QZMRF Quartz Mountain Resources (PK)

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

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

As at September 29, 2014

Commission File Number: 000-15490

QUARTZ MOUNTAIN RESOURCES LTD.
(Translation of registrant's name into English)

1500 - 1040 W Georgia Street, Vancouver, BC, V6E 4H1, Canada
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[ x ] Form 20-F   [           ] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [           ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [           ]

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SUBMITTED HEREWITH

Exhibits

	99.1	Consolidated Annual Financial Statements for the Year Ended July 31, 2014
	99.2	Management's Discussion and Analysis for the Year Ended July 31, 2014

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Quartz Mountain Resources Ltd.
	(Registrant)
Date: September 29, 2014	By:	/s/ Michael Lee
		Michael Lee
	Title:	Chief Financial Officer

 

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QUARTZ MOUNTAIN RESOURCES LTD.

 

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JULY 31, 2014 AND 2013

 

(Expressed in Canadian Dollars, unless otherwise stated)

 

 

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INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Quartz Mountain Resources Ltd.

We have audited the accompanying consolidated financial statements of Quartz Mountain Resources Ltd., which comprise the consolidated balance sheets as at July 31, 2014 and 2013 and the consolidated statements of loss and comprehensive loss, changes in equity (deficiency) and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Quartz Mountain Resources Ltd. as at July 31, 2014 and 2013 and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes conditions and matters that indicate the existence of a material uncertainty that may cast significant doubt about Quartz Mountain Resources Ltd.’s ability to continue as a going concern.

	"DAVIDSON & COMPANY LLP"
Vancouver, Canada	Chartered Accountants
September 24, 2014

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QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Balance Sheets
(Expressed in Canadian Dollars)

		July 31			July 31
		2014			2013
ASSETS
Current assets
Cash and cash equivalents (note 3(a))	$	1,025,320		$	706,393
Amounts receivable and other assets (note 4)		11,504			143,487
		1,036,824			849,880
Restricted cash (note 3(b))		38,563			158,387
Amounts receivable and other assets (note 4)		8,295			440,000
Mineral property interests (note 5)		891,628			1,021,547
Total assets	$	1,975,310		$	2,469,814
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Amounts payable and other liabilities (note 7)	$	6,844		$	136,137
Convertible debenture (note 8)		600,000			–
Flow-through share premium (note 9)		–			35,639
Due to related parties (note 10)		2,957,075			2,421,220
		3,563,919			2,592,996
Convertible debenture (note 8)		–			600,000
		3,563,919			3,192,996
Shareholders' equity (deficiency)
Share capital (note 6)		26,050,118			26,050,118
Reserves		592,011			592,011
Accumulated deficit		(28,230,738	)		(27,365,311	)
Total shareholders' equity (deficiency)		(1,588,609	)		(723,182	)
Total liabilities and shareholders' equity (deficiency)	$	1,975,310		$	2,469,814
Nature and continuance of operations (note 1)

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

/s/ James Kerr	/s/ Ronald W. Thiessen
James Kerr	Ronald W. Thiessen
Director	Director

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QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)

		For the year ended July 31
		2014				2013
Expenses (note 11):
Exploration and evaluation	$	261,971			$	3,880,441
Assays and analysis		20,921				359,928
Drilling		90,773				265,336
Engineering		–				21,518
Environmental		1,507				610
Geological		67,687				1,560,270
Graphics		3,417				47,464
Property payments		1,409				83,962
Site activities		37,549				723,338
Socio-economic		15,750				34,333
Transportation		4,770				690,565
Travel and accommodation		18,188				93,117
General and administration		603,998				1,359,671
Conferences and travel		8,147				40,197
Legal, accounting and audit		50,321				61,634
Office and administration		505,061				1,161,928
Regulatory, trust and filing		21,904				45,371
Shareholder communications		18,565				50,541
Equity-settled share-based payments (note 6(c))		–				210,872
		(865,969	)			(5,450,984	)
Other items
Flow-through share premium (note 9)		35,639				462,990
Interest income		9,225				10,984
Interest expense		(44,087	)			(40,326	)
Gain on disposition of a mineral property interest (note 5(a)(ii))		–				1,578,969
Tax related to flow-through financing (note 9)		(235	)			(20,460	)
Loss before income tax		(865,427	)			(3,458,827	)
Income tax (note 13)		–				–
Loss and comprehensive loss for the year		(865,427	)			(3,458,827	)
Basic and diluted loss per common share	$	(0.03	)		$	(0.13	)
Weighted average number of common shares outstanding		27,299,513				26,223,006

