnity the directors consider adequate.

Splitting Share Certificates

2.7                     If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

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Certificate Fee

2.8                     There must be paid to the Company, in relation to the issue of any share certificate under §2.5, §2.6 or §2.7, the amount, if any, not exceeding the amount prescribed under the Act, determined by the directors.

Recognition of Trusts

2.9                     Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

ARTICLE 3

ISSUE OF SHARES

Directors Authorized

3.1                     Subject to the Act and the rights of the holders of issued shares of the Company, the Company may allot, issue, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the consideration (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

Commissions and Discounts

3.2                     The Company may at any time pay a reasonable commission or allow a reasonable discount to any person in consideration of that person’s purchase or agreement to purchase shares of the Company from the Company or any other person’s procurement or agreement to procure purchasers for shares of the Company.

Brokerage

3.3                     The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

Share Purchase Warrants and Rights

3.4                     Subject to the Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

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ARTICLE 4

SHARE REGISTERS

Central Securities Register

4.1                     As required by and subject to the Act, the Company must maintain in British Columbia a central securities register and may appoint an agent to maintain such register. The directors may appoint one or more agents, including the agent appointed to keep the central securities register, as transfer agent for shares or any class or series of shares and the same or another agent as registrar for shares or such class or series of shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

ARTICLE 5

SHARE TRANSFERS

Registering Transfers

5.1                     A transfer of a share must not be registered unless:

(a)           except as exempted by the Act, a duly signed proper instrument of transfer in respect of the share has been received by the Company;

(b)           if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate has been surrendered to the Company; and

(c)           if a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgment has been surrendered to the Company.

Form of Instrument of Transfer

5.2                     The instrument of transfer in respect of any share must be either in the form, if any, on the back of the Company’s share certificates of that class or series or in some other form that may be approved by the directors.

Transferor Remains Shareholder

5.3                     Except to the extent that the Act otherwise provides, the transferor of a share is deemed to remain the holder of it until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

Signing of Instrument of Transfer

5.4                     If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

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(a)           in the name of the person named as transferee in that instrument of transfer; or

(b)           if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

Enquiry as to Title Not Required

5.5                     Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares transferred, of any interest in such shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

Transfer Fee

5.6                     There must be paid to the Company, in relation to the registration of a transfer, the amount, if any, determined by the directors.

ARTICLE 6

TRANSMISSION OF SHARES

Legal Personal Representative Recognized on Death

6.1                     In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the Company shall receive the documentation required by the Act.

Rights of Legal Personal Representative

6.2                     The legal personal representative of a shareholder has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Act and the directors have been deposited with the Company.

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ARTICLE 7

PURCHASE OF SHARES

Company Authorized to Purchase Shares

7.1                     Subject to §7.2, to the special rights and restrictions attached to the shares of any class or series and to the Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

Purchase When Insolvent

7.2                     The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that:

(a)           the Company is insolvent; or

(b)           making the payment or providing the consideration would render the Company insolvent.

Sale and Voting of Purchased Shares

7.3                     If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

(a)           is not entitled to vote the share at a meeting of its shareholders;

(b)           must not pay a dividend in respect of the share; and

(c)           must not make any other distribution in respect of the share.

ARTICLE 8

BORROWING POWERS

8.1                     The Company, if authorized by the directors, may:

(a)           borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(b)           issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as the directors consider appropriate;

(c)           guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

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(d)           mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

ARTICLE 9

ALTERATIONS

Alteration of Authorized Share Structure

9.1                     Subject to §9.2 and the Act, the Company may by ordinary resolution (or a resolution of the directors in the case of §9.1(c) or §9.1(f)):

(a)           create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

(b)           increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;

(c)           subdivide or consolidate all or any of its unissued, or fully paid issued, shares; (d) if the Company is authorized to issue shares of a class of shares with par value:

(i)           decrease the par value of those shares; or

(ii)          if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

(e)           change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;

(f)           alter the identifying name of any of its shares; or

(g)           otherwise alter its shares or authorized share structure when required or permitted to do so by the Act where it does not specify a special resolution.

Special Rights and Restrictions

9.2                     Subject to the Act and in particular those provisions relating to the rights of holders of outstanding shares to vote if their rights are prejudiced or interfered with, the Company may by ordinary resolution:

(a)           create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or

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(b)           vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued, and alter its Notice of Articles accordingly.

9.3                     To the extent permitted by and subject to the Act, if the special rights and restrictions attached to a class or series of shares permit the directors to do so, the directors may:

(a)           attach special rights or restrictions to the shares of any series of shares; or

(b)           alter any special rights or restrictions attached to the shares of any class or series of shares.

Change of Name

9.4                     The Company may by resolution of the directors authorize an alteration of its Notice of Articles in order to change its name or adopt or change any translation of that name.

Other Alterations

9.5                     If the Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by ordinary resolution alter these Articles.

ARTICLE 10

MEETINGS OF SHAREHOLDERS

Annual General Meetings

10.1                   Unless an annual general meeting is deferred or waived in accordance with the Act, the Company must hold an annual general meeting at least once in each calendar year and not more than 15 months after its last annual reference date.

Resolution Instead of Annual General Meeting

10.2                   If all the shareholders who are entitled to vote at an annual general meeting consent in writing by a unanimous resolution under the Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this §10.2, select as the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

Calling of Meetings of Shareholders

10.3                   The directors may, whenever they think fit, call a meeting of shareholders.

Notice for Meetings of Shareholders

10.4                   The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

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(a)           if the Company is a public company, 21 days;

(b)           otherwise, 10 days.

Record Date for Notice

10.5                   The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

(a)           if the Company is a public company, 21 days;

(b)           otherwise, 10 days.

If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

Record Date for Voting

10.6                   The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

Failure to Give Notice and Waiver of Notice

10.7                   The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

Notice of Special Business at Meetings of Shareholders

10.8                   If a meeting of shareholders is to consider special business within the meaning of §11.1, the notice of meeting must:

(a)           state the general nature of the special business; and

(b)           if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

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(i)           at the Company’s records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and

(ii)          during statutory business hours on any one or more specified days before the day set for the holding of the meeting.

Place of Meetings

10.9                   In addition to any location in British Columbia, any general meeting may be held in any location outside British Columbia approved by a resolution of the directors.

ARTICLE 11

PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

Special Business

11.1                   At a meeting of shareholders, the following business is special business:

(a)           at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(b)           at an annual general meeting, all business is special business except for the following:

(i)           business relating to the conduct of or voting at the meeting;

(ii)          consideration of any financial statements of the Company presented to the meeting;

(iii)         consideration of any reports of the directors or auditor;

(iv)          the setting or changing of the number of directors;

(v)           the election or appointment of directors;

(vi)          the appointment of an auditor;

(vii)         the setting of the remuneration of an auditor;

(viii)        business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;

(ix)          any other business which, under these Articles or the Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

Special Majority

11.2                   The majority of votes required to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

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Quorum

11.3                   Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 10% of the issued shares entitled to be voted at the meeting.

One Shareholder May Constitute Quorum

11.4                   If there is only one shareholder entitled to vote at a meeting of shareholders:

               (a)            the quorum is one person who is, or who represents by proxy, that shareholder, and

               (b)            that shareholder, present in person or by proxy, may constitute the meeting.

Other Persons May Attend

11.5                   The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and every other person invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

Requirement of Quorum

11.6                   No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

Lack of Quorum

11.7                   If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

(a)           in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

(b)           in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

Lack of Quorum at Succeeding Meeting

11.8                   If, at the meeting to which the meeting referred to in §11.7(b) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

Chair

11.9                   The following individual is entitled to preside as chair at a meeting of shareholders:

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(a)           the chair of the board, if any; or

(b)           if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any.

Selection of Alternate Chair

11.10                  If, at any meeting of shareholders, there is no chair of the board or president present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present may choose either one of their number or the solicitor of the Company to be chair of the meeting. If all of the directors present decline to take the chair or fail to so choose or if no director is present or the solicitor of the Company declines to take the chair, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

Adjournments

11.11                   The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

Notice of Adjourned Meeting

11.12                   It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

Decisions by Show of Hands or Poll

11.13                   Subject to the Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

Declaration of Result

11.14                   The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under §11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

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Motion Need Not be Seconded

11.15                   No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

Casting Vote

11.16                   In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

Manner of Taking Poll

11.17                   Subject to §11.18, if a poll is duly demanded at a meeting of shareholders:

(a)           the poll must be taken:

(i)           at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

(ii)          in the manner, at the time and at the place that the chair of the meeting directs;

(b)           the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

(c)           the demand for the poll may be withdrawn by the person who demanded it.

Demand for Poll on Adjournment

11.18                   A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

Chair Must Resolve Dispute

11.19                   In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is final and conclusive.

Casting of Votes

11.20                   On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

Demand for Poll

11.21                   No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

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Demand for Poll Not to Prevent Continuance of Meeting

11.22                  The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

Retention of Ballots and Proxies

11.23                  The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

ARTICLE 12

VOTES OF SHAREHOLDERS

Number of Votes by Shareholder or by Shares

12.1                   Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under §12.3:

(a)           on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

(b)           on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

Votes of Persons in Representative Capacity

12.2                   A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

Votes by Joint Holders

12.3                   If there are joint shareholders registered in respect of any share:

(a)           any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

(b)           if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

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Legal Personal Representatives as Joint Shareholders

12.4                   Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of §12.3, deemed to be joint shareholders.

Representative of a Corporate Shareholder

12.5                   If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

(a)           for that purpose, the instrument appointing a representative must:

(i)           be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(ii)          be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting;

(b)           if a representative is appointed under this §12.5:

(i)           the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

(ii)          the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

Proxy Provisions Do Not Apply to All Companies

12.6                   If and for so long as the Company is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply, then §12.7 to §12.15 are not mandatory, however the directors of the Company are authorized to apply all or part of such sections or to adopt alternative procedures for proxy form, deposit and revocation procedures to the extent that the directors deem necessary in order to comply with securities laws applicable to the Company.

Appointment of Proxy Holders

12.7                   Every shareholder of the Company entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more (but not more than two) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

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Alternate Proxy Holders

12.8                   A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

When Proxy Holder Need Not Be Shareholder

12.9                   A person must not be appointed as a proxy holder unless the person is a shareholder, although a person who is not a shareholder may be appointed as a proxy holder if:

(a)           the person appointing the proxy holder is a corporation or a representative of a corporation appointed under §12.5;

(b)           the Company has at the time of the meeting for which the proxy holder is to be appointed only one shareholder entitled to vote at the meeting; or

(c)           the shareholders present in person or by proxy at and entitled to vote at the meeting for which the proxy holder is to be appointed, by a resolution on which the proxy holder is not entitled to vote but in respect of which the proxy holder is to be counted in the quorum, permit the proxy holder to attend and vote at the meeting.

Deposit of Proxy

12.10                  A proxy for a meeting of shareholders must:

(a)           be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

(b)           unless the notice provides otherwise, be provided, at the meeting, to the chair of the meeting or to a person designated by the chair of the meeting.

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages, including through Internet voting or by email if permitted by the notice calling the meeting or the information circular for the meeting.

Validity of Proxy Vote

12.11                  A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

(a)           at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(b)           by the chair of the meeting, before the vote is taken.

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Form of Proxy

12.12                  A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

[name of company]
(the “Company”)

The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if given in respect of all shares registered in the name of the shareholder): _____________________

Signed [month, day, year]

_________________________________
[Signature of shareholder]

_________________________________
[Name of shareholder—printed]

Revocation of Proxy

12.13                  Subject to §12.14, every proxy may be revoked by an instrument in writing that is:

(a)           received at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

(b)           provided, at the meeting, to the chair of the meeting.

Revocation of Proxy Must Be Signed

12.14                  An instrument referred to in §12.13 must be signed as follows:

(a)           if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or his or her legal personal representative or trustee in bankruptcy;

(b)           if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under §12.5.

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Production of Evidence of Authority to Vote

12.15                  The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

ARTICLE 13

DIRECTORS

First Directors; Number of Directors

13.1                   The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Act. The number of directors, excluding additional directors appointed under §14.8, is set at:

(a)           subject to §(b) and §(c), the number of directors that is equal to the number of the Company’s first directors;

(b)           if the Company is a public company, the greater of three and the most recently set of:

(i)           the number of directors set by a resolution of the directors (whether or not previous notice of the resolution was given); and

(ii)          the number of directors in office pursuant to §14.4;

(c)           if the Company is not a public company, the most recently set of:

(i)           the number of directors set by a resolution of the directors (whether or not previous notice of the resolution was given); and

(ii)           the number of directors in office pursuant to §14.4.

Change in Number of Directors

13.2                   If the number of directors is set under §13.1(b)(i) or §13.1(c)(i):

(a)           the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors up to that number; or

(b)           if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of directors up to that number then the directors may appoint directors to fill those vacancies.

Directors’ Acts Valid Despite Vacancy

13.3                     An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

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Qualifications of Directors

13.4                   A director is not required to hold a share as qualification for his or her office but must be qualified as required by the Act to become, act or continue to act as a director.

Remuneration of Directors

13.5                   The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders.

Reimbursement of Expenses of Directors

13.6                   The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.

Special Remuneration for Directors

13.7                   If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, he or she may be paid remuneration fixed by the directors, or at the option of the directors, fixed by ordinary resolution, and such remuneration will be in addition to any other remuneration that he or she may be entitled to receive.

Gratuity, Pension or Allowance on Retirement of Director

13.8                   Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

ARTICLE 14

ELECTION AND REMOVAL OF DIRECTORS

Election at Annual General Meeting

14.1                   At every annual general meeting and in every unanimous resolution contemplated by §10.2:

(a)           the shareholders entitled to vote at the annual general meeting for the election of directors must elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and

all the directors cease to hold office immediately before the election or appointment of directors under §(a), but are eligible for re-election or re-appointment.

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Consent to be a Director

14.2                 No election, appointment or designation of an individual as a director is valid unless:

(a)           that individual consents to be a director in the manner provided for in the Act;

(b)           that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or

(c)           with respect to first directors, the designation is otherwise valid under the Act.

Failure to Elect or Appoint Directors

14.3                 If:

(a)           the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by §10.2, on or before the date by which the annual general meeting is required to be held under the Act; or

(b)           the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by §10.2, to elect or appoint any directors;

then each director then in office continues to hold office until the earlier of:

(c)           the date on which his or her successor is elected or appointed; and

(d)           the date on which he or she otherwise ceases to hold office under the Act or these Articles.

Places of Retiring Directors Not Filled

14.4                   If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles but their term of office shall expire when new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

Directors May Fill Casual Vacancies

14.5                   Any casual vacancy occurring in the board of directors may be filled by the directors.

Remaining Directors Power to Act

14.6                   The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Act, for any other purpose.

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Shareholders May Fill Vacancies

14.7                   If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

Additional Directors

14.8                   Notwithstanding §13.1 and §13.2, between annual general meetings or unanimous resolutions contemplated by §10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this §14.8 must not at any time exceed:

(a)           one-third of the number of first directors, if, at the time of the appointments, one or more of the first directors have not yet completed their first term of office; or

(b)           in any other case, one-third of the number of the current directors who were elected or appointed as directors other than under this §14.8.

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under §14.1(a), but is eligible for re-election or re-appointment.

Ceasing to be a Director

14.9                   A director ceases to be a director when:

(a)           the term of office of the director expires;

(b)           the director dies;

(c)           the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or

(d)           the director is removed from office pursuant to §14.10 or §14.11.

Removal of Director by Shareholders

14.10                  The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

Removal of Director by Directors

14.11                  The directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

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ARTICLE 15

ALTERNATE DIRECTORS

Appointment of Alternate Director

15.1                   Any director (an “appointor”) may by notice in writing received by the Company appoint any person (an “appointee”) who is qualified to act as a director to be his or her alternate to act in his or her place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to his or her appointor within a reasonable time after the notice of appointment is received by the Company.

Notice of Meetings

15.2                   Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which his or her appointor is a member and to attend and vote as a director at any such meetings at which his or her appointor is not present.

Alternate for More than One Director Attending Meetings

15.3                   A person may be appointed as an alternate director by more than one director, and an alternate director:

(a)           will be counted in determining the quorum for a meeting of directors once for each of his or her appointors and, in the case of an appointee who is also a director, once more in that capacity;

(b)           has a separate vote at a meeting of directors for each of his or her appointors and, in the case of an appointee who is also a director, an additional vote in that capacity;

(c)           will be counted in determining the quorum for a meeting of a committee of directors once for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a directors, once more in that capacity; and

(d)           has a separate vote at a meeting of a committee of directors for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, an additional vote in that capacity.

Consent Resolutions

15.4                   Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her appointor any resolutions to be consented to in writing.

Alternate Director an Agent

15.5                   Every alternate director is deemed to be the agent of his or her appointor.

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Revocation or Amendment of Appointment of Alternate Director

15.6                   An appointor may at any time, by notice in writing received by the Company, revoke or amend the terms of the appointment of an alternate director appointed by him or her.

Ceasing to be an Alternate Director

15.7                   The appointment of an alternate director ceases when:

(a)           his or her appointor ceases to be a director and is not promptly re-elected or reappointed;

(b)           the alternate director dies;

(c)           the alternate director resigns as an alternate director by notice in writing provided to the Company or a lawyer for the Company;

(d)           the alternate director ceases to be qualified to act as a director; or

(e)           the term of his appointment expires, or his or her appointor revokes the appointment of the alternate directors.

Remuneration and Expenses of Alternate Director

15.8                   The Company may reimburse an alternate director for the reasonable expenses that would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.

ARTICLE 16

POWERS AND DUTIES OF DIRECTORS

Powers of Management

16.1                   The directors must, subject to the Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Act or by these Articles, required to be exercised by the shareholders of the Company. Notwithstanding the generality of the foregoing, the directors may set the remuneration of the auditor of the Company.

Appointment of Attorney of Company

16.2                   The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

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ARTICLE 17

DISCLOSURE OF INTEREST OF DIRECTORS

Obligation to Account for Profits

17.1                   A director or senior officer who holds a disclosable interest (as that term is used in the Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Act.

Restrictions on Voting by Reason of Interest

17.2                   A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

Interested Director Counted in Quorum

17.3                   A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

Disclosure of Conflict of Interest or Property

17.4                   A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Act.

Director Holding Other Office in the Company

17.5                   A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

No Disqualification

17.6                   No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

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Professional Services by Director or Officer

17.7                   Subject to the Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

Director or Officer in Other Corporations

17.8                   A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.

ARTICLE 18

PROCEEDINGS OF DIRECTORS

Meetings of Directors

18.1                   The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

Voting at Meetings

18.2                   Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting has a second or casting vote.

Chair of Meetings

18.3                   The following individual is entitled to preside as chair at a meeting of directors:

(a)           the chair of the board, if any;

(b)           in the absence of the chair of the board, the president, if any, if the president is a director; or

(c)           any other director chosen by the directors if:

(i)           neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes after the time set for holding the meeting;

(ii)          neither the chair of the board nor the president, if a director, is willing to chair the meeting; or

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(iii)         the chair of the board and the president, if a director, have advised the secretary, if any, or any other director, that they will not be present at the meeting.

Meetings by Telephone or Other Communications Medium

18.4                   A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone , are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who participates in a meeting in a manner contemplated by this §18.4 is deemed for all purposes of the Act and these Articles to be present at the meeting and to have agreed to participate in that manner.

Calling of Meetings

18.5                   A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

Notice of Meetings

18.6                   Other than for meetings held at regular intervals as determined by the directors pursuant to §18.1, 48 hours’ notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors by any method set out in §24.1 or orally or by telephone.

When Notice Not Required

18.7                   It is not necessary to give notice of a meeting of the directors to a director if:

(a)           the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or

(b)           the director has waived notice of the meeting.

Meeting Valid Despite Failure to Give Notice

18.8                   The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director, does not invalidate any proceedings at that meeting.

Waiver of Notice of Meetings

18.9                   Any director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director.

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Quorum

18.10                  The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be a majority of the directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

Validity of Acts Where Appointment Defective

18.11                  Subject to the Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

Consent Resolutions in Writing

18.12                  A resolution of the directors or of any committee of the directors may be passed without a meeting:

(a)           in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or

(b)           in the case of a resolution to approve a contract or transaction in respect of which a director has disclosed that he or she has or may have a disclosable interest, if each of the other directors who are entitled to vote on the resolution consents to it in writing.

18.13                  A consent in writing under this Article may be by signed document, fax, email or any other method of transmitting legibly recorded messages. A consent in writing may be in two or more counterparts which together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the directors passed in accordance with this §18.12 is effective on the date stated in the consent in writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

ARTICLE 19

EXECUTIVE AND OTHER COMMITTEES

Appointment and Powers of Executive Committee

19.1                   The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors’ powers, except:

(a)           the power to fill vacancies in the board of directors;

(b)           the power to remove a director;

(c)           the power to change the membership of, or fill vacancies in, any committee of the directors; and

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(d)           such other powers, if any, as may be set out in the resolution or any subsequent directors’ resolution.

Appointment and Powers of Other Committees

19.2                   The directors may, by resolution:

(a)           appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;

(b)           delegate to a committee appointed under §(a) any of the directors’ powers, except:

(i)           the power to fill vacancies in the board of directors;

(ii)          the power to remove a director;

(iii)         the power to change the membership of, or fill vacancies in, any committee of the directors; and

(iv)          the power to appoint or remove officers appointed by the directors; and

(c)           make any delegation referred to in §(b) subject to the conditions set out in the resolution or any subsequent directors’ resolution.

Obligations of Committees

19.3                   Any committee appointed under §19.1 or §19.2, in the exercise of the powers delegated to it, must:

(a)           conform to any rules that may from time to time be imposed on it by the directors; and

(b)           report every act or thing done in exercise of those powers at such times as the directors may require.

Powers of Board

19.4                   The directors may, at any time, with respect to a committee appointed under §19.1 or §19.2:

(a)           revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;

(b)           terminate the appointment of, or change the membership of, the committee; and

(c)           fill vacancies in the committee.

Committee Meetings

19.5                   Subject to §19.3(a) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under §19.1 or §19.2:

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(a)           the committee may meet and adjourn as it thinks proper;

(b)           the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;

(c)           a majority of the members of the committee constitutes a quorum of the committee; and

(d)           questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.

ARTICLE 20

OFFICERS

Directors May Appoint Officers

20.1                   The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

Functions, Duties and Powers of Officers

20.2                   The directors may, for each officer:

(a)           determine the functions and duties of the officer;

(b)           entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and

(c)           revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.

Qualifications

20.3                   No person may be appointed as an officer unless that person is qualified in accordance with the Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as a managing director must be a director. Any other officer need not be a director.

Remuneration and Terms of Appointment

20.4                   All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.

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ARTICLE 21

INDEMNIFICATION

Definitions

21.1                     In this Article 21:

(a)           “eligible party” means an individual who:

(i)           is or was a director or officer of the Company;

(ii)          is or was a director or officer of another corporation

(A)           at a time when the corporation is or was an affiliate of the Company, or

(B)           at the request of the Company; or

(iii)         at the request of the Company, is or was, or holds or held a position equivalent to that of, a director or officer of a partnership, trust, joint venture or other unincorporated entity;

(b)           “eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;

(c)           “eligible proceeding” means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which a director or former director of the Company or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director of the Company:

(i)           is or may be joined as a party; or

(ii)          is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;

and shall include any other proceeding or action contemplated by the Act; and

(d)           “expenses” has the meaning set out in the Act and includes costs, charges and expenses, including legal and other fees, but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding.

Mandatory Indemnification of Directors and Former Directors

21.2                   Subject to the Act, the Company must indemnify a director or former director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director or officer is deemed to have contracted with the Company on the terms of the indemnity contained in this §21.2.

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Indemnification of Other Persons

21.3                   Subject to any restrictions in the Act, the Company may agree to indemnify and may indemnify any person (including an eligible party) against eligible penalties and pay expenses incurred in connection with the performance of services by that person for the Company.

Authority to Advance Expenses

21.4                   The Company may advance expenses to an eligible party to the extent permitted by and in accordance with the Act.

Non-Compliance with Act

21.5                   Subject to the Act, the failure of a director or officer of the Company to comply with the Act or these Articles does not, of itself, invalidate any indemnity to which he or she is entitled under this Part.

Company May Purchase Insurance

21.6                   The Company may purchase and maintain insurance for the benefit of any eligible party person (or his or her heirs or legal personal representatives) against any liability incurred by him or her as such director, officer or person who holds or held such equivalent position.

ARTICLE 22

DIVIDENDS

Payment of Dividends Subject to Special Rights

22.1                   The provisions of this Article 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

Declaration of Dividends

22.2                   Subject to the Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

Record Date

22.3                   The directors must set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months.

Manner of Paying Dividend

22.4                   A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

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Settlement of Difficulties

22.5                   If any difficulty arises in regard to a distribution under §22.4, the directors may settle the difficulty as they deem advisable, and, in particular, may:

(a)           set the value for distribution of specific assets;

(b)           determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and

(c)           vest any such specific assets in trustees for the persons entitled to the dividend.

When Dividend Payable

22.6                   Any dividend may be made payable on such date as is fixed by the directors.

Dividends to be Paid in Accordance with Number of Shares

22.7                   All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

Receipt by Joint Shareholders

22.8                   If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

Dividend Bears No Interest

22.9                   No dividend bears interest against the Company.

Fractional Dividends

22.10                  If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

Payment of Dividends

22.11                  Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the address of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

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Capitalization of Surplus

22.12                  Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the surplus or any part of the surplus.

ARTICLE 23

DOCUMENTS, RECORDS AND REPORTS

Recording of Financial Affairs

23.1                   The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Act.

Inspection of Accounting Records

23.2                   Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

ARTICLE 24

NOTICES

Method of Giving Notice

24.1                   Unless the Act or these Articles provide otherwise, a notice, statement, report or other record required or permitted by the Act or these Articles to be sent by or to a person may be sent by:

(a)           mail addressed to the person at the applicable address for that person as follows:

(i)           for a record mailed to a shareholder, the shareholder’s registered address;

(ii)          for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class;

(iii)         in any other case, the mailing address of the intended recipient;

(b)           delivery at the applicable address for that person as follows, addressed to the person:

(i)           for a record delivered to a shareholder, the shareholder’s registered address;

(ii)          for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class;

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(iii)         in any other case, the delivery address of the intended recipient;

(c)           sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;

(d)           sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class;

(e)           physical delivery to the intended recipient.

Deemed Receipt of Mailing

24.2                   A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in §24.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

Certificate of Sending

24.3                   A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required by §24.1, prepaid and mailed or otherwise sent as permitted by §24.1 is conclusive evidence of that fact.

Notice to Joint Shareholders

24.4                   A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share.

Notice to Trustees and Personal Representatives

24.5                   A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

(a)           mailing the record, addressed to them:

(i)           by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and

(ii)          at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or

(b)           if an address referred to in §(a)(ii) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.

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ARTICLE 25

SEAL

Who May Attest Seal

25.1                   Except as provided in §25.2 and §25.3, the Company’s seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

(a)           any two directors;

(b)           any officer, together with any director;

(c)           if the Company only has one director, that director; or

(d)           any one or more directors or officers or persons as may be determined by the directors.

Sealing Copies

25.2                   For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite §25.1, the impression of the seal may be attested by the signature of any director or officer.

Mechanical Reproduction of Seal

25.3                   The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and the chair of the board or any senior officer together with the secretary, treasurer, secretary-treasurer, an assistant secretary, an assistant treasurer or an assistant secretary-treasurer may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

ARTICLE 26

SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED SHARES

Special Rights and Restrictions

26.1                   The Preferred shares without par value shall have attached thereto the following special rights and restrictions:

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(a)           The holders of the Preferred shares shall be entitled to receive notices of and to attend and vote at all Meetings of the shareholders of the Company in the same manner and to the same extent as are the holders of the common shares;

(b)           The holders of the Preferred shares shall be entitled to receive, and the Company shall pay thereon as and when declared by the board of directors out of the monies of the Company properly applicable to the payment of dividends, dividends which shall be in the amounts and upon the conditions that shall have been agreed upon by the board of directors at the time of issuance and sale of each such share. More specifically, the directors of the Company shall be entitled, upon agreeing to sell a Preferred share, to contract as to the rate of dividend which will be paid on the share, if any, how often the dividends are to be paid, whether they are to be accumulative and whether the rate is fixed for the life of the share or shall be subject to declaration by the board of directors each year.

(c)           The holders of the Preferred shares shall be entitled to exchange them for Common shares in the capital of the Company; provided that when the directors agree to the issuance of any Preferred shares they shall be entitled to specify the terms, conditions and rates during which and upon which the holders of these Preferred shares subject to such specifications shall be entitled to exercise these conversion privileges.

(d)           The Company may, upon giving notice as hereinafter provided, redeem the whole or any part of the Preferred shares on payment for each share to be redeemed of the amount paid up thereon, together with all dividends declared thereon and unpaid; in case a part only of the then outstanding Preferred shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot in such manner as the directors in their discretion shall decide or, if the directors so determine, may be redeemed pro rata, disregarding fractions, and the directors may make such adjustments as may be necessary to avoid the redemption of fractional parts of shares; not less than thirty (30) days' notice in writing of such redemption shall be given by mailing such notice to the registered holders of the shares to be redeemed, specifying the date and place or places of redemption; if notice of any such redemption be given by the Company in the manner aforesaid and an amount sufficient to redeem the shares be deposited with any trust company or chartered bank in Canada as specified in the notice on or before the date fixed for redemption, dividends on the Preferred shares to be redeemed shall cease after the date so fixed for redemption and the holders thereof shall thereafter have no rights against the Company in respect thereof except, upon the surrender of certificates for such shares, to receive payment therefor out of the money so deposited; after the redemption price of such shares has been deposited with any trust company or chartered bank in Canada, as aforesaid, notice shall be given to the holders of any Preferred shares called for redemption who have failed to present the certificates representing such shares within two (2) months of the date specified for redemption that the money has been so deposited and may be obtained by the holders of the said Preferred shares upon presentation of the certificates representing such shares called for redemption at the said trust company or chartered bank. The Company will redeem such Preferred shares at the price so specified, provided the redemption will not be in breach of any of the provisions of the Business Corporations Act (British Columbia).

(e)           The Preferred shares shall rank, both as regards dividends and return of capital, in priority to all other shares of the Company, but shall not be entitled to any further right to participate in the profits or assets of the Company.

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(f)           In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Preferred shares shall be entitled to receive, before any distribution of any part of the property and assets of the Company among the holders of any other shares, an amount equal to one hundred percent (100%) of the amount paid thereon and any dividends declared thereon and unpaid, and no more.

(g)           The directors of the Company may issue the Preferred shares in one or more series. In addition, the directors may, by resolution, alter the Notice of Articles to fix the number of shares in and to determine the designation of the shares of each series; the directors may also, by resolution, alter the Notice of Articles to create, define and attach special rights and restrictions to the shares of each series, subject to the special rights and restrictions attached to the Preferred shares.

EX-4.1

QUARTZ MOUNTAIN RESOURCES LTD.
(the “Company”) SHARE OPTION PLAN

Dated for Reference January 19, 2007

ARTICLE 1
PURPOSE AND INTERPRETATION

Purpose

1.1 The purpose of this Plan is to advance the interests of the Company by encouraging equity participation in the Company through the acquisition of Common Shares of the Company. It is the intention of the Company that this Plan will at all times be in compliance with the TSX Venture Policies (or, if applicable, the NEX Policies) and any inconsistencies between this Plan and the TSX Venture Policies) (or, if applicable, the NEX Policies) will be resolved in favour of the latter.

Definitions

1.2 In this Plan

(a)           Affiliate means a company that is a parent or subsidiary of the Company, or that is controlled by the same entity as the Company;

(b)           Associate has the meaning set out in the Securities Act;

(c)           Board means the board of directors of the Company or any committee thereof duly empowered or authorized to grant Options under this Plan;

(d)           Change of Control includes situations where after giving effect to the contemplated transaction and as a result of such transaction:

(i) any one Person holds a sufficient number of voting shares of the Company or resulting company to affect materially the control of the Company or resulting company, or,

(ii) any combination of Persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, holds in total a sufficient number of voting shares of the Company or its successor to affect materially the control of the Company or its successor,

where such Person or combination of Persons did not previously hold a sufficient number of voting shares to affect materially control of the Company or its successor. In the absence of evidence to the contrary, any Person or combination of Persons acting in concert by virtue of an agreement, arrangement, commitment or understanding, holding more than 20% of the voting shares of the Company or resulting company is deemed to materially affect control of the Company or resulting company;

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(e)           Common Shares means common shares without par value in the capital of the Company providing such class is listed on the TSX Venture (or the NEX, as the case may be);

(f)           Company means the company named at the top hereof and includes, unless the context otherwise requires, all of its Affiliates and successors according to law;

(g)           Consultant means an individual or Consultant Company, other than an Employee, Officer or Director that:

(i) provides on an ongoing bona fide basis, consulting, technical, managerial or like services to the Company or an Affiliate of the Company, other than services provided in relation to a Distribution;

(ii) provides the services under a written contract between the Company or an Affiliate and the individual or the Consultant Company;

(iii) in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the business and affairs of the Company or an Affiliate of the Company; and

(iv) has a relationship with the Company or an Affiliate of the Company that enables the individual or Consultant Company to be knowledgeable about the business and affairs of the Company;

(h)           Consultant Company means for an individual consultant, a company or partnership of which the individual is an employee, shareholder or partner;

(i)           Directors means the directors of the Company as may be elected from time to time;

(j)           Discounted Market Price has the meaning assigned by Policy 1.1 of the TSX Venture Policies;

(k)           Disinterested Shareholder Approval means approval by a majority of the votes cast by all the Company’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to Common Shares beneficially owned by Insiders who are Service Providers or their Associates;

(l)           Distribution has the meaning assigned by the Securities Act, and generally refers to a distribution of securities by the Company from treasury;

(m)           Effective Date for an Option means the date of grant thereof by the Board;

(n)           Employee means:

(i) an individual who is considered an employee under the Income Tax Act (i.e. for whom income tax, employment insurance and CPP deductions must be made at source);

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(ii) an individual who works full-time for the Company or a subsidiary thereof providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

(iii) an individual who works for the Company or its subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions need not be made at source;