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

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QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Statement of Changes in Equity (Deficiency)
(Expressed in Canadian Dollars)

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

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QUARTZ MOUNTAIN RESOURCES LTD.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)

		For the year ended July 31
		2014			2013
Cash flows from operating activities:
Loss for the year	$	(865,427	)	$	(3,458,827	)
Adjusted for:
Equity-settled share-based payments (note 6(c))		–			210,872
Flow-through share premium (note 9)		(35,639	)		(462,990	)
Gain on disposition of a mineral property interest (note 5 (a)(ii))		–			(1,578,969	)
Interest income		(9,225	)		(10,984	)
Interest expense		44,087			40,326
Property option payments paid through issuance of shares (note 5 (a)(i))		–			5,000
Restricted cash (note 3(b))		119,824			(80,387	)
Changes in non-cash working capital items:
Amounts receivable and other assets - current		131,990			149,350
Amounts receivable and other assets - non-current		191,705			(200,000	)
Amounts payable and other liabilities		(122,334	)		(474,310	)
Due to related parties		491,076			1,607,365
Net cash used in operating activities		(53,943	)		(4,253,554	)
Cash flows from investing activities:
Acquisition of the Galaxie Project (note 5 (a)(i))		–			(50,000	)
Disposition of mineral property interest (note 5(a)(iii))		402,636			2,000,000
Interest received		9,225			10,984
Net cash provided by investing activities		411,861			1,960,984
Cash flows from financing activities:
Proceeds from issuance of share capital, net of issuance costs (note 6(b))		–			615,780
Principal payment on convertible debenture (note 8)		–			(30,000	)
Interest paid on convertible debenture		(38,991	)		(37,268	)
Net cash provided by financing activities		(38,991	)		548,512
Increase (decrease) in cash and cash equivalents		318,927			(1,744,058	)
Cash and cash equivalents, beginning of year		706,393			2,450,451
Cash and cash equivalents, end of year (note 3(a))	$	1,025,320		$	706,393
Supplementary cash flow information:
Non cash investing and financing activities:
Property option payments paid through issuance of shares (note 5(a)(i))	$	–		$	5,000
Property acquisition costs paid through issuance of shares (note 5(a)(i))		–			1,002,577
Property acquisition costs paid through issuance of convertible debenture (note 5(a)(i))		–			650,000
Portion of debenture assumed by Amarc (note 5(a)(iv))		(240,000	)		240,000
		(240,000	)		1,897,577

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

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Quartz Mountain Resources Ltd.

Notes to the Consolidated Financial Statements

For the years ended July 31, 2014 and 2013

(Expressed in Canadian Dollars, unless otherwise stated)

1.	NATURE AND CONTINUANCE OF OPERATIONS
	Quartz Mountain Resources Ltd. ("Quartz Mountain" or the "Company") is a Canadian public company incorporated in British Columbia on August 3, 1982. The Company's corporate office is located at 1040 West Georgia Street, 15th Floor, Vancouver, British Columbia, Canada. The Company is primarily engaged in the acquisition and exploration of mineral properties.
	These consolidated financial statements (the "Financial Statements") of the Company as at and for the year ended July 31, 2014 include Quartz Mountain Resources Ltd. and its subsidiary (together referred to as the "Company"). Quartz Mountain Resources Ltd. is the ultimate parent entity of the group.
	The Company is in the process of acquiring and exploring mineral property interests. The Company's continuing operations are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of these projects, obtaining the necessary permits to mine, on future profitable production of any mine and the proceeds from the disposition of the mineral property interests.
	These Financial Statements have been prepared on a going concern basis which contemplates the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. As at July 31, 2014, the Company had cash and cash equivalents of $1.0 million, a working capital deficit of $2.6 million, and accumulated losses of $28.2 million since inception. These material uncertainties cast significant doubt on the ability of the Company to continue as a going concern.
	Of the total current liabilities of $3.6 million at July 31, 2014, approximately $3.0 million is payable to Hunter Dickinson Services Inc. ("HDSI"), a related party (note 10(b)). The Company has received a confirmation from HDSI that HDSI will continue to provide services to the Company and will not demand repayment of amounts outstanding, prior to November 1, 2015. However, there is no guarantee or amended agreement and as such the amount is presented as a current obligation.
	Management believes that it is able to maintain its mineral rights in good standing for the next 12 month period. Additional debt or equity financing will be required to fund exploration or development programs. The Company has a reasonable expectation that additional funds will be available when necessary to meet ongoing exploration and development costs. However, there can be no assurance that the Company will continue to obtain additional financial resources and/or achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will be required to re-evaluate its planned expenditures until additional funds can be raised through financing activities.
	These Financial Statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