(o) Exercise Price means the amount payable per Common Share on the exercise of an Option, as determined in accordance with the terms hereof;

(p) Expiry Date means the day on which an Option lapses as specified in the Option Commitment therefor or in accordance with the terms of this Plan;

(q) Insider means an insider as defined in the TSX Venture Policies or as defined in securities legislation applicable to the Company;

(r) Investor Relations Activities has the meaning assigned by Policy 1.1 of the TSX Venture Policies;

(s)           Management Company Employee means an individual employed by a Person providing management services to the Company which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

(t) NEX means a separate board of the TSX Venture for companies previously listed on the TSX Venture or the Toronto Stock Exchange which have failed to maintain compliance with the ongoing financial listing standards of those markets;

(u) NEX Issuer means a company listed on the NEX;

(v) NEX Policies means the rules and policies of the NEX as amended from time to time;

(w) Officer means a Board appointed officer of the Company;

(x) Option means the right to purchase Common Shares granted hereunder to a Service Provider;

(y) Option Commitment means the notice of grant of an Option delivered by the Company hereunder to a Service Provider and substantially in the form of Schedule A attached hereto;

(z)           Optioned Shares means Common Shares that may be issued in the future to a Service Provider upon the exercise of an Option;

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(aa)      Optionee means the recipient of an Option hereunder;

(bb) Outstanding Shares means at the relevant time, the number of issued and outstanding Common Shares of the Company from time to time;

(cc)      Participant means a Service Provider that becomes an Optionee;

(dd) Person includes a company, any unincorporated entity, or an individual;

(ee)      Plan means this share option plan, the terms of which are set out herein or as may be amended;

(ff) Plan Shares means the total number of Common Shares which may be reserved for issuance as Optioned Shares under the Plan as provided in §2.2;

(gg) Regulatory Approval means the approval of the TSX Venture and any other securities regulatory authority that has lawful jurisdiction over the Plan and any Options issued hereunder;

(hh) Securities Act means the Securities Act, R.S.B.C. 1996, c. 418, or any successor legislation;

(ii) Service Provider means a Person who is a bona fide Director, Officer, Employee, Management Company Employee, Consultant or Company Consultant, and also includes a company, 100% of the share capital of which is beneficially owned by one or more Service Providers;

(jj) Share Compensation Arrangement means any Option under this Plan but also includes any other stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares to a Service Provider;

(kk) Shareholder Approval means approval by a majority of the votes cast by eligible shareholders of the Company at a duly constituted shareholders’ meeting;

(ll) TSX Venture means the TSX Venture Exchange and any successor thereto; and

(mm) TSX Venture Policies means the rules and policies of the TSX Venture as amended from time to time.

Other Words and Phrases

1.3 Words and phrases used in this Plan but which are not defined in the Plan, but are defined in the TSX Venture Policies (and, if applicable, the NEX Policies), will have the meaning assigned to them in the TSX Venture Policies (and, if applicable, the NEX Policies).

Gender

1.4 Words importing the masculine gender include the feminine or neuter, words in the singular include the plural, words importing a corporate entity include individuals, and vice versa.

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ARTICLE 2 SHARE OPTION PLAN

Establishment of Share Option Plan

2.1 The Plan is hereby established to recognize contributions made by Service Providers and to create an incentive for their continuing assistance to the Company and its Affiliates.

Maximum Plan Shares

2.2 The maximum aggregate number of Plan Shares that may be reserved for issuance under the Plan at any point in time is 10% of the Outstanding Shares at the time Plan Shares are reserved for issuance as a result of the grant of an Option, less any Common Shares reserved for issuance under share options granted under Share Compensation Arrangements other than this Plan, unless this Plan is amended pursuant to the requirements of the TSX Venture Policies and, if applicable, the NEX Policies.

Eligibility

2.3 Options to purchase Common Shares may be granted hereunder to Service Providers from time to time by the Board. Service Providers that are not individuals will be required to undertake in writing not to effect or permit any transfer of ownership or option of any of its securities, or to issue more of its securities (so as to indirectly transfer the benefits of an Option), as long as such Option remains outstanding, unless the written permission of the TSX Venture and the Company is obtained.

Options Granted Under the Plan

2.4 All Options granted under the Plan will be evidenced by an Option Commitment in the form attached as Schedule A, showing the number of Optioned Shares, the term of the Option, a reference to vesting terms, if any, and the Exercise Price.

2.5 Subject to specific variations approved by the Board, all terms and conditions set out herein will be deemed to be incorporated into and form part of an Option Commitment made hereunder.

Limitations on Issue

2.6 Subject to §2.9, the following restrictions on issuances of Options are applicable under the Plan:

(a)           no Service Provider can be granted an Option if that Option would result in the total number of Options, together with all other Share Compensation Arrangements granted to such Service Provider in the previous 12 months, exceeding 5% of the Outstanding Shares (unless the Company is classified as a Tier 1 Issuer by the TSX Venture and has obtained Disinterested Shareholder Approval to do so);

(b) no Options can be granted under the Plan if the Company is on notice from the TSX Venture to transfer its listed shares to the NEX;

(c)           the aggregate number of Options granted to Service Providers conducting Investor Relations Activities in any 12-month period cannot exceed 2% of the Outstanding Shares, calculated at the time of grant, without the prior consent of the TSX Venture; and

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(d) the aggregate number of Options granted to any one Consultant in any 12-month period cannot exceed 2% of the Outstanding Shares, calculated at the time of grant, without the prior consent of the TSX Venture.

Options Not Exercised

2.7 In the event an Option granted under the Plan expires unexercised or is terminated by reason of dismissal of the Optionee for cause or is otherwise lawfully cancelled prior to exercise of the Option, the Optioned Shares that were issuable thereunder will be returned to the Plan and will be eligible for re-issuance.

Powers of the Board

2.8 The Board will be responsible for the general administration of the Plan and the proper execution of its provisions, the interpretation of the Plan and the determination of all questions arising hereunder. Without limiting the generality of the foregoing, the Board has the power to

(a)           allot Common Shares for issuance in connection with the exercise of Options;

(b)           grant Options hereunder;

(c)           subject to any necessary Regulatory Approval, amend, suspend, terminate or discontinue the Plan, or revoke or alter any action taken in connection therewith, except that no general amendment or suspension of the Plan will, without the prior written consent of all Optionees, alter or impair any Option previously granted under the Plan

unless the alteration or impairment occurred as a result of a change in the TSX Venture Policies or the Company’s tier classification thereunder;

(d) delegate all or such portion of its powers hereunder as it may determine to one or more committees of the Board, either indefinitely or for such period of time as it may specify, and thereafter each such committee may exercise the powers and discharge the duties of the Board in respect of the Plan so delegated to the same extent as the Board is hereby authorized so to do; and

(e)           amend this Plan (except for previously granted and outstanding Options) to reduce the benefits that may be granted to Service Providers (before a particular Option is granted) subject to the other terms hereof.

Terms or Amendments Requiring Disinterested Shareholder Approval

2.9                     The Company shall obtain Disinterested Shareholder Approval prior to any of the following actions becoming effective:

(a)           the Plan, together with all of the Company’s other Share Compensation Arrangements, could result at any time in:

(i) the aggregate number of Common Shares reserved for issuance under Options granted to Insiders exceeding 10% of the Outstanding Shares (in the event that this Plan is amended to reserve for issuance more than 10% of the Outstanding Shares);

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(ii) the number of Optioned Shares issued to Insiders within a one-year period exceeding 10% of the Outstanding Shares (in the event that this Plan is amended to reserve for issuance more than 10% of the Outstanding Shares); or,

(iii) in the case of a Tier l Issuer only, the issuance to any one Optionee, within a 12-month period, of a number of Common Shares exceeding 5% of Outstanding Shares; or

(b) any reduction in the Exercise Price of an Option previously granted to an Insider.

ARTICLE 3 TERMS AND CONDITIONS OF OPTIONS

Exercise Price

3.1                     The Exercise Price of an Option will be set by the Board at the time such Option is allocated under the Plan, and cannot be less than the Discounted Market Price.

Term of Option

3.2                     An Option can be exercisable for a maximum of 10 years from the Effective Date for a Tier 1 Issuer, or five years from the Effective Date for a Tier 2 or a NEX Issuer.

Option Amendment

3.3 Subject to §2.9(b), the Exercise Price of an Option may be amended only if at least six (6) months have elapsed since the later of the date of commencement of the term of the Option, the date the Common Shares commenced trading on the TSX Venture, and the date of the last amendment of the Exercise Price.

3.4                     An Option must be outstanding for at least one year before the Company may extend its term, subject to the limits contained in §3.2.

3.5 Any proposed amendment to the terms of an Option must be approved by the TSX Venture prior to the exercise of such Option.

Vesting of Options

3.6 Subject to §3.7, vesting of Options shall be in accordance with Schedule B attached hereto or otherwise, at the discretion of the Board, and will generally be subject to:

(a)           the Service Provider remaining employed by or continuing to provide services to the Company or any of its Affiliates as well as, at the discretion of the Board, achieving certain milestones which may be defined by the Board from time to time or receiving a satisfactory performance review by the Company or any of its Affiliates during the vesting period; or

(b) the Service Provider remaining as a Director of the Company or any of its Affiliates during the vesting period.

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Vesting of Options Granted to Consultants Conducting Investor Relations Activities

3.7 Notwithstanding §3.6, Options granted to Consultants conducting Investor Relations Activities will vest:

(a)           over a period of not less than 12 months as to 25% on the date that is three months from the date of grant, and a further 25% on each successive date that is three months from the date of the previous vesting; or

(b) such longer vesting period as the Board may determine.

Optionee Ceasing to be Director, Employee or Service Provider

3.8 No Option may be exercised after the Service Provider has left his employ/office or has been advised by the Company that his services are no longer required or his service contract has expired, except as follows:

(a)           in the case of the death of an Optionee, any vested Option held by him at the date of death will become exercisable by the Optionee’s lawful personal representatives, heirs or executors until the earlier of one year after the date of death of such Optionee and the date of expiration of the term otherwise applicable to such Option;

(b) in the case of a Tier 1 Issuer, an Option granted to any Service Provider will expire within 90 days after the date the Optionee ceases to be employed by or provide services to the Company, but only to the extent that such Option has vested at the date the Optionee ceased to be so employed by or to provide services to the Company;

(c)           in the case of a Tier 2 or NEX Issuer, Options granted to a Service Provider conducting Investor Relations Activities will expire within 30 days of the date the Optionee ceases to conduct such activities, but only to the extent that such Option has vested at the date the Optionee ceased to conduct such activities;

(d) in the case of a Tier 2 or NEX Issuer, any Option granted to an Optionee other than one conducting Investor Relations Activities will expire within 90 days after the Optionee ceases to be employed by or provide services to the Company, but only to the extent that such Option has vested at the date the Optionee ceased to be so employed by or to provide services to the Company; and

(e)           in the case of an Optionee being dismissed from employment or service for cause, such Optionee’s Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise same.

Non Assignable

3.9                     Subject to §3.8, all Options will be exercisable only by the Optionee to whom they are granted and will not be assignable or transferable.

Adjustment of the Number of Optioned Shares

3.10                   The number of Common Shares subject to an Option will be subject to adjustment in the events and in the manner following:

(a)           in the event of a subdivision of Common Shares as constituted on the date hereof, at any time while an Option is in effect, into a greater number of Common Shares, the Company will thereafter deliver at the time of purchase of Optioned Shares hereunder, in addition to the number of Optioned Shares in respect of which the right to purchase is then being exercised, such additional number of Common Shares as result from the subdivision without an Optionee making any additional payment or giving any other consideration therefor;

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(b) in the event of a consolidation of the Common Shares as constituted on the date hereof, at any time while an Option is in effect, into a lesser number of Common Shares, the Company will thereafter deliver and an Optionee will accept, at the time of purchase of Optioned Shares hereunder, in lieu of the number of Optioned Shares in respect of

which the right to purchase is then being exercised, the lesser number of Common Shares as result from the consolidation;

(c)           in the event of any change of the Common Shares as constituted on the date hereof, at any time while an Option is in effect, the Company will thereafter deliver at the time of purchase of Optioned Shares hereunder the number of shares of the appropriate class resulting from the said change as an Optionee would have been entitled to receive in respect of the number of Common Shares so purchased had the right to purchase been exercised before such change;

(d) in the event of a capital reorganization, reclassification or change of outstanding equity shares (other than a change in the par value thereof) of the Company, a consolidation, merger or amalgamation of the Company with or into any other company or a sale of the property of the Company as or substantially as an entirety at any time while an Option is in effect, an Optionee will thereafter have the right to purchase and receive, in lieu of the Optioned Shares immediately theretofore purchasable and receivable upon the exercise of the Option, the kind and amount of shares and other securities and property receivable upon such capital reorganization, reclassification, change, consolidation, merger, amalgamation or sale which the holder of a number of Common Shares equal to the number of Optioned Shares immediately theretofore purchasable and receivable upon the exercise of the Option would have received as a result thereof. The subdivision or consolidation of Common Shares at any time outstanding (whether with or without par value) will not be deemed to be a capital reorganization or a reclassification of the capital of the Company for the purposes of this §3.10;

(e)           an adjustment will take effect at the time of the event giving rise to the adjustment, and the adjustments provided for in this section are cumulative;

(f) the Company will not be required to issue fractional shares in satisfaction of its obligations hereunder. Any fractional interest in a Common Share that would, except for the provisions of this §3.10, be deliverable upon the exercise of an Option will be cancelled and not be deliverable by the Company; and

(g) if any questions arise at any time with respect to the Exercise Price or number of Optioned Shares deliverable upon exercise of an Option in any of the events set out in this §3.10, such questions will be conclusively determined by the Company’s auditors, or, if they decline to so act, any other firm of Chartered Accountants, in Vancouver, British Columbia (or in the city of the Company’s principal executive office) that the Company may designate and who will be granted access to all appropriate records. Such determination will be binding upon the Company and all Optionees.

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ARTICLE 4 COMMITMENT AND EXERCISE PROCEDURES

Option Commitment

4.1 Upon grant of an Option hereunder, an authorized officer of the Company will deliver to the Optionee an Option Commitment detailing the terms of such Options and upon such delivery the Optionee will be subject to the Plan and have the right to purchase the Optioned Shares at the Exercise Price set out therein subject to the terms and conditions hereof.

Manner of Exercise

4.2 An Optionee who wishes to exercise his Option may do so by delivering

(a)           a written notice to the Company specifying the number of Optioned Shares being acquired pursuant to the Option; and

(b)           a certified cheque, wire transfer or bank draft payable to the Company for the aggregate Exercise Price by the Optioned Shares being acquired.

Delivery of Certificate and Hold Periods

4.3 As soon as practicable after receipt of the notice of exercise described in §4.2 and payment in full for the Optioned Shares being acquired, the Company will direct its transfer agent to issue a certificate to the Optionee for the appropriate number of Optioned Shares. Such certificate issued will bear a legend stipulating any resale restrictions required under applicable securities laws. Further, if the Company is a Tier 2 or NEX Issuer, or the Exercise Price is set below than the then current market price of the Common Shares on the TSX Venture, the certificate will also bear a legend stipulating that the Optioned Shares are subject to a four-month TSX Venture hold period commencing the date of the grant of the Option.

ARTICLE 5 GENERAL

Employment and Services

5.1 Nothing contained in the Plan will confer upon or imply in favour of any Optionee any right with respect to office, employment or provision of services with the Company, or interfere in any way with the right of the Company to lawfully terminate the Optionee’s office, employment or service at any time pursuant to the arrangements pertaining to same. Participation in the Plan by an Optionee is voluntary.

No Representation or Warranty

5.2 The Company makes no representation or warranty as to the future market value of Common Shares issued in accordance with the provisions of the Plan or to the effect of the Income Tax Act (Canada) or any other taxing statute governing the Options or the Common

Shares issuable thereunder or the tax consequences to a Service Provider. Compliance with applicable securities laws as to the disclosure and resale obligations of each Participant is the responsibility of each Participant and not the Company.

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Interpretation

5.3 The Plan will be governed and construed in accordance with the laws of the Province of British Columbia.

Continuation of Plan

5.4 The Plan will become effective from and after January 19, 2007, and will remain effective provided that the Plan, or any amended version thereof receives Shareholder Approval at each annual general meeting of the holders of Common Shares of the Company subsequent to January 19, 2007.

SCHEDULE A SHARE OPTION PLAN OPTION COMMITMENT

Notice is hereby given that, effective this _________ day of ___________________, __________ (the “Effective Date”) Quartz Mountain Resources Ltd. (the “Company”) has granted to _____________________ (the “Optionee”), an Option to acquire _____________ Common Shares (“Optioned Shares”) up to 5:00 p.m. Vancouver Time on the ________ day of ______, _________ Cdn$__________ (the “Expiry Date”) at an Exercise Price of _______________ per share.

At the date of grant of the Option, the Company is classified as [a Tier _______ Issuer under TSX Venture Policies] [an NEX Issuer].

[Tier 2 if Plan Shares greater than 10% only] Optioned Shares will vest and may be exercised as follows:

{COMPLETE ONE}

_________________In accordance with the vesting provisions set out in Schedule B of the Plan

or

As follows: [INSERT VESTING SCHEDULE ][INSERT VESTING TERMS]

The grant of the Option evidenced hereby is made subject to the terms and conditions of the Plan, which are hereby incorporated herein and forms part hereof.

To exercise your Option, deliver a written notice specifying the number of Optioned Shares you wish to acquire, together with a certified cheque, wire transfer or bank draft payable to the Company for the aggregate Exercise Price. A certificate for the Optioned Shares so acquired will be issued by the transfer agent as soon as practicable thereafter and will bear a minimum four month non-transferability legend from the date of this Option Commitment, the text of which is as follows. [A Tier 1 Issuer may grant stock options without a hold period, provided the exercise price of the options is set at or above the market price of the Company’s shares rather than below.].

"WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL 12:00 A.M. (MIDNIGHT) ON [insert date 4 months from the date of grant]”.

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The Company and the Optionee represent that the Optionee under the terms and conditions of the Plan is a bona fide Service Provider (as defined in the Plan), entitled to receive Options under TSX Venture Policies.

The Optionee also acknowledges and consents to the collection and use of Personal Information (as defined in the Policies of the TSX Venture Exchange) by both the Company and the TSX Venture (or the NEX, as the case may be) as more particularly set out in the Acknowledgement - Personal Information in use by the TSX Venture (or the NEX, as the case may be) on the date of this Share Option Plan.

QUARTZ MOUNTAIN RESOURCES LTD.

______________________________________
Authorized Signatory

______________________________________
(SIGNATURE OF OPTIONEE)

SCHEDULE B

SHARE OPTION PLAN VESTING SCHEDULE

1.           Options granted pursuant to the Plan to Directors, Officers and all Employees and Consultants employed or retained by the Company for a period of more than six months at the time the Option is granted will vest as follows:

(a)           1/3 of the total number of Options granted will vest six months after the date of grant;

(b)           a further 1/3 of the total number of Options granted will vest one year after the date of grant; and

(c)           the remaining 1/3 of the total number of Options granted will vest eighteen months after the date of grant.

2.           Options granted pursuant to the Plan to an Employee or a Consultant who has been employed or retained by the Company for a period of less than six months at the time the Option is granted will vest as follows:

(a)           1/3 of the total number of Options granted will vest one year after the date of grant;

(b)           a further 1/3 of the total number of Options granted will vest eighteen months after the date of grant; and

(c)           the remaining 1/3 of the total number of Options granted will vest two years after the date of grant.

3.           Options granted to Consultants retained by the Company pursuant to a short term contract or for a specific project with a finite term, will be subject to such vesting provisions determined by the Board of Directors of the Company at the time the Option Commitment is made, subject to Regulatory Approval.

4.           Options granted to Service Providers involved in Investor Relations Activities shall vest in accordance with §3.7 of the Plan.

EX-4.5

SERVICES AGREEMENT

This Services Agreement (the “Agreement”) is made as of the 2^nd day of July, 2010 (the “Effective Date”).

BETWEEN:

HUNTER DICKINSON SERVICES INC., a company incorporated under the federal laws of Canada

(“HD Services”),

AND:

QUARTZ MOUNTAIN RESOURCES LTD., a company incorporated under the laws of British Columbia (the “Company”),

(collectively, HD Services and the Company are the “Parties” and each is a “Party”).

WHEREAS:

A.	HD Services is a company established to provide technical, geological, corporate communications, administrative and management services for companies involved in the acquisition, exploration, development and mining of natural resource properties.
B.	HD Services possesses and has access to certain expertise in the identification and evaluation of resource exploration, development and mining opportunities and structuring of mineral transactions.
C.	The Company wishes to engage HD Services to provide, and HD Services has agreed to provide, the Services as more particularly described herein.

NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which consideration each Party acknowledges, the Parties agree as follows:

ARTICLE 1 – ENGAGEMENT

1.01          Engagement

During the term of this Agreement, which shall be determined in accordance with Article 8 (the “Term”), the Company hereby engages HD Services, and HD Services accepts such engagement, to provide the Services (as defined and further described in Article 2).

1.02          Standard of Care and Services Provided

          (1)   HD Services shall provide the Services in a proper and workmanlike and efficient manner, in accordance with accepted mining industry and other relevant professional standards, practices and applicable laws and shall exercise the degree of care and skill that a reasonably prudent advisor would exercise in comparable circumstances and shall comply in all material respects with applicable laws. For the avoidance of doubt, HD Services shall not provide any services in respect of which a registration in any capacity would be required under applicable securities laws or other laws, except to the extent provided in Section 2.05(j) . HD Services shall comply with the terms of the Company’s licences, permits, contracts and other agreements pertaining to the material resource properties of the Company and applicable laws.

          (2)   The Company acknowledges that although during the course of providing the Services, HD Services may provide the Company assistance with tax, accounting or legal matters, the Company shall not be relying on HD Services for advice or opinions on tax, accounting or legal matters.

          (3)   The Company specifically acknowledges HD Services shall at no time provide the Company with any tax or accounting advice, opinion, analysis or similar services.

          (4)   The Company specifically acknowledges HD Services shall at no time provide the Company with any legal advice, opinion, analysis or similar services, including with respect to the interpretation or enforcement of any rights, obligations, duties or remedies that the Company may have in any matter and that any communication between the Company and HD Services shall not necessarily be considered to be legally privileged.

          (5)   The Company further acknowledges that any decisions with regards to the use of the Services and any operational or management decisions made by the Company are the sole and final decision of the Company and it shall be the sole obligation of the Company to seek and obtain independent legal advice on any issues regarding the use of the Services or the making or implementation by the Company of any operational or management decisions.

          (6)   The use of the Services by the Company shall not result in the creation of a client-solicitor relationship between the Company and HD Services, including any internal legal counsel employed by HD Services (the “Internal Counsel”) and it is understood by the Company that any Internal Counsel has no professional duty to or fiduciary relationship with the Company and that any such duty is owed solely to HD Services. During the course of HD Services providing the Services, the Company may have access to legal work product of Internal Counsel (the “Internal Legal Product”). The Company acknowledges that to the extent it has access to any Internal Legal Product, the Company shall not rely on such Internal Legal Product as professional legal advice.

1.03          Independent Contractor

In the performance of the Services, HD Services shall act as an independent contractor and shall not act as agent of the Company except to the extent expressly mandated by the Company and agreed to by HD Services. Nothing herein shall constitute or be construed to constitute or create a partnership or joint venture between HD Services and the Company and/or its affiliates. Where HD Services has been expressly mandated by the Company to incur obligations on behalf the Company, all debts and liabilities to third persons incurred by HD Services in the course of providing the Services in accordance with this Agreement shall be deemed to be the debts and obligations of the Company only and HD Services and its affiliates shall be indemnified by the Company in respect of such debts and liabilities to such third parties. HD Services shall inform third parties with whom it deals on behalf of the Company that it does so on behalf of the Company, and may take any other reasonable steps to carry out the intent of this Section 1.03. For purposes of administration of any Program (as defined below), the status of the Company as manager or operator of any of the Company’s joint ventures and other operating agreements in respect of which it is manager or operator is not intended to be in any way affected by this Agreement. HD Services’ role in relation to any such Program shall solely be as an independent contractor providing advice and services to the Company notwithstanding that it may interact with the staff of or advisors to another party in the joint venture. Save as expressly provided in the foregoing, nothing contained in this Agreement shall be deemed to create any relationship of principal and agent between the parties or to provide either Party with the right, power or authority, whether express or implied, to create any duty or obligation on behalf of the other Party. Nothing contained in this Agreement shall be deemed to create any partnership or joint venture.

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ARTICLE 2 - SERVICES

2.01          Provision of Services

HD Services shall, subject to the terms and conditions hereof, supply technical, geological, corporate communications, administrative and management services as more particularly described in Sections 2.04 and 2.05 (the “Services”) to the Company.

2.02          Seconded Employees

HD Services may, from time to time, require that certain of its employees (the “Seconded Employees”) be seconded to the Company on the terms and conditions of the secondment agreement set out as Annexure A hereto (the “Secondment Agreement”) in order to ensure the level of the Services in accordance with this Agreement. Upon any such request by HD Services, the Company shall execute and deliver to HD Services a Secondment Agreement in respect of each such Seconded Employee.

2.03          HD Contractors

The Parties acknowledge that there are certain independent contractors (the “HD Contractors”) who make the services of individuals available to HD Services on the basis that such individuals devote the majority of their time to the business of HD Services and perform duties which would otherwise be performed by employees of HD Services. HD Services may, from time to time, require that certain HD Contractors provide services to the Company on the terms and conditions of the contractor agreement set out as Annexure B hereto (the “Contractor Agreement”) in order to ensure the level of the Services in accordance with this Agreement. Upon any such request by HD Services, the Company shall execute and deliver to HD Services a Contractor Agreement in respect of each such HD Contractor.

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2.04          General Corporate Services

Subject to receipt of a written request by the Company in accordance with Section 2.06 which is agreeable to HD Services, HD Services shall:

(a)	perform general corporate services for the Company as required in relation to, but not limited to other matters such as administration, accounting, payment of third party invoices and reporting thereon, regulatory reporting, management information and information technology services and human resources;
(b)	provide incidental assistance with corporate communications programs, including investor relationship management, website services, and corporate brochures regarding the Company; provided that these services shall not constitute professional investor relations services under the rules of any stock exchange, if applicable, or other regulatory policies;
(c)	assist the Company in designing, implementing and maintaining its compliance framework and controls;
(d)	assist the Company in liaising with its auditors and security regulators;
(e)	provide corporate secretarial services; and
(f)	provide any other services requested by the Company within HD Services’ expertise in addition to those described in this Section 2.04 and in Section 2.05.

2.05          Program Services

Subject to receipt of a written request by the Company in accordance with Section 2.06, HD Services shall together with the Company management and such other consultants as the Company chooses to involve, review the resource property portfolio of the Company with a view to making recommendations for the design and implementation of programs of exploration, development and/or mining (“Programs”) for the resource properties of the Company. Such recommendations shall be accompanied by reasonable details of the proposed Program, including scheduling, description of activities and budgets. Upon written mutual acceptance of such Program(s) by the Company and HD Services (with or without variations that the Parties may agree upon, and where acceptance is in the sole discretion of each Party), HD Services shall carry out each Program and shall generally:

(a)

provide and/or retain the necessary technical and support staff;

(b)

negotiate third party service contracts for execution by the Company, or subject to the agreed terms of implementation of the Program(s), execute such contracts as agent for the Company. Such third party contracts may include (without limitation) geophysical and geochemical surveys, sampling, line cutting, diamond drilling, engineering, environmental, independent analyses and reporting and such other work as has been agreed in respect of such Program;

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(c)	negotiate third party mining equipment contracts for execution by the Company, or subject to the agreed terms of implementation of the Program(s), execute such contracts as agent for the Company;
(d)	negotiate third party off take contracts for execution by the Company, or subject to the agreed terms of implementation of the Program(s), execute such contracts as agent for the Company;
(e)	apply for necessary regulatory permits and licences;
(f)	provide field staff to supervise and oversee the work of HD Services staff and subcontractors;
(g)	obtain appropriate insurance for the Company as the named insured;
(h)	assist in making applications and relevant filings pertaining to the maintenance of titles to the property as well as filing of assessment work respecting exploration work carried out;
(i)	provide general administration of the Program including accounting, payment of third party invoices and reporting thereon; and
(j)	when instructed by the Company, provide technical reporting to the standards required under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“43-101”), such reporting to include the necessary approvals and certifications of such HD Services’ employees as necessary who meet the qualifications of a ‘qualified person’ as that term is defined in 43-101.

2.06          Requests for Services to be Evidenced in Writing

Any Services to be provided by HD Services to the Company shall generally be agreed on an annual basis and shall be initiated by the Company in a non-binding written communication to HD Services and shall indicate the Company’s requirements and expectations in reasonable detail, including required timing. HD Services shall promptly respond to this request with a written proposal and shall mutually agree with the Company upon the level, degree and cost of contracted Services for the next twelve (12) months, such agreement to be evidenced by a document in writing signed by the CEO of the Company and the CEO of HD Services. The Parties shall use their commercially reasonable efforts to develop and agree upon such Services at least ninety (90) days in advance of the annual renewal period of this Agreement. Notwithstanding the foregoing, the Company may at any time request additional Services in writing and the process set out above shall apply to all additional Services requests.

ARTICLE 3 - PAYMENTS TO HD SERVICES

3.01          Services’ Fees and Expenses

          (1)   The Company shall pay a monthly fee (the “Monthly Services Fee”) to HD Services for the Services provided to the Company, with the exception of those Services described in Section 3.01(4) which services shall be excluded from the Monthly Services Fee. The Monthly Services Fee shall be calculated on the basis of the time spent by HD Services employees and other staff providing such Services based on the rates set out in the HD Services Charge-Out Rates Schedule attached hereto as Annexure C, which rates may be amended from time to time by HD Services by providing to the Company, on not less than thirty (30) days advance notice, an updated HD Services Charge-Out Rate Schedule.

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          (2)   The estimated fees payable by the Company to HD Services in accordance with Section 3.01(1) shall be included in the budget forming part of any Program approved by the Company in accordance with Section 2.04.

          (3)   HD Services shall promptly notify the Company of any material departure from the budget of an adopted Program (a “material departure” for such purposes being an increase above budgeted costs of more than fifteen percent (15%)). Amendments to a Program must be agreed to in writing by the Company and HD Services, including amendments to the budget, failing which the Company may terminate the relevant Program and, in the event of a material departure, may terminate this Agreement in accordance with Section 8.02. Notwithstanding the foregoing but without derogating from the provisions of Section 5.05, HD Services shall not be required to itself bear the cost of any material departures. Nothing contained in this Agreement shall oblige HD Services, in the absence of express agreement to the contrary, to incur any indebtedness for or on behalf of, or advance any credit to the Company.

          (4)   The Company shall pay an annual fee (the “Annual Communications Fee”) to HD Services in respect of the Services which relate to public relations, investor communications and branding of the Company and HD Services, including, without limitation, conference fees, promotional materials, and website services, but excludes the time spent by HD Services employees in providing the public relations, investor communications and branding services. The Annual Communications Fee shall be calculated on an annual basis in advance as of December 31 for the upcoming year and shall reflect the Company’s pro rata share of the anticipated public relations, investor communications and branding costs of the Company and the Hunter Dickinson group for the upcoming year. For greater certainty, there shall be no duplication between the amounts payable in respect of the Monthly Services Fee and the Annual Communications Fee. The Annual Communications Fee shall be invoiced in twelve (12) equal monthly instalments.

          (5)   In addition to the Monthly Services Fee and the Annual Communications Fee, the Company shall pay directly or reimburse HD Services in respect of third party expenditures validly incurred by HD Services in connection with the Services and such expenditures shall be invoiced by HD Services monthly on a cost recovery basis.

3.02          Invoices

          (1)   The Company agrees to promptly pay all invoices delivered by HD Services in connection with the fees and expenses described in Sections 3.01 and also agrees to advance funds against written cash calls (in the form of invoices) for reasonably immediate expenditure requirements of HD Services (such as to pay for or secure services, to secure equipment, contractors, deposits and the like) and to honour all agreements which HD Services enters into in good faith on behalf of the Company with third parties in the course of performing the Services.

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          (2)   HD Services shall provide the Company with such further information as it may reasonably request in relation to any amount shown on any invoices delivered in accordance with this Section 3.02, including reasonably satisfactory evidence of any reimbursable costs and expenses. All invoices shall be payable no later than thirty (30) days after presentation.

3.03          Sales Taxes, No Set-offs

The amounts to be billed by HD Services for the Services and third party costs under this Article 3 may be subject to GST, HST or other general sales tax, value added tax or any like service or sales tax or withholding tax which may be payable from time to time. All amounts payable under this Agreement shall be paid by the Company free and clear of any deductions or claims for set-offs. If any amounts are required to be withheld by applicable law, the Company shall be obliged to pay an additional amount over the amount invoiced as shall leave HD Services receiving the same net amount as HD Services invoiced for. Any such additional amount paid for withholding by the Company shall be refunded if recovered by HD Services and HD Services shall promptly apply to recover or reduce any such withholding amounts.

3.04          Interest

If either Party defaults in the payment when due of any sum payable under this Agreement (howsoever determined) the liability of such Party shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgment) at the rate of LIBOR plus 4% (four percent). Such interest shall accrue from day to day. For such purposes, “LIBOR” means the interest rate per annum for deposits in US dollars for a ninety (90) day period which appears on the Reuters LIBO page (or such other page or pages as may replace that page or pages on that service for the purpose of displaying offered rates of leading banks for London interbank deposits in US dollars) at or about 11:00 a.m. London time on the business day in London before and for value on the first day of such period, provided that, if two or more such offered rates are indicated on such display, LIBOR shall be the rate that equals the arithmetic mean (expressed as a decimal fraction to five decimal places) of such offered rates, and provided further that if such period is not equal to any period shown on such page, LIBOR shall be the rate determined by interpolation from the rates for the next longer and next shorter periods shown on such page, using the number of days as the basis for the interpolation, expressed as a decimal fraction to five decimal places.