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2.	SIGNIFICANT ACCOUNTING POLICIES

(a)	Statement of compliance
	These Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee (“IFRIC”) effective for the Company's fiscal year ended July 31, 2014.
	Issuance of these Financial Statements was authorized by the Company’s Board of Directors on September 24, 2014.
(b)	Basis of presentation
	These Financial Statements have been prepared on a historical cost basis, except for financial instruments measured at fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting, except for cash flow information.
(c)	Significant accounting estimates and judgments
	The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
	The impact of such estimates is pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that management believes are reasonable under the circumstances. Changes in the subjective inputs and assumptions can materially affect fair value estimates.
	Specific areas where significant estimates or judgements exist are:
	Sources of estimation uncertainty:

•

Management determines costs for share-based payments using market-based valuation techniques. The fair value of the market-based and performance-based share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates;

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	•	Estimate for the accrual of the Mineral Exploration Tax Credit ("METC"). The METC initiative was introduced by the government of British Columbia to stimulate mineral exploration activity in the province and includes an enhanced credit for mineral exploration in areas affected by the mountain pine beetle infestation. The Company is eligible to receive refunds under this tax credit. However, the timing and amounts of refunds pursuant to the METC program are uncertain as these amounts are subject to government audit;
	•	Estimated fair values of mineral properties acquired or disposed;
	•	Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxation authorities. Where the final outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made;
	•	Valuation of shares issued in non-cash transactions are measured at the fair value of the equity instruments granted based on quoted market prices on the date of grant or per the terms of the contract; and
	•	Estimate of the Company’s borrowing rate at a rate consistent with the rate charged on the convertible debenture.

Critical accounting judgments:

	•	Assessment of the Company's ability to continue as a going concern;
	•	The recoverability of the carrying value of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. The carrying value of these assets is reviewed by management when events or circumstances indicate that its carrying value may not be recovered. If impairment is determined to exist, an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount;
	•	Information about the judgements used in the classification of the joint arrangement entered into during the year is provided in note 5(a). Judgment is required in assessing whether the arrangement is jointly controlled by all of its parties or by a group of the parties, or controlled by one of its parties alone.

(d)	Basis of consolidation
	These consolidated financial statements include the accounts of the Company and the subsidiaries that it controls. Control is achieved when the Company is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
	Intercompany balances and transactions, including any unrealized income and expenses arising from intercompany transactions, are eliminated upon consolidation.
	At July 31, 2014 and July 31, 2013 the Company held an ownership interest in the following subsidiary:

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(e)	Foreign currency
	The functional and presentation currency of the Company and its subsidiary, as at July 31, 2014, is the Canadian dollar.
	Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the period end date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re- translated. Gains and losses arising on translation are included in profit or loss for the period.
(f)	Financial instruments
	Financial assets and liabilities are recognized when the Company becomes party to the contracts that give rise to them. The Company determines the classification of its financial assets and liabilities at initial recognition and, where allowed and appropriate, re-evaluates such classification at each financial year end. The Company does not have any derivative financial instruments.
	Non-derivative financial assets:
	The Company classifies its non-derivative financial assets into the following categories:
	Loans and receivables
	Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.
	Loans and receivables comprise amounts receivable, restricted cash and cash and cash equivalents, described as follows: Cash and cash equivalents Cash and cash equivalents in the statement of financial position consist of cash and highly liquid investments, having maturity dates of three months or less from the date of purchase or redeemable fixed- term deposits which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. The Company's cash and cash equivalents are invested in business and savings accounts which are available on demand by the Company for its programs.
	Non-derivative financial liabilities:
	The Company's non-derivative financial liabilities comprise financial liabilities measured at amortized cost. Such financial liabilities are recognized initially at fair value net of any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities measured at amortized cost comprise amounts payable and other liabilities, balances payable to related parties and a convertible debenture.

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Impairment of financial assets:

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

Objective evidence of impairment could include:

	•	significant financial difficulty of the issuer or counterparty; or
	•	default or delinquency in interest or principal payments; or
	•	it becoming probable that the borrower will enter bankruptcy or financial re-organization.

	For certain categories of financial assets, such as amounts receivable, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of amounts receivable, where the carrying amount is reduced through the use of an allowance account. When an amount receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.
	If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
(g)	Exploration and evaluation expenditures
	Exploration and evaluation expenditures are expenditures incurred by the Company in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
	Exploration and evaluation expenditures are expensed as incurred, except for initial expenditures associated with the acquisition of exploration and evaluation assets through a business combination or an asset acquisition.
	Exploration and evaluation expenditures include the cash consideration and the estimated fair market value of common shares on the date of issue or as otherwise provided under the relevant agreements. Costs for properties for which the Company does not possess unrestricted ownership and exploration rights, such as option agreements, are expensed in the period incurred or until a feasibility study has determined that the property is capable of commercial production.
	Administrative expenditures related to exploration activities are expensed in the period incurred.