ARTICLE 4 - NON EXCLUSIVITY AND OPPORTUNITIES

4.01          Non Exclusive Services

Save as provided in Section 4.02:

(a)	the Services provided by HD Services to the Company hereunder are not intended by either Party to be exclusive (nor shall they be deemed to be exclusive);
(b)	the Company shall be free to appoint additional advisors to render services which are similar to the Services provided by HD Services or other services; and

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(c) HD Services shall be free to render similar or other services to other parties on such terms and conditions as it may agree.

4.02 Opportunities and Confidentiality

          (1)   The Company acknowledges that HD Services shall not have any obligation to provide any information or advice to the Company respecting a resource company, interest in mineral rights, prospects, financing opportunities or other opportunities (“Opportunities”) which come to the attention of HD Services, except that for purposes hereof certain Opportunities shall be deemed to be “Prohibited Opportunities” as follows:

(a)	Opportunities related to an interest in mineral rights (or investments in, or acquisitions of, persons which directly or indirectly own such an interest in mineral rights, but excluding shareholdings less than 2% of a person’s aggregate issued share capital) which are located within a 10 kilometre radius of the existing mineral rights of the Company or of any of its subsidiaries in relation to which any significant and relevant Confidential Information has been provided to HD Services, or which was generated by HD Services on behalf of the Company, in connection with providing the Services;
(b)	Opportunities which can be demonstrated to have been discovered by HD Services primarily as a result of the provision of Services to the Company; or
(c)	Opportunities that are presented to HD Services by any third party for the express benefit of or for the specific attention of the Company.

          (2)   For the purposes of this Section 4.02, Prohibited Opportunities shall be deemed to include Opportunities, mutatis mutandis within the meaning of Sections 4.02(1)(a) to 4.02(1)(c) that are obtained by HD Services’ directors, officers or employees. HD Services will use commercially reasonable efforts to procure that its services contract with any HD Contractor contains materially similar restrictions in relation to Opportunities as are set forth in this Section 4.02 and that the term “Prohibited Opportunities” will include any Opportunities to the extent that such Opportunities are Prohibited Opportunities in accordance with the contract by which HD Services retains the services of such HD Contractor. HD Services shall promptly notify the Company of any Prohibited Opportunities obtained or identified by HD Services during the Term, but nothing herein shall be deemed to be negligence on the part of HD Services if some Prohibited Opportunity is overlooked or not discovered, it being the intention only to prevent HD Services from misappropriating Prohibited Opportunities. An Opportunity which the Company confirms in writing to HD Services that it shall not pursue shall in no event be deemed to be a Prohibited Opportunity.

          (3)   The Company agrees it has no interest whatsoever in any Opportunities which come to the attention of HD Services, other than Prohibited Opportunities. The Company acknowledges that HD Services has entered into agreements similar to this Agreement with other companies or third parties that may be competitors of the Company (“Competitors”) and also may receive unsolicited proposals for Opportunities from sources wholly unrelated to the Company. As a consequence, HD Services shall be exposed to Opportunities in the ordinary course and may receive Opportunities as a consequence of services to Competitors. These Opportunities are acknowledged by the Company to be the sole property of HD Services. HD Services is not under any fiduciary or other duty or obligation to the Company or its affiliates which shall prevent or impede it from participating in, or enjoying the benefits of competing endeavours of a nature similar to the business of the Company and the legal doctrines of “corporate opportunity” or “business opportunity” shall have no application in respect of this Agreement. HD Services may in its sole discretion refer Opportunities to the Company from time to time, pursue such Opportunities for its own benefit or refer Opportunities to Competitors or any other person. HD Services shall be under no liability to the Company for, or as a result of, it referring any Opportunities to, or acting as consultant or advisor to, Competitors or the manner in which it resolves competing interests deriving therefrom, unless HD Services has acted in any manner which constitutes fraud, wilful misconduct or negligence.

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4.03          Services Through Agents or Affiliates

HD Services shall have the right to provide the Services, or portions thereof, through agents, affiliates or independent contractors; provided that HD Services shall ensure that such agents, affiliates or independent contractors comply with the terms and conditions of this Agreement that are relevant to the performance of their assigned tasks. HD Services shall ensure that such agents, affiliates or independent contractors contractually are legally responsible for their conduct under the standards applicable to HD Services pursuant to this Agreement.

ARTICLE 5 - INDEMNITY AND LIMIT ON LIABILITY

5.01          Consequential Losses

Neither Party shall be liable to the other for any indirect or consequential loss, loss of profits, decline in earnings, decline in production, loss of opportunities, loss of goodwill or any other indirect damages or loss (“Consequential Losses”) related to a breach of this Agreement (notwithstanding the provisions of any legislation in Canada or otherwise and whether or not advised of the possibility of those damages) and whether arising in contract, tort or otherwise, provided that a Claim by any party other than HD Services or the Company (a “Third Party”) shall not be considered Consequential Losses for such purposes even if such Third Party’s Claim is itself a Claim for Consequential Losses.

5.02          Company Indemnity

Subject to Sections 5.01, 5.03 and 5.04, the Company hereby indemnifies and saves harmless HD Services and any of its directors, officers, employees, contractors and agents (each, an “HD Indemnified Person”) from and against any loss, liability, claim, demand, damage and expense (including reasonable legal fees) (each a “Claim” and collectively “Claims”) in connection with the provision of the Services.

5.03          Exclusion

The indemnity in Section 5.02 shall not extend or apply to any Claim to the extent that such Claim arises out of any fraud, wilful misconduct or Gross Negligence of an HD Indemnified Person. For purposes of this Agreement “Gross Negligence” means any wanton or reckless act or omission not justified by any special circumstances as amounts to a wilful and utter disregard for the harmful and avoidable consequences but shall not include any act or omission of an HD Indemnified Person done or omitted to be done, if resulting from:

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(i)	the direction of, or with the knowledge and concurrence, of the Company; or
(ii)	an action taken in good faith by an HD Indemnified Person to protect life, health or property.

5.04          Limitation of Company’s Liability

          (1)   Notwithstanding anything to the contrary contained in this Agreement except for the provisions set out in Section 5.04(2) the liability of the Company to HD Services and any HD Indemnified Person from and against any Claims in connection with the provision of the Services by HD Services shall not exceed the amount (the “Cap”) that is the higher of:

(a)	$500,000;
(b)	fifty percent (50%) of the aggregate of the amounts actually paid to or accrued in favour of HD Services in accordance with Article 3, during the Term, save for reimbursable costs in accordance with Section 3.01(5); and
(c)	in respect of Claims which are covered by the Company’s insurance policies, the proceeds of insurance under such policies in respect of such Claims (“Insurance Proceeds”).

          (2)   Save as expressly set forth in Sections 5.04(2)(c) and 5.04(2)(e), the provisions of Section 5.04(1) shall not limit the liability of the Company to HD Services for any Claims that arise as a result of:

(a)	the Company’s failure to pay any amounts owing the HD Services pursuant to this Agreement or any other breach or alleged breach by the Company of any of its obligations under this Agreement;
(b)	any Claim to the extent that such Claim arises out of the fraud, wilful misconduct or Gross Negligence of the Company, its officers, directors, agents or employees;
(c)	the death of or injury to any HD Indemnified Person that occurs during the course of such HD Indemnified Person providing the Services to the Company, but only to the extent that any such Claims exceed any available proceeds of insurance under HD Services’ insurance policies or coverage under any workers’ compensation insurance in relation to the subject matter of such Claims;
(d)	any breach of or default under any agreement (other than this Agreement), licence, permit or other obligation to which the Company is a party or by which the Company is bound and which relates to the Services; and
(e)	a Claim by a Third Party against an HD Indemnified Person that arises in connection with the provision by HD Services of the Services to the Company, provided that the Company’s liability to HD Services in respect of any Claims by a Third Party that arise directly from and relate to HD Services acting as an agent or representative of the Company shall be subject to the Cap to the extent that the Company can establish that such Claims were caused by the negligence or negligent performance by HD Services of the Services.

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5.05          HD Indemnity

Subject to Sections 5.01 and 5.06, HD Services hereby indemnifies and saves harmless the Company and any of its directors, officers, employees, contractors and agents for any Claim (a “Misconduct Claim”) to the extent that such Claim arises out of the fraud, wilful misconduct or Gross Negligence of HD Services or any of its directors, officers, employees, contractors and agents.

5.06          Limitation of HD Services’ Liability

          (1)   Notwithstanding anything to the contrary contained in this Agreement except for the provisions of Section 5.06(2), the liability of HD Services to the Company arising out of any any Claims in connection with the provision of the Services by HD Services shall not exceed the higher of

(a)	$500,000;
(b)	fifty percent (50%) of the aggregate of the amounts actually paid to or accrued in favour of HD Services in accordance with Article 3, during the Term, save for reimbursable costs in accordance with Section 3.01(5); and
(c)	in respect of Claims which are covered by the insurance policies referred to in Section 9.01, the proceeds of insurance up to the available coverage limits specified in Section 9.01.

          (2)   The provisions of Section 5.06(1) shall not limit the liability of HD Services for any Misconduct Claims.

5.07          Claims

          (1)   In the event that any action, suit or proceeding is brought against either HD Services or the Company (in this Section, an “Indemnified Party”) in respect of which indemnity may be sought against the other Party (in this Section, an “Indemnifying Party”) in accordance with Section 5.02 or 5.05 as the case may be, the Indemnified Party shall give the Indemnifying Party prompt written notice of any such action, suit or proceeding of which the Indemnified Party has knowledge and the Indemnifying Party shall undertake the investigation and defence thereof on behalf of the Indemnified Party, including employment of counsel acceptable to such Indemnified Party, and make payment of all expenses.

          (2)   No admission of liability and no settlement of any action, suit or proceeding shall be made without the consent of the Indemnifying Party and the Indemnified Parties affected, such consent not to be unreasonably withheld.

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          (3)   Notwithstanding that the Indemnifying Party shall undertake the investigation and defence of any action, suit or proceeding, an Indemnified Party shall have the right to employ separate counsel in any such action, suit or proceeding and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless:

(a)	employment of such counsel has been authorised by the Indemnifying Party;
(b)	the Indemnifying Party has not assumed the defence of the action, suit or proceeding within a reasonable period of time after receiving notice thereof;
(c)	the named parties to any such action, suit or proceeding include both the Indemnifying Party and the Indemnified Party and the Indemnified Party shall have been advised by counsel that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party; or
(d)	there are one or more legal defences available to the Indemnified Party which are different from or in addition to those available to the Indemnifying Party.

          (4)   It is the intention of the parties to constitute each other as trustee for each other’s directors, officers, employees, contractors and agents under this Article 5 and each Party agrees to accept such trust and to hold and enforce such covenants on behalf of its own directors, officers, employees, contractors and agents.

          (5)   For the purposes of this Article 5:

(a)	“action, suit or proceeding” shall include every action, suit or proceeding, civil, criminal, administrative, investigative or other; and
(b)	the right of indemnification conferred hereby shall extend to any threatened action, suit or proceeding.

          (6)   The foregoing rights of indemnification shall not be exclusive of any other rights to which the Indemnified Parties may be entitled as a matter of law or which may be lawfully granted to such Indemnified Parties.

          (7)   Each of the Company (in respect of the policies referenced in Section 5.04(1)(c)) and HD Services (in respect of the policies referenced in Section 9.01) shall use their reasonable commercial endeavours to ensure that the relevant policies of insurance maintained by them contain waivers of subrogation as against one another.

          (8)   The indemnities set out in Section 5.02 or 5.05 shall remain in full force and effect notwithstanding the termination of this Agreement.

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ARTICLE 6 – CONFIDENTIALITY AND INTELLECTUAL PROPERTY

6.01          Confidentiality

          (1)   HD Services acknowledges that the business carried on by the Company is an extremely competitive business, that during the Term HD Services shall receive and be exposed to confidential information belonging to the Company and its affiliates and that disclosure of any such confidential information to third parties could irreparably damage and place the Company at a competitive disadvantage. Such confidential information shall encompass the Company or its affiliates’ proprietary or confidential information disclosed or entrusted to HD Services or developed or generated by HD Services in the performance of the Services, including information relating to the Company or its affiliates’ interests in mineral rights, exploration results, exploration developments, research data, organizational structure, operations, business plans and affairs, technical projects, pricing data, business costs, inventions, trade secrets, names of joint venture partners or other work produced or developed by or for the Company or any of its affiliates, (“Confidential Information”). HD Services shall:

(a)	diligently take commercially reasonable efforts to protect the integrity and security of the Confidential Information within its control and to ensure that only authorized personnel of HD Services are provided with Confidential Information. HD Services shall limit access to Confidential Information to its own staff on a need-to-know basis and shall ensure that its personnel acknowledge the need to protect the confidentiality of the Confidential Information and that they are made aware that they are in a “special relationship” with the Company as contemplated by securities legislation;
(b)	not disclose any of the Confidential Information to third parties without the prior written consent of the Company, provided that such consent shall not be required where the Confidential Information is disclosed:
	(i)	to the employees, officers, representatives and agents of HD Services and affiliates of HD Services and professional advisors of HD Services, to enable such persons to assist HD Services in providing Services to the Company; and provided further that all such persons acknowledge the need to preserve and protect the confidential nature of the Confidential Information and to use such information only in connection with the provision of Services to the Company; and provided further that HD Services shall be liable for any breach of confidentiality by such persons;
	(ii)	to the employees, officers, agents or professional advisors of the Company; or
	(iii)	pursuant to any law, statute or regulation, ordinance or administrative, regulatory or judicial order, or requirement of any applicable stock exchange; provided that the Company has received prior notice to the extent possible and been given an opportunity to contest or resist disclosure where possible and appropriate.

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          (2)   Section 6.01(1) shall not apply to any information in the possession of HD Services which, at the relevant time:

(a)	through no act or omission of HD Services is or becomes generally known or part of the public domain;
(b)	is furnished to others by the Company without restriction on disclosure; or
(c)	is lawfully furnished to HD Services by a third party without HD Services’ knowledge of a breach of any confidentiality obligation owed to the Company but if HD Services subsequently becomes aware that such Confidential Information was actually received in breach of a third party’s confidentiality obligations to the Company, the restrictions in Section 6.01(1) shall thereafter apply on a going- forward basis provided that any actions taken or interests acquired by HD Services prior to it becoming so aware shall not be affected.

          (3)   All business, technical, and like records and information received or generated by HD Services during the Term in relation to the Company or its affiliates shall be delivered to the Company, or destroyed by HD Services upon request by the Company, at any time during the Term and upon the termination of this Agreement. The Company shall continue to own all rights in such Confidential Information.

          (4)   In the event that a Party wishes to refer to the other Party hereunder or its engagement with the other Party in any public statement, news release, shareholder communication or otherwise, it must first seek the other Party’s consent (such consent not to be unreasonably withheld or delayed), in all cases, prior to the release of such reference. During the Term, when referring to HD Services in any promotional or marketing materials, the Company shall use such name or trade names of HD Services, or its affiliates or its associates, and describe HD Services and its affiliates and associates, only as permitted by HD Services. Upon termination of this Agreement, each Party shall immediately cease referring to the other Party and any of its affiliates or associates and shall, unless otherwise required by law, amend, update or withdraw any offering documents, promotional and marketing material or other literature then in use that refers to any agreement or arrangement with the other Party.

          (5)   HD Services acknowledges that to the extent that it may be necessary for the Company to disclose this Agreement to stock exchanges, or other regulatory authorities or otherwise make it public pursuant to applicable securities laws and policies and agrees that the Company may disclose this Agreement in such circumstances upon notice to HD Services; provided that, the Company acknowledges that disclosure of the commercial terms of this Agreement would be to the detriment of HD Services because of the competitive nature of the advisory business and the Company shall use all reasonable efforts consistent with stock exchange and regulatory requirements and securities laws and policies to remove any commercially sensitive fee information relating to this Agreement before filing or otherwise making this Agreement or its terms public.

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6.02          Intellectual Property of HD Services

          (1)   Each Party is the exclusive owner of all valuable industrial and intellectual property rights whether protectable by statute, at common law or in equity, (including any works, inventions (including all patents), trade secrets, know-how, processes, designs, trade marks, trade names, logos, service marks, or copyrights, whether registered or unregistered) (the “Intellectual Property”) owned or possessed by it or any of its affiliates as of the Effective Date whether used by it in fulfilling its obligations under this Agreement or otherwise (the “Background IP”). Except for any of the Company’s trade-marks, the Parties acknowledge and agree that, except as otherwise expressly agreed to in writing by the Parties, all new and original Intellectual Property created or developed by HD Services during the course of its performance of the Services, including, without limitation, any modification, improvements, or enhancements to either Party’s Background IP, (the “HD Services IP”) shall be the sole property of HD Services or its affiliates, as appropriate, and the Company shall have no interest in such HD Services IP except pursuant to Section 6.02(2) . Except for any of the Company’s trade-marks, the Company hereby assigns and transfers to HD Services and agrees to assign and transfer to HD Services, as and when created, all right, title, and interest, including any Intellectual Property, throughout the world, in and to all HD Services IP, to the extent such HD Services IP does not automatically and immediately vest in HD Services.

          (2)   HD Services grants to the Company a non-exclusive, revocable, non-transferable and royalty-free licence to access, use, or copy the Background IP and the HD Service IP but only insofar as is necessary in relation to the Services and such licence and all rights granted under such license shall terminate upon the termination of this Agreement.

ARTICLE 7 - OTHER RIGHTS AND DUTIES OF THE COMPANY

7.01          Access to the Company Properties and Records

For the sole purpose of enabling HD Services to perform the Services and only to the extent required to enable such performance, the Company shall allow HD Services, its employees and authorized agents reasonable access on notice to the Company’s properties, business premises and business records. The Company shall ensure that its employees, and any contractors, consultants, advisors or auditors engaged by it, co-operate fully with HD Services in its performance of the Services. Nothing in this Agreement shall be deemed to allow HD Services automatic access to legally privileged documents.

7.02          Access to HD Services Records

Any authorized representative of the Company shall on reasonable notice to HD Services be provided with full access to all of the records or information of HD Services pertaining to the affairs of the Company. Such access shall be extended to the auditors and other professional advisors of the Company. Nothing in this Agreement shall be deemed to allow the Company automatic access to legally privileged documents.

7.03          Audit

        (1)   The Company shall have the right on reasonable notice of not less than thirty (30) days in any event, to have an independent audit of the relevant business records of HD Services as they relate to the Services provided by HD Services to the Company in order to satisfy itself that any fees and expenses charged to the Company by HD Services under this Agreement have been properly incurred in accordance with Article 3. The Company shall not have the right to audit records and accounts of HD Services related to transactions or operations more than twenty-four (24) months after the calendar year during which the Services were provided. Any audit conducted on behalf of the Company shall be made during HD Services’ normal business hours and shall not interfere with its operations.

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          (2)   In the event that the Parties are unable to agree on the conclusions of the audit, the matter shall be referred for dispute resolution under Article 10. If that process results in a refund of more than five percent (5%) of amounts invoiced by HD Services then HD Services shall not only pay the amount but shall pay for the costs of the audit. A one percent (1%) to five percent (5%) refund adjustment shall result in the audit cost being shared equally and a less than one percent (1%) adjustment shall result in the Company paying for the costs of the audit. All written exceptions to and claims upon or by HD Services for discrepancies disclosed by such audit shall be made not more than ninety (90) days after completion and delivery of such audit, or they shall be deemed waived by the Company or HD Services, as the case may be.

7.04          Mutual Non Solicitation

The Company undertakes that is shall not directly or indirectly, for the Term and for twelve (12) months after the date of termination of this Agreement, solicit any HD Services employee for the purposes of offering employment, unless expressly approved by HD Services in writing. HD Services undertakes that is shall not directly or indirectly, for the Term and for twelve (12) months after the date of termination of this Agreement, solicit any Company employee for the purposes of offering employment, unless expressly approved by the Company in writing.

ARTICLE 8 - TERM AND TERMINATION

8.01          Term

The initial term of this Agreement shall be for a period of two (2) years from the Effective Date, following which this Agreement shall automatically renew for successive one year terms unless earlier terminated as provided in Section 8.02.

8.02          Termination

          (1)   This Agreement may be terminated without cause at any time by either Party giving sixty (60) days notice in writing to the other Party, except that where a the Company is engaged in a material mine construction or expansion program such period shall be extended to one hundred and eighty (180) days notice.

          (2)   Notwithstanding Section 8.02(1), the Company may terminate this Agreement with immediate effect for cause, which shall include:

(a) HD Services committing an act of Gross Negligence, wilful misconduct or wilful default of its obligations under this Agreement in circumstances that would, in the reasonable opinion of the Company, make HD Services unsuitable to continue to act on behalf of the Company;

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(b)	A material departure from an approved Program in accordance with Section 3.01(3);
(c)	HD Services ceasing to be a wholly-owned subsidiary of Hunter Dickinson Inc.;
(d)	HD Services being in material breach of this Agreement and within thirty (30) days of receipt of notice thereof from the Company either:
	(i)	such breach is not remedied; or
	(ii)	if such breach is incapable of being remedied, either within such thirty (30) day period or at all, HD Services has not paid reasonable monetary compensation in lieu of remedying the breach; provided that the breach is not of such a fundamental nature as to significantly impair the value to the Company of this Agreement;
(e)	the dissolution, liquidation, bankruptcy, insolvency or winding-up or the making of any assignment for the benefit of creditors of HD Services; or
(f)	the appointment of a trustee, receiver and manager or liquidator of HD Services.

(3) Notwithstanding Section 8.02(1), HD Services may terminate this Agreement with immediate effect for cause, which shall include:

(a)	the Company committing an act of negligence, wilful misconduct or wilful default of its obligations under this Agreement in circumstances that would, in the reasonable opinion of HD Services, make representation of the Company by HD Services unsuitable;
(b)	the Company being in material breach of this Agreement and within thirty (30) days of receipt of notice thereof from HD Services either:
	(i)	such breach is not remedied; or
	(ii)	if such breach is incapable of being remedied, either within such thirty (30) day period or at all, the Company has not paid reasonable monetary compensation acceptable to HD Services in lieu of remedying the breach; provided always that the breach is not of such a fundamental nature as to significantly impair the value to HD Services of this Agreement;
(c)	the dissolution, liquidation, bankruptcy, insolvency or winding-up or the making of any assignment for the benefit of creditors of the Company; or
(d)	the appointment of a trustee, receiver and manager or liquidator of the Company.

(4) if this Agreement is terminated:

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(a)	all rights and obligations under this Agreement (except those in Article 4, Sections 5.02 or 5.05, Article 6 and this Section 8.02(4)) shall terminate;
(b)	for any reason other than the circumstances described Sections 8.02(2)(a) and 8.02(2)(b), HD Services shall be entitled to receive, and the Company shall pay to HD Services, any outstanding fees and any reimbursable expenses pursuant to Article 3 up to and including the date of termination;
(c)	during the course of implementation of any Program, the Parties shall negotiate in good faith to minimize any interruption of such Program and to ensure that the costs related thereto are duly discharged by the Company; and
(d)	notwithstanding such termination, the Company shall continue to be bound by any third party commitments and agreements contracted for or on its behalf by HD Services in accordance with this Agreement prior to such termination.

ARTICLE 9 – INSURANCE

9.01          HD Services’ Insurance

          (1)  HD Services shall obtain, maintain until expiry or earlier termination of this Agreement or such longer period as may be specified below, and pay the premiums for, the following insurance coverage:

(a)	Automobile Liability Insurance. Automobile liability insurance covering liability for bodily injury, including death, and property damage arising out of ownership, use or operation of HD Services owned or leased licensed motor vehicles of $2 million inclusive per occurrence.
(b)	Professional Liability Insurance. A “professional liability insurance policy” in an amount of $2 million per claim and in the aggregate, to cover damages because of any error, omission or negligent act in professional services rendered by HD Services or any contractor or agent engaged by HD Services directly or indirectly. Subject to reasonable commercial availability coverage shall be maintained for at least 24 months after expiry or earlier termination of this Agreement.
(c)	Commercial General Liability Insurance. A “commercial general liability insurance policy”, in the amount of $5 million per occurrence, with cross liability and severability of interest clauses or equivalent wording, and a standard “non-owned automobile liability endorsement”. The policy shall name the Company as an additional insured with respect to bodily injury or property damage that arise out of Services provided pursuant to the Agreement.
(d)	Equipment Insurance. Prior to the commencement of the Services, HD Services shall obtain broad form equipment insurance covering loss or damage to tools, property and equipment of HD Services or for which HD Services is legally liable or responsible, in an amount equal to the full replacement value of the tools, property and equipment (or on such other basis as the Company may approve, such approval not to be unreasonably withheld). /P>

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          (2)   All insurance policies required under Section 9.01(1)(b), (c) and (d) shall provide that 30 days written notice of cancellation shall be given to the Company. HD Services is solely responsible to determine the appropriate type and amount of insurance to carry, but shall maintain, until expiry or earlier termination of this Agreement or such longer period as may be specified in Section 9.01(1), at least the amount and type of insurance specified in this Section 9.01.

          (3)   HD Services shall comply with workers’ compensation or equivalent legislation that is applicable to it, including the payment of assessments and dues thereunder, until expiry or earlier termination of this Agreement.

ARTICLE 10 - DISPUTE RESOLUTION

10.01         Disputes Regarding Reimbursable Costs

Notwithstanding Section 10.02, in the event of any dispute arising between the Parties regarding fees or reimbursable costs claimed by HD Services in accordance with Article 3 and such dispute not having been resolved between the Parties within thirty (30) days from the written notice of such dispute by either Party to the other, such dispute may be referred by either Party to a Chartered Accountant (“CA”) to be mutually agreed upon or, failing which, a third CA appointed by two CAs, one of which is chosen by each of the Parties. Such third CA shall act as arbitrator based on the results of the audit work (and such other work as he or she may direct be done) and shall be entitled to make such adjustments as may in the circumstances appear to it to be appropriate and whose decision shall be regarded as the decision of an arbitrator and shall be binding and final upon the Parties. The costs of the CA in deciding such dispute shall be borne by each Party in the same proportion as the cost of the audit in 7.03.

10.02         Other Disputes

Any dispute arising under or in connection with any matter relating to or resulting from the performance of obligations under this Agreement, other than as contemplated by Section 10.01, which has not been resolved by the Parties within thirty (30) days after the date on which either Party delivers written notice to the other Party of such dispute, which notice shall specify in reasonable detail the matter or matters in dispute, shall:

(a)

be referred to the President or the Chief Executive Officer of each Party (or the person who performs like functions) or their respective designates, who shall meet (face to face or by telephonic means) within ten (10) days from the expiry of such thirty (30) day period and shall endeavour to resolve such dispute; and

(b)

failing such resolution, be referred to and finally resolved by a single arbitrator pursuant to the Commercial Arbitration Act (British Columbia) as amended from time to time or any legislation substituted therefor, pursuant to the Commercial Arbitration Rules of the British Columbia International Commercial Arbitration Centre (the “Centre”), provided that it is understood and agreed that this Section 10.02 is not intended to nor is it to be construed as preventing the Parties hereto, or

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any of them, from seeking injunctive relief. If the Parties cannot agree to a single arbitrator, then such arbitrator shall be chosen by reference to the Centre. Such arbitration shall include a requirement for the production and discovery of documents and examination for discovery as required by the British Columbia Supreme Court Rules. The place of arbitration shall be Vancouver, British Columbia.

ARTICLE 11 - MISCELLANEOUS

11.01         Notices

Any demand, notice or other communication to be given in connection with this Agreement must be given in writing and shall be given by personal delivery, by registered mail or by electronic means of communication addressed to the recipient as follows:

To Hunter Dickinson Services Inc.:

1020 - 800 West Pender Street
Vancouver, British Columbia
Canada V6C 2V6

Fax: (604) 681 2741

Attention: President

To Quartz Mountain Resources Ltd. :

1020 - 800 West Pender Street
Vancouver, British Columbia
Canada V6C 2V6

Fax: (604) 684 681 2741

Attention: Secretary

or to such other address, individual or electronic communication number as may be designated by notice given by either Party to the other. Any demand, notice or other communication given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof and, if given by registered mail, on the third (3rd) business day following the deposit thereof in the mail and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the business day during which such normal business hours next occur if not given during such hours on any day. If the Party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such demand, notice or other communication may not be mailed but must be given by personal delivery or by electronic communication.

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11.02         Further Assurances

Each Party shall from time to time execute and deliver such further documents and instruments and do all acts and things as the other Party may reasonably require to effectively carry out or better evidence or perfect the terms of this Agreement.

11.03         Entire Agreement

          (1)   This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the Parties with respect thereto and any rights that the Company may have at law or equity regarding HD Services’ possession or use of the Confidential Information.

          (2)   Neither this Agreement nor the parties’ performance hereunder shall be deemed to create any special relationship or obligations, including fiduciary obligations, and there are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the Parties, other than as expressly set forth in this Agreement.

11.04         Assignment

This Agreement may not be assigned by either Party without the prior written consent of the other Party. Any assignment shall require the written agreement of the assignee to be bound by the terms hereof.

11.05         Amendments and Waivers

No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by the Parties. No waiver of any breach of any provision of this Agreement shall be effective or binding unless made in writing and signed by the Party purporting to give the same and, unless otherwise provided, shall be limited to the specific breach waived.

11.06         Enurement

This Agreement shall enure to the benefit of the Parties and shall be binding upon their successors and permitted assigns.

11.07         Ambiguities

Each of the parties has participated in the drafting of this Agreement and any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply to the interpretation of this Agreement.

11.08         Enforceability

If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the provisions shall remain in full force and effect and shall not be affected, impaired or invalidated thereby.

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11.09          Severability

If a provision of this Agreement shall be found to be wholly or partially invalid, this Agreement shall be interpreted as if the invalid provision had not been a part of this Agreement.

11.10         Currency

All dollar figures referred to in this Agreement are Canadian dollars unless specifically noted otherwise.

11.11         Headings, Etc.

The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms “this Agreement”, “hereof’, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.

11.12         Expanded Meanings

In this Agreement, unless something in the subject matter or context is inconsistent therewith:

(a)	the singular of any term includes the plural, and vice versa, the use of any term is equally applicable to any gender and, where applicable, a body corporate, the word “or” is not exclusive and the word “including” is not limiting (whether or not non- limiting language is used with reference thereto);
(b)	a reference to a person includes a company or other entity constituting a legal person; and
(c)	the words “written” or “in writing” include printing, typewriting or any electronic means of communication capable of being visibly reproduced at the point of reception including telex, telegraph or telecopy.

11.13         Governing Law

This Agreement shall be governed by the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

11.14         Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument.

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11.15         Electronic Transmission

Delivery of an executed signature page to this Agreement by either Party by electronic transmission shall be as effective as delivery of a manually executed copy of this Agreement by such Party.

IN WITNESS WHEREOF the Parties have caused this Agreement to be executed as of the Effective Date.

HUNTER DICKINSON SERVICES INC.

By: ________________________________
        Authorized Signatory

QUARTZ MOUNTAIN RESOURCES LTD.

By: ________________________________
        Authorized Signatory

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ANNEXURE A

SECONDMENT AGREEMENT

Employee Secondment Agreement made effective •, between Hunter Dickinson Services Inc. (“HDSI”), • (“•”) and the undersigned individual (the “Employee”).

1.        Secondment

The Employee will provide employment services to • or its affiliates (the “Secondment”). HDSI and the Employee acknowledges that • may, upon written notice to the Employee, second the Employee to its affiliate, • (“•”) and • may in turn, upon written notice to the Employee, second the employee to • (“•”)(•,• or • being in such capacity the “Employer”). During the Secondment, the Employee(s) will work under the general direction and supervision of the relevant Employer and will carry out the job duties and functions assigned by such Employer or their contactors and agents. Notwithstanding the Secondment, Employee will remain an employee of HDSI and all decisions regarding the Employee’s employment status will continue to be the sole responsibility of HDSI.

2.        General Obligations of Employee

Employee hereby acknowledges and agrees with • that:

(a)	he/she is subject to an obligation of confidentiality to the Employer and will not divulge or use for his/her own benefit any confidential information belonging to the Employer, except as may be required for the proper performance of the Employee’s duties;
(b)	as the sole compensation to the Employee for the services performed by the Employee for •, • may provide the Employee with incentive stock options in accordance with the terms and conditions of •’s stock option plan;
(c)	in the event that • awards Employee an incentive stock option, the Employee will receive a tax reporting slip in connection with any deemed benefits from this option from •;
(d)	Employee is obligated to pay his/her portion of Canada Pension Plan premiums to • in connection with any deemed benefits upon exercise of such stock option and will also pay or allowed to be withheld by • any other amounts properly payable by him/her according to applicable law; and
(e)	Employee is obligated to conduct him/herself in accordance with all of the internal employee policies of the Employer.

A-1

3.        Acknowledgements of •

• hereby acknowledges that it will promote a safe, secure workplace for Employee when at the Employer’s premises or outside of HDSI’s offices on secondment to the Employer and will ensure Employee is able to perform his or her duties free from harassment and under proper direction.

4.        General

(a)	This agreement is to be co-terminus with and construed together with (i) the services agreement between HDSI and •, and (ii) the terms and conditions of employment between HDSI and the Employee, and (iii) HDSI’s secondment policies as each may be amended from time to time.
(b)	This agreement is personal to the parties and may not be amended except by written instrument agreed by all parties. This agreement is intended to memorialize the Secondment and not change the employment arrangements as they have been traditionally understood by Employee and HDSI.
(c)	This Agreement shall be governed by the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

IN WITNESS WHEREOF the parties have executed this agreement as of the date first written above.

Hunter Dickinson Services Inc.

_______________________________________
Authorized Signatory

•

_______________________________________
Authorized Signatory

_______________________________________
[Employee]

A-2

ANNEXURE B

CONTRACTOR AGREEMENT

Services Agreement made effective •, between Hunter Dickinson Services Inc. (“HDSI”), • (“•”) and the undersigned individual (the “Contractor”).

1.        Contracting

The Contractor will provide corporate and technical services to • or its affiliates (the “Contracting”). HDSI and the Contractor acknowledges that • may, upon written notice to the Contractor, assign its rights and obligations hereunder to its affiliate, • (“•”) and • may in turn, upon written notice to the Contractor, assign its rights and obligations as against the Contractor to • (“•”)(•,• or • being in such capacity the “Client”). During the Contracting, the Contractor(s) will provide the services requested by such Client or their contactors and agents. Notwithstanding the Contracting, Contractor will also remain an independent contractor to HDSI under a separate services agreement (the “HDSI Contract”) and all services provided by the Contractor to HDSI will continue to be the sole responsibility of HDSI.

2.        Independent Contractor

The Parties acknowledge and agree that:

(a)	Contractor shall act as an independent contractor in relation to the Client in the provision of the services hereunder and shall not be an agent or an employee of the Client; and
(b)	Contractor shall have no authority to bind, obligate or incur any liability on behalf of the Client in any way and shall not, directly or indirectly, or by inference, make any guarantees, representations or warranties, oral or written, in respect of the Client or represent that it is an agent or representative of the Client.

3.        Fees and Expenses

HDSI has a services contract with •, • has in turn contracted with • and • has a services contract with • (such services contracts collectively being the “Primary Services Contracts”). Contractor acknowledges that the Client shall pay all remuneration in respect of the Contracting solely in accordance with the relevant Primary Services Contract and HDSI shall remain solely liable to pay the monthly fees, and reimburse the expenses, of Contractor in accordance with the HDSI Contract.

4.        General Obligations of Contractor

Contractor hereby acknowledges and agrees with • that:

(a) he/she is subject to an obligation of confidentiality to the Client and will not divulge or use for his/her own benefit any confidential information belonging to the Client, except as may be required for the proper provision of the Contractor’s services; and

B-1

(b) Contractor is obligated to conduct him/herself in accordance with all of the internal Contractor policies of the Client.

5.        Acknowledgements of •

• hereby acknowledges that it will promote a safe, secure workplace for Contractor when at the Client’s premises or outside of HDSI’s offices while Contracting and will ensure Contractor is able to provide his/her services free from harassment and under proper direction.

6.        Termination

This agreement shall continue until the earlier of:

(a)	termination of the HDSI Contract;
(b)	termination of the relevant Primary Services Contract; and
(c)	the date that is ten (10) days following the date of written notice of termination of this agreement by either of Contractor or the relevant Client delivered to the other parties.

7.	General
	(a)	This agreement is to be co-terminus with and construed together with (i) the Primary Service Contract between HDSI and •, and (ii) the HDSI Contract, and (iii) HDSI’s Contractor policies, as each may be amended from time to time.
	(b)	This agreement is personal to the parties and may not be amended except by written instrument agreed by all parties. This agreement is intended to memorialize the Contracting and not change the contracting arrangements as they have been traditionally understood by Contractor and HDSI.
	(c)	This Agreement shall be governed by the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

B-2

IN WITNESS WHEREOF the parties have executed this agreement as of the date first written above.

Hunter Dickinson Services Inc.

_______________________________________
Authorized Signatory

•

_______________________________________
Authorized Signatory

_______________________________________
[Contractor]

B-3

ANNEXURE C

HD SERVICES CHARGE-OUT RATES SCHEDULE

Rate Structure for FY2010
Department	Category	Hourly Rate
110 - Engineering	Exec VP	250.00
	Manager	125.00
	Senior Advisor	100.00
	Advisor	75.00
120 - Environmental	Exec VP	250.00
	VP	200.00
	Senior Manager	150.00
130 - Geology	Exec VP	250.00
	VP	200.00
	Senior Manager	150.00
	Senior Advisor	125.00
	Advisor	75.00
140 - Graphics	Manager	125.00
	Senior Advisor	90.00
	Advisor	75.00
150 - Information Technology	Manager	125.00
	Senior Advisor	75.00
	Advisor	50.00
160 - Site Services	Senior Advisor	100.00
	Technician	75.00
180 - Resource / Database	VP	300.00
	Senior Manager	150.00
	Manager	100.00
	Senior Advisor	75.00
	Advisor	50.00
	Technician	50.00
210 - Administration	Manager	100.00
	Senior Advisor	75.00
	Executive Administration	75.00
	Administration 2	75.00
	Administration 1	50.00
220 - Corporate Communications	Exec VP	300.00
	Senior Advisor	90.00
	Advisor	75.00
230 - Finance	CFO or EVP	250.00
	Manager	150.00
	Senior Advisor	100.00
	Advisor	75.00
	Technician	50.00

C-1

240 - Human Resources	Manager	100.00
	Advisor	75.00
250 - Legal	Legal Counsel	300.00
	Corporate Secretary	100.00
260 - Investor Relations	Senior Manager	150.00
	Manager	125.00
	Advisor	75.00
275 - Public Affairs	Exec VP	250.00
	Advisor	75.00
280 - Corporate Development	VP	200.00
	Senior Manager	150.00
	Manager	125.00
	Analyst	40.00
285 - Acquisitions	Exec VP	250.00
	Senior Manager	150.00
	Manager	100.00
000 - Contractors	Contractors	40.00

C-2

EX-12.1

CERTIFICATION
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Rene G. Carrier, President and Chief Executive Officer of Quartz Mountain Resources, certify that:

(1)	I have reviewed this annual report on Form 20-F of Quartz Mountain Resources for the fiscal year ended July 31, 2010;
(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
(4)	The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting;
(5)	The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of issuer’s board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date:	September 30, 2010
By:	/s/ R. G. Carrier
Name:	Rene G. Carrier
Title:	President and Chief Executive Officer

EX-12.2

CERTIFICATION
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Mann, Principal Accounting Officer of Quartz Mountain Resources, certify that:

(1)	I have reviewed this annual report on Form 20-F of Quartz Mountain Resources for the fiscal year ended July 31, 2010;
(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
(4)	The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting;
(5)	The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of issuer’s board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date:	September 30, 2010
By:	/s/ P. Mann
Name:	Paul Mann
Title:	Principal Accounting Officer

EX-13.1

CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

(1)           The Annual Report on Form 20-F of the Company for the fiscal year ended July 31, 2010 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

By:	/s/ R. G. Carrier
Name:	Rene G. Carrier
Title:	President and Chief Executive Officer
Date:	September 30, 2010

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

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

EX-13.2

CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

(1)           The Annual Report on Form 20-F of the Company for the fiscal year ended July 31, 2010 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

By:	/s/ P. Mann
Name:	Paul Mann
Title:	Principal Accounting Officer
Date:	September 30, 2010

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

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

EX-99.1

QUARTZ MOUNTAIN RESOURCES LTD.

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED
JULY 31, 2010, 2009 AND 2008

(Expressed in United States Dollars, unless otherwise stated)

DAVIDSON & COMPANY LLP
	Chartered Accountants	A Partnership of Incorporated Professionals

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of
Quartz Mountain Resources Ltd.

We have audited the consolidated balance sheets of Quartz Mountain Resources Ltd. as at July 31, 2010 and 2009 and the consolidated statements of operations, shareholders' equity and cash flows for the years ended July 31, 2010, 2009 and 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at July 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended July 31, 2010, 2009 and 2008 in accordance with Canadian generally accepted accounting principles.

	“DAVIDSON & COMPANY LLP”
Vancouver, Canada	Chartered Accountants
September 30, 2010

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

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated September 30, 2010 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.

	“DAVIDSON & COMPANY LLP”
Vancouver, Canada	Chartered Accountants
September 30, 2010

QUARTZ MOUNTAIN RESOURCES LTD.

Consolidated Balance Sheets

(Expressed in United States Dollars unless otherwise stated)

		July 31			July 31
		2010			2009
ASSETS
Current assets
Cash and cash equivalents	$	251,240		$	391,040
Amounts receivable and prepaids		12,873			32,686
		264,113			423,726
Mineral property interests (note 5)		1			1
	$	264,114		$	423,727
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	20,000		$	20,722
Amounts due to a related party (note 7)		9,864			35,116
		29,864			55,838
Shareholders' equity
Share capital (note 6)		21,269,046			21,269,046
Deficit		(21,034,796	)		(20,901,157	)
		234,250			367,889
	$	264,114		$	423,727

Nature and continuance of operations (Note 1)
Subsequent events (note 11)

Approved by the Board of Directors:

/s/ Rene G. Carrier	/s/ Brian F. Causey
Rene G. Carrier	Brian F. Causey
Director	Director

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

QUARTZ MOUNTAIN RESOURCES LTD.

Consolidated Statements of Operations

(Expressed in United States Dollars, unless otherwise stated)

		Years ended July 31
		2010			2009			2008
Expenses and other
Foreign exchange (gain) loss	$	(13,470	)	$	55,267		$	(29,874	)
Interest (income)		(1,790	)		(4,451	)		(24,465	)
Legal, accounting and audit		45,776			24,521			34,779
Mineral property investigations		1,096			7,593			–
Office and administration		95,008			113,587			93,070
Regulatory, trust and filing		27,370			27,586			33,001
Shareholder communication		3,400			–			–
Administrative cost (recovery)		(23,751	)		–			–
Loss and comprehensive loss for the year	$	133,639		$	224,103		$	106,511
Basic and diluted loss per common share	$	0.01		$	0.02		$	0.01
Weighted average number of common shares outstanding		13,399,426			13,399,426			13,399,426

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

QUARTZ MOUNTAIN RESOURCES LTD.

Consolidated Statements of Shareholders' Equity

(Expressed in United States Dollars, unless otherwise stated)

			Years ended July 31
	2010				2009
	Number of				Number of
Share capital	shares		Amount		shares		Amount
Balance at beginning and end of the year	13,399,426	$	21,269,046		13,399,426	$	21,269,046
Deficit
Balance at beginning of the year			(20,901,157	)			(20,677,054	)
Loss for the year			(133,639	)			(224,103	)
Balance at end of the year		$	(21,034,796	)		$	(20,901,157	)
TOTAL SHAREHOLDERS' EQUITY		$	234,250			$	367,889

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

QUARTZ MOUNTAIN RESOURCES LTD.

Consolidated Statements of Cash Flows

(Expressed in United States Dollars, unless otherwise stated)

		Years ended July 31
Cash and cash equivalents provided by (used in)		2010			2009			2008
Operating activities
Loss for the year	$	(133,639	)	$	(224,103	)	$	(106,511	)
Changes in non-cash working capital items
Amounts receivable and prepaids		19,813			(16,977	)		22,665
Accounts payable and accrued liabilities		(722	)		203			6,111
Amounts due to and from related parties		(25,252	)		40,581			5,194
		(139,800	)		(200,296	)		(72,541	)
Decrease in cash and cash equivalents during the year		(139,800	)		(200,296	)		(72,541	)
Cash and cash equivalents, beginning of year		391,040			591,336			663,877
Cash and cash equivalents, end of year	$	251,240		$	391,040		$	591,336
Components of cash and cash equivalents are as follows:
Cash	$	251,240		$	391,040		$	37,920
Commercial paper		–			–			37,911
Government treasury bills		–			–			515,505
	$	251,240		$	391,040		$	591,336
Supplemental disclosure:
Interest paid during the year	$	–		$	–		$	–
Income taxes paid during the year	$	–		$	–		$	–

There were no significant non-cash transactions during the years ended July 31, 2010, 2009 and 2008.

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

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

1.	NATURE AND CONTINUANCE OF OPERATIONS
	Quartz Mountain Resources Ltd. ("Quartz" or the "Company") is a Canadian public company incorporated in British Columbia. The Company is primarily engaged in the acquisition and exploration of mineral properties.
	These consolidated financial statements have been prepared using accounting principles applicable to a going concern. The Company has a history of losses and no operating revenue, other than interest income. The ability of the Company to carry out its planned business objectives is dependent on its ability to raise adequate financing from lenders, shareholders and other investors. There can be no assurances that the Company will continue to obtain additional financial resources and/or achieve profitability or positive cash flows in the future. If the Company is unable to obtain adequate additional financing, the Company will be required to curtail operations and exploration activities. Failure to continue as a going concern would require that the Company's assets and liabilities be restated on a liquidation basis which may differ significantly from the going concern basis. These consolidated financial statements do not include any adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.
2.	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
	These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles and have been reconciled to United States generally accepted accounting principles in note 10. These consolidated financial statements include the accounts of (i) Quartz Mountain Resources Ltd., (ii) Quartz Mountain Gold Inc., a wholly-owned subsidiary incorporated in the State of Nevada, and (iii) Wavecrest Resources Inc., a wholly-owned subsidiary of Quartz Mountain Gold Inc., incorporated in the State of Delaware.
	All material intercompany balances and transactions have been eliminated upon consolidation.
3.	SIGNIFICANT ACCOUNTING POLICIES
(a)	Cash and cash equivalents
	Cash and cash equivalents consist of highly liquid investments, having maturity dates of three months or less from the date of purchase, which are readily convertible to known amounts of cash.
	At July 31, 2010, the Company held Canadian-dollar-denominated cash and cash equivalents totaling C$252,197 (2009 – C$131,826).

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(b)	Mineral property interests
	Mineral property acquisition costs, and exploration and development expenditures incurred subsequent to the determination of the feasibility of mining operations, are capitalized until the property to which they relate is placed into production, sold, allowed to lapse or abandoned. Mineral property acquisition costs include the cash consideration and the estimated fair value of common shares and warrants issued for mineral property interests, pursuant to the terms of the relevant agreement. These costs are amortized over the estimated life of the property following commencement of commercial production, or written off if the property is sold, allowed to lapse or abandoned, or when an impairment in value has been determined to have occurred.
	Exploration expenses incurred prior to determination of the feasibility of mining operations, including periodic option payments and administrative expenditures are expensed as incurred.
	The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
(c)	Asset retirement obligations
	The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company also records a corresponding asset value which is amortized over the remaining service life of the asset being retired. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).
	The Company also reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.
	The Company has no material asset retirement obligations as at July 31, 2010 and 2009.
(d)	Foreign currency translation
	The Company considers its functional currency to be the United States dollar.
	Monetary assets and liabilities of the Company and its integrated foreign operations are translated into United States dollars at exchange rates in effect at the balance sheet date. Non- monetary assets and liabilities are translated at historical exchange rates unless such items are carried at market, in which case they are translated at the exchange rates in effect on the balance sheet date. Revenues and expenses, except amortization, are translated at the average exchange rates for the period. Amortization is translated at the same exchange rate as the assets to which it relates. Gains or losses on translation are recorded in the statement of operations.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(e)	Income taxes
	The Company uses the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are computed based on differences between the carrying amount of existing assets and liabilities on the balance sheet and their corresponding tax values, using the enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
	Future income tax assets also result from unused loss carry forwards and other deductions. Future tax assets are recognized to the extent that they are considered more likely than not to be realized. The valuation of future income tax assets is adjusted, if necessary, by the use of a valuation allowance to reflect the estimated realizable amount.
(f)	Share capital
	The Company records proceeds from share issuances net of issue costs. Shares issued for consideration other than cash are valued at the quoted price on the stock exchange on the date that shares are issued pursuant to the relevant agreement.
(g)	Stock-based compensation
	The Company has a share option plan which is described in note 6(b). The Company accounts for all non-cash stock-based payments to non-employees, and employee awards that are direct awards of shares that call for settlement in cash or other assets, or that are share appreciation rights which call for settlement by the issuance of equity instruments, using the fair value method.
	Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of non-cash stock-based payments is periodically re-measured until counterparty performance is complete, and any change therein is recognized in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of non-cash stock-based payments to service providers that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.
	Consideration received by the Company upon the exercise of share purchase options and warrants, and the stock-based compensation previously credited to contributed surplus related to such options and warrants, is credited to share capital.
	During the years ended July 31, 2010, 2009 and 2008, no stock options were granted.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(h)	Loss per share
	Basic loss per share is calculated by dividing the loss for the period by the weighted average number of common shares outstanding during the period.
	Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common shares at the average market price during the period.
(i)	Use of estimates
	The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as at the balance sheet date and the reported amounts of revenue and expenses during the reporting period.  Significant areas requiring the use of management estimates include the determination of potential impairment of asset values, and the assumptions used in determining the fair value of non-cash stock-based compensation.  Actual results could differ from those estimates.
(j)	Segment disclosures
	The Company is currently operating in a single segment – the acquisition and exploration of mineral properties.
(k)	Financial instruments
	All financial instruments are classified into one of the following five categories: held for trading, held-to-maturity, loans and receivables, available-for-sale financial assets, or other financial liabilities. Subsequent measurement and recognition of changes in the value of financial instruments depends on their initial classification:
		Held-to-maturity investments, loans and receivables, and other financial liabilities are initially measured at fair value and subsequently measured at amortized cost.
		Available-for-sale financial assets are measured at fair value. Revaluation gains and losses are included in other comprehensive income (loss) until the asset is removed from the balance sheet.
		Held for trading financial instruments are measured at fair value. All gains and losses are included in net earnings (loss) in the period in which they arise.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

		All derivative financial instruments are measured at fair value, even when they are part of a hedging relationship. All gains and losses are included in net earnings (loss) in the period in which they arise.
	The Company has classified its financial instruments as follows:
		Cash and cash equivalents are classified as held for trading financial instruments and are measured at fair value due to their short term nature and availability for prompt liquidation.
		Amounts receivable and amounts due from a related party are classified as loans and receivables and are measured initially at fair value and subsequently measured at amortized cost.
		Accounts payable and accrued liabilities and amounts due to a related party are classified as other financial liabilities and are measured initially at fair value and subsequently measured at amortized cost.
(l)	Comprehensive income (loss)
	Comprehensive income is the change in the Company's shareholders' equity that results from transactions and other events from other than the Company's shareholders and includes items that would not normally be included in net earnings (loss), such as unrealized gains or losses on available-for-sale investments. Certain gains and losses that would otherwise be recorded as part of net earnings are presented in other "comprehensive income" until it is considered appropriate to recognize into net earnings. Comprehensive income and its components are presented in a separate financial statement that is displayed with the same prominence as the other financial statements.
	As at July 31, 2010 and 2009, the Company had no accumulated other comprehensive income and for the years ended July 31, 2010, 2009 and 2008, comprehensive loss equals net loss.
4.	CHANGES IN ACCOUNTING POLICIES
(a)	Newly Adopted Accounting Policies
	Effective August 1, 2009, the Company adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants ("CICA"):
	(i)	Goodwill and Intangible Assets:
	The Canadian Accounting Standards Board ("AcSB") issued CICA 3064, Goodwill and Intangible Assets, which replaces CICA 3062, Goodwill and Other Intangible Assets, and CICA 3450, Research and Development Costs. This new section establishes revised standards for the recognition, measurement and disclosure of goodwill and intangible assets. The Company evaluated the impact of this new standard and concluded that there was no material impact on the financial position or operating results of the Company as a result of the adoption of this standard.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

	(ii)	Fair Value Hierarchy:
	During the year, the AcSB amended CICA 3862, Financial Instruments – Disclosures, to require enhanced disclosures about the relative reliability of the data, or "inputs," that an entity uses to measure the fair values of its financial instruments. It requires financial instruments measured at fair value to be classified into one of three levels in the "fair value hierarchy" based on the lowest level input that is significant to the fair value measurement in its entirety. The amended section relates to disclosure only and did not have a material impact on the financial results of the Company. These disclosures are presented in note 8.
(b)	Accounting Standards Issued But Not Yet Adopted
	(i)	Business Combinations/Consolidated Financial Statements/Non-Controlling Interests:
	The AcSB issued CICA sections 1582, Business Combinations, 1601, Consolidated Financial Statements, and 1602, Non-Controlling Interests, which replaced sections 1581, Business Combinations, and 1600, Consolidated Financial Statements. CICA 1582 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011. CICA 1601 and CICA 1602 apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Early adoption is permitted for these new standards. The Company does not expect the adoption of these sections to have a material impact on its consolidated financial statements.
	(ii)	Amendment to CICA 3855 – Financial Instruments – Recognition and Measurement:
	The AcSB amended CICA 3855 to clarify when an embedded prepayment option is separated from its host debt instrument for accounting purposes. The amendment is applicable to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial statements.
	(iii)	International Financial Reporting Standards ("IFRS"):
	In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada's own GAAP. The transition date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. Due to the Company's July 31 fiscal year, the mandatory transition date for the Company is August 1, 2011 with the restatement of amounts reported by the Company for the year ended July 31, 2011

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

for comparative purposes. The Company has allocated resources, engaged expert consultants, and trained accounting staff to execute the transition from Canadian GAAP to IFRS.

5. MINERAL PROPERTY INTERESTS

		Years ended July 31
Quartz Mountain Property		2010		2009
Net smelter royalty	$	1	$	1

Quartz Mountain ("Angel's Camp") Property – Oregon, USA

During the year ended July 31, 2002, the Company sold 100% of its title, rights and interest in the Quartz Mountain property located in Lake County, Oregon to Seabridge Resources Inc. ("Seabridge"), which later changed its name to Seabridge Gold Inc., for 300,000 common shares of Seabridge (sold in prior years), 200,000 common share purchase warrants of Seabridge (exercised and sold in prior years), cash of $100,000, and a 1% net smelter return royalty payable to the Company on any production from the Quartz Mountain (subsequently renamed "Angel's Camp") property. In 2003, Seabridge optioned a 50% interest in the property to Quincy Gold Inc., which later changed its name to Golden Predator Mines Inc., which in turn became Golden Predator Royalty & Development Corporation.

6.	SHARE CAPITAL
(a)	Authorized share capital
	The Company's authorized share capital consists of an unlimited number of common shares, without par value and an unlimited number of preferred shares, without par value.
(b)	Share purchase options
	The Company's Share Purchase Option Plan allows the Company to grant up to 10% of the issued and outstanding shares of the Company at any one time, typically vesting over two years, subject to regulatory terms and approval, to its directors, employees, officers, and consultants. The exercise price of each option may be set equal to or greater than the closing market price of the common shares on the day prior to the date of the grant of the option, less any allowable discounts.
	As at July 31, 2010, no share purchase options had been granted under the Company's Share Purchase Option Plan. Accordingly, there were no stock options outstanding as at July 31, 2010, 2009, and 2008.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

7. RELATED PARTY BALANCES AND TRANSACTIONS

Amounts due to a related party		As at
		July 31		July 31
		2010		2009
Hunter Dickinson Services Inc.	$	9,864	$	35,116

Transactions		Years ended July 31
		2010		2009		2008
Services rendered and expenses reimbursed Hunter Dickinson Services Inc.	$	69,156	$	127,153	$	95,754

Hunter Dickinson Services Inc. ("HDSI") is a private company which until recently was owned equally by several public companies, one of which was Quartz. During the third quarter of fiscal 2010, the Company sold its interest in HDSI for nominal value. HDSI has certain directors in common with the Company and provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company and its subsidiaries on a full cost recovery basis per agreement dated June 1, 2008. On July 2, 2010, the HDSI services agreement was amended and services will be provided based on annually set rates.

A director of the Company is an employee of HDSI.

Services rendered by and expenses reimbursed to HDSI for the years ended July 31, 2010, 2009 and 2008 are related to the reimbursement of travel expenses, office and administration services and geological consulting services for property investigation activities.

8.	CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS
(a)	Capital Management Objectives
	The Company's primary objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders, and to have sufficient funds on hand for business opportunities as they arise. The Company considers the components of shareholders' equity, and its cash and cash equivalents as capital. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. As at July 31, 2010 the Company is not subject to any externally-imposed capital requirements.
	The Company's investment policy is to invest its cash in highly liquid short-term interest-bearing investments, having maturity dates of three months or less from the date of acquisition, that are readily convertible to known amounts of cash.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

	There were no changes to the Company's approach to capital management during the year ended July 31, 2010.
(b)	Fair Value of Financial Instruments
	The fair value of a financial instrument is the price at which a party would accept the rights and/or obligations of the financial instrument from an independent third party. Given the varying influencing factors, the reported fair values are only indicators of the prices that may actually be realized for these financial instruments.
	Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

The following table illustrates the classification of the Company's financial instruments recorded at fair value within the fair value hierarchy as at July 31, 2010:

Financial assets at fair value:
								July 31
	3	Level 1		Level 2		Level 3		2010
Cash and equivalents	$	251,240	$	–	$	–	$	251,240
Total financial assets at fair value	$	251,240	$	–	$	–	$	251,240

	The carrying amounts of the Company's cash and cash equivalents, amounts receivable, balances due to/receivable from a related party, and accounts payable and accrued liabilities approximate their fair values.
(c)	Financial Instrument Risk Exposure and Risk Management
	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of documented treasury policies, counterparty limits, and controlling and reporting structures. The types of risk exposure and the way in which such exposures are managed are provided as follows:

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(i) Credit Risk

Credit risk is the risk of potential loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets, including cash and cash equivalents, accounts receivable and balances receivable from a related party. The Company limits the exposure to credit risk by only investing its cash and cash equivalents with high credit quality financial institutions and in government treasury bills. The carrying value of the Company's cash and cash equivalents and amounts receivable represent the maximum exposure to credit risk. The Company does not have financial assets that are invested in asset backed commercial paper.

(ii) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company ensures, as far as reasonably possible, it will have sufficient capital in order to meet short term business requirements, after taking into account cash flows from operations and the Company's holdings of cash and cash equivalents. The Company believes that these sources will be sufficient to cover the likely short term cash requirements. The Company's cash and cash equivalents are invested in business accounts, which are available on demand for the Company's programs.

(iii) Foreign Exchange Risk

The Company is exposed to foreign exchange risk as its operating expenses are primarily incurred in Canadian dollars. The results of the Company's operations are subject to currency transaction risk and currency translation risk. The operating results and financial position of the Company are reported in United States dollars in the Company's consolidated financial statements. The fluctuation of the Canadian dollar in relation to the United States dollar will consequently have an impact upon the losses incurred by the Company and may also affect the value of the Company's assets and the amount of shareholders' equity.

The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

The exposure of the Company's cash and cash equivalents and, amounts receivable to foreign exchange risk is as follows:

Currency		July 31, 2010				July 31, 2009
		Foreign currency		Amount in US		Foreign currency		Amount in US
		amount		dollars		amount		dollars
Canadian Dollar
Cash and cash
equivalents	$	252,197	$	245,256	$	131,826	$	122,344
Amounts receivable		7,344		7,142		10,413		9,664
Total financial assets	$	259,541	$	252,398	$	142,239	$	132,008

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

The exposure to foreign exchange risk of the Company's accounts payable and accrued liabilities, and amounts due to a related party is as follows:

Currency		July 31, 2010				July 31, 2009
		Foreign				Foreign
		currency		Amount in		currency		Amount in
		amount		US dollars		amount		US dollars
Canadian Dollar
Accounts payable and accrued liabilities	$	–	$	–	$	22,327	$	20,722
Amounts due to a related party		10,143		9,864		37,837		35,116
Total financial liabilities	$	10,143	$	9,864	$	60,164	$	55,838

The following significant exchange rates were applied during the year:

	Years ended July 31
United States dollar per Canadian dollar	2010	2009	2008
Average rate for the year	1.0491	1.1753	1.0072
Closing rate July 31	1.0283	1.0775	1.0240

(iv) Interest Rate Risk

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

9.	INCOME TAXES
	At July 31, 2010, the Company had estimated income tax losses available for application against future years' taxable income of approximately $56,000 (2009 – $95,000) in the United States which, if unused, will predominantly expire between fiscal years ending 2011 and 2023.
	The Company has tax losses in Canada of approximately $1,323,000 (2009 – $1,148,000), which if unused, will expire between fiscal 2011 and 2030. The Company also has resource allowance expenditures and capital asset deductions of approximately $3,539,000 (2009 – $3,377,000) and $100,000 (2009 – $105,000), respectively, which carry forward indefinitely. Because of the uncertainty regarding the Company's ability to utilize these amounts in future years, a valuation allowance equal to the amount of the tax asset relating to these amounts has been provided.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

A reconciliation of income tax expense at the statutory rate of 29.12% (2009 – 30.21%, 2008 –32.59%) with reported taxes is as follows:

		Years ended July 31
Income tax expense		2010			2009			2008
Loss before income taxes	$	(133,639	)	$	(224,103	)	$	(106,511	)
Income tax recovery at statutory rates		(39,000	)		(68,000	)		(35,000	)
Permanent differences		(4,000	)		17,000			(10,000	)
Change in future tax rate		–			47,000			189,000
Statutory rate differential		16,000			2,000			12,000
Foreign exchange		(66,000	)		66,000			(58,000	)
Change in valuation allowance		72,000			(90,000	)		(314,000	)
Losses expired		21,000			26,000			195,000
Non-deductible items		–			–			21,000
Net income taxes (recovery)	$	–		$	–		$	–

Amounts of future tax assets and liabilities are as follows:

		As at July 31
Future tax assets and liabilities		2010			2009
Losses carried forward – Canada	$	331,000		$	287,000
Losses carried forward – United States		20,000			33,000
Resource allowance		885,000			844,000
Property and equipment		28,000			26,000
		1,264,000			1,190,000
Valuation allowance		(1,264,000	)		(1,190,000	)
Future income tax asset (liability)	$	–		$	–

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which differ in certain material aspects from those principles that the Company would have followed had its consolidated financial statements been prepared in accordance with United States generally accepted accounting principles ("US GAAP"). Had the Company followed US GAAP, certain items on the balance sheets and the statements of operations, shareholders' equity and cash flows would have been reported as below:

Consolidated statements of operations

		Years ended July 31
		2010			2009			2008
Loss for the year, Canadian GAAP and US GAAP	$	(133,639	)	$	(224,103	)	$	(106,511	)
Mineral property acquisition costs		–			–			–
Basic and diluted loss per common share, Canadian and US GAAP	$	(0.01	)	$	(0.02	)	$	(0.01	)
Weighted average shares outstanding, basic and diluted, Canadian GAAP and US GAAP		13,399,426			13,399,426			13,399,426

Consolidated balance sheets

		As at			As at
		July 31, 2010			July 31, 2009
Total assets, Canadian GAAP	$	264,114		$	423,727
Mineral property interests expensed per US GAAP		(1	)		(1	)
Total assets – US GAAP	$	264,113		$	423,726
Current liabilities, Canadian GAAP and US GAAP	$	29,864		$	55,838
Shareholders' equity, Canadian GAAP		234,250			367,889
Mineral property interests		(1	)		(1	)
Shareholders' equity, US GAAP		234,249			367,888
Total liabilities and shareholders' equity, US GAAP	$	264,113		$	423,726

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

Consolidated statements of cash flows

		Years ended July 31
		2010			2009			2008
Cash flows used in operating activities, Canadian and US GAAP	$	(139,800	)	$	(200,296	)	$	(72,541	)
Cash flows provided by financing activities, Canadian and US GAAP		–			–			–
Decrease in cash and cash equivalents during the year		(139,800	)		(200,296	)		(72,541	)
Cash and cash equivalents, beginning of year		391,040			591,336			663,877
Cash and cash equivalents, end of year	$	251,240		$	391,040		$	591,336

(a)	Mineral properties
	Under Canadian GAAP, the Company accounts for mineral properties as described in note 3(b).
	Under US GAAP, costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property, plant and equipment costs, to determine if these costs are in excess of their net recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
(b)	Other presentation items
	Under US GAAP, the Company would be considered an exploration stage company as it is devoting its efforts to establishing a commercially viable mineral property. However, the identification of the Company as such for accounting purposes does not impact the measurement principles applied in these consolidated financial statements.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(c)	Income tax
	FASB Codification 740-10 ("Codification 740-10") Accounting for Uncertainty in Income Taxes, prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.
	Codification 740-10 requires that the Company recognize the impact of a tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Codification 740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. In accordance with the provisions of Codification 740-10, any cumulative effect resulting from the initial adoption of Codification 740-10 is to be recorded as an adjustment to the opening balance of deficit. The adoption of Codification 740-10 did not result in a material impact on the Company's consolidated financial position or results of operations.
(d)	Impact of recent United States accounting pronouncements:
	(i)	Accounting standards codification
	In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of GAAP (codified within ASC 105). The Accounting Standards Codification ("ASC") establishes the sources of accounting principles and the framework for selecting principles used in the preparation of financial statements of non-governmental entities presented in conformity with US GAAP. The statement establishes two levels of GAAP: authoritative and non-authoritative. An entity must first consider authoritative GAAP for similar transactions or events, and then consider non-authoritative guidance from other sources. The adoption of the ASC did not have an impact on the Company's consolidated financial statements.
	(ii)	Subsequent events
	In June 2009, the FASB issued general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before the financial statements are issued or are available to be issued (codified within ASC 855). The update sets forth: (a) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (b) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (c) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of this standard had no impact on the Company's financial position, results of operations or cash flows. Refer to note 11 for the subsequent events note disclosure.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(e) United States accounting pronouncements not yet effective

(i) Share-based payments

In April 2010, the FASB provided an update to address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation, provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. This standard is effective for years beginning after December 15, 2010, and for subsequent interim and annual reporting periods thereafter. The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.

(i) Fair value measurement and disclosures

In January 2010, the FASB issued Accounting Standards Update No. 2010-06, "Improving Disclosures about Fair Value Measurements" (ASU 2010-06 or the ASU). The ASU amends ASC 820 to require a number of additional disclosures regarding fair value measurements. Specifically, the ASU requires entities to disclose:

(a)	the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers
(b)	the reasons for any transfers in or out of Level 3
(c)	information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis

In addition to these new disclosure requirements, the ASU also amends ASC 820 to clarify certain existing disclosure requirements.

Except for the requirement to disclose information about purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 measurements on a gross basis, all the amendments to ASC 820 made by ASU 2010-06 are effective for interim and annual reporting periods beginning after 15 December 2009. The requirement to separately disclose purchases, sales, issuances, and settlements of recurring Level 3 measurements does not become effective until fiscal years beginning after 15 December 2010, including interim periods within those fiscal years.

The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.

QUARTZ MOUNTAIN RESOURCES LTD.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2010 and 2009, 2008

(Expressed in United States Dollars, unless otherwise stated)

(ii) Variable interest entities

In June 2009, the FASB issued new guidance relating to accounting for Variable Interest Entities ("VIE") codified within ASC 810-10. Key changes include: (a) the elimination of the exemption for qualifying special purpose entities ("QSPE"); (b) a new approach for determining who should consolidate a VIE; and (c) changes to when it is necessary to reassess who should consolidate a VIE. This standard is effective for years beginning after November 15, 2009, and for subsequent interim and annual reporting periods thereafter. The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.

11.	SUBSEQUENT EVENTS
	There were no significant events subsequent to July 31, 2010 requiring disclosure in these consolidated financial statements.