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	Mineral property interests
	Expenditures incurred by the Company in connection with a mineral property after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable are capitalized. Such amounts are then amortized over the estimated life of the property following the commencement of commercial production, or are written off if the property is sold, allowed to lapse or abandoned, or when impairment has been determined to have occurred.
	Mineral property interests, if any, are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
	Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, mineral property interests attributable to that area of interest are first tested for impairment and then reclassified to mineral property and development assets within property, plant and equipment.
	Recoverability of the carrying amount of mineral property interests is dependent on successful development and commercial exploitation, or alternatively, a sale of the respective areas of interest.
(h)	Impairment of non-financial assets
	At the end of each reporting period the carrying amounts of the Company's assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the greater of (i) fair value less costs to sell, and (ii) value in use. Fair value is estimated as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current assessments of the Company's cost of capital and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and an impairment loss is recognized in the profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
	Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
(i)	Share capital
	Common shares are classified as equity. Transaction costs directly attributable to the issuance of common shares and share purchase options are recognized as a deduction from equity, net of any tax effects.

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Flow–through shares

Canadian tax legislation permits mining entities to issue flow–through shares to investors. Flow–through shares are securities issued to investors whereby the deductions for tax purposes related to eligible Canadian exploration expenses ("CEE"), as defined in the Income Tax Act (Canada), may be claimed by investors instead of the entity, pursuant to a defined renunciation process.

Renunciation may occur:

	•	prospectively (namely, the flow–through shares are issued, renunciation occurs and CEE are incurred subsequently); or
	•	retrospectively (namely, the flow–through shares are issued, CEE are then incurred, and renunciation occurs subsequently).

	Flow–through shares are recorded in share capital at the fair value of common shares on date of issuance. When flow–through shares are issued, the difference between the fair value of non-flow-through common shares and the amount the investors pay for flow–through shares is recorded as a deferred liability called "flow-through share premium". This deferred liability is credited to profit or loss when the eligible expenses are incurred and renounced to investors.
	Upon eligible expenses being incurred, the Company derecognizes the liability and recognizes a deferred tax liability, if any, for the amount of tax reduction renounced to shareholders. The premium is recognized as other income and the related deferred tax is recognized as a tax provision.
(j)	Loss per share
	The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.
(k)	Share-based payments
	Share-based payments to employees and others providing similar services are measured at the fair value of the instruments at the grant date. The fair value determined at the grant date is charged to operations over the vesting period, based on the Company's estimate of equity instruments that will eventually vest. The Company revises the estimate on each reporting date and the effect of the change is recognized in profit or loss.
	Share-based payment transactions with other parties are measured at the fair value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

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(l)	Rehabilitation provision
	An obligation to incur rehabilitation and site restoration costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project, as soon as the obligation to incur such costs arises. These costs are charged against earnings over the life of the operation.
	The Company has no material rehabilitation and site restoration costs, as the disturbance to date has been minimal.
(m)	Income taxes
	Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
	Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.
	Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
	The following temporary differences are not provided for:

	•	goodwill not deductible for tax purposes;
	•	the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and
	•	differences relating to investments in subsidiaries, associates, and joint ventures to the extent that they will probably not reverse in the foreseeable future.

	The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period applicable to the period of expected realization or settlement.
	A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
(n)	Government assistance
	When the Company is entitled to receive mineral exploration tax credits and other government grants, these amounts are recognized as a cost recovery within exploration and evaluation expenditures when there is reasonable assurance of their recovery.

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(o)	Compound financial instruments
	Compound financial instruments issued by the Company comprise a convertible debenture that can be converted into a fixed number of the Company's common shares at the option of the holder.
	The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component, if any, is recognized initially as the difference between the estimated fair value of the compound financial instrument as a whole and the estimated fair value of the liability component. Directly attributable transaction costs, if material, are allocated to the liability and equity components in proportion to their initial carrying amounts.
(p)	Joint venture activities and joint controlled operations
	Joint control is defined as the contractually agreed sharing of control over an economic activity, and exists only when the strategic, financial and operating decisions essential to the relevant activities require the unanimous consent of the parties sharing control. When the Company enters into agreements that provide for specific percentage interests in exploration properties, a portion of the Company's exploration activities is conducted jointly with others, without establishment of a corporation, partnership or other entity.
	Under IFRS 11 "Joint Arrangements", this type of joint control of mineral assets and joint exploration and/or development activities is considered as a joint operation, which is defined as a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.
	In its financial statements, the Company recognizes the following in relation to its interest in a joint operation:

	•	its assets, including its share of any assets held jointly;
	•	its liabilities, including its share of any liabilities incurred jointly;
	•	its revenue from the sale of its share of the output of the joint operation; and
	•	its expenses, including its share of any expenses incurred jointly

(q)	Accounting standards, interpretations and amendments to existing standards
	Effective August 1, 2013, the Company adopted new and revised IFRS that were issued by the IASB. The application of these new and revised IFRS has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements.
	Accounting policies adopted in the current year:

	•	Amendments to IAS 1, Presentation of Items of Other Comprehensive Income
	•	IFRS 13, Fair Value Measurement
	•	IAS 19, Employee Benefits

13

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•

IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine

There was no material impact of the new and amended accounting standards adopted during the period.

Accounting standards issued but not yet effective:

Effective for annual periods beginning on or after January 1, 2014

	•	Amendments to IAS 32, Financial Instruments – Presentation
	•	Amendments to IAS 36, Impairment of Assets
	•	Amendments to IAS 39, Financial Instrument – Recognition and Measurement
	•	IFRIC 21 – Levies

Effective for annual periods beginning on or after July 1, 2014

•

Amendments to IAS 19, Employee Benefits

Effective for annual periods beginning on or after January 1, 2016

	•	IFRS 14, Regulatory Deferral Accruals
	•	Amendments to IFRS 11, Joint Operations
	•	Amendments to IAS 16 and IAS 38, Depreciation and Amortization

Effective for annual periods beginning on or after January 1, 2017

•

IFRS 15, Revenue from Contracts with Customers

Effective for annual periods beginning on or after January 1, 2018

•

IFRS 9, Financial Instruments – Classification and Measurement

	The Company has not early adopted these new standards, interpretations, or amendments to existing standards, and is currently assessing the impact that these standards will have on the Company's Financial Statements.
3.	CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

(a)	Cash and cash equivalents

			July 31, 2014			July 31, 2013
	Business and savings accounts	$	523,507		$	706,393
	Cash held in guaranteed investment certificates		501,813			–
	Total	$	1,025,320		$	706,393

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(b)	Restricted cash
	Restricted cash in the amount of $38,563 (July 31, 2013 – $158,387) consists of guaranteed investment certificates held in support of explorations permits.

4.	AMOUNTS RECEIVABLE AND OTHER ASSETS

			July 31, 2014			July 31, 2013
	Current:
	Sales tax receivable	$	4,834		$	17,679
	Prepaid insurance		6,670			5,808
	Other receivables		–			120,000
	Total	$	11,504		$	143,487
	Non-current:
	Other receivable (note 5(a)(iv))	$	–		$	240,000
	Estimated British Columbia Mineral Exploration Tax Credit recoverable		8,295			200,000
	Total	$	8,295		$	440,000

5.	MINERAL PROPERTY INTERESTS

			July 31, 2014			July 31, 2013
	Galaxie Project (note 5(a))	$	891,627		$	1,021,546
	Angel's Camp royalty (note 5(b))		1			1
	Total	$	891,628		$	1,021,547

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(a)	Galaxie Project
	At July 31, 2014, the Company held a 100% interest in the Galaxie Project located approximately 24 kilometres south of Dease Lake, BC.

			Total
	Estimated fair value of the Company's shares issued upon initial acquisition	$	1,002,577
	Cash payment upon initial acquisition		50,000
	Convertible debenture issued to vendor (note 8)		650,000
	Amount initially recognized as mineral property interest (note 5(a)(i))		1,702,577
	Disposition of 40% to Galaxie joint arrangement (note 5(a)(ii))		(681,031	)
	Galaxie Project balance as of July 31, 2013		1,021,546
	Contributions received from Amarc (note 5(a)(iii))		(402,636	)
	Relinquishment of the underlying mineral property interest upon termination of the Galaxie joint arrangement (note 5(a)(iv))		272,717
	Galaxie Project balance as of July 31, 2014	$	891,627

(i)      Initial acquisition

In August 2012, Quartz Mountain acquired the Galaxie Project from Finsbury Exploration Ltd. ("Finsbury") by:

Bearclaw retains a 1% net smelter returns royalty on a portion of the Galaxie Project known as the Gnat Pass Property, capped at aggregate payments of $7,500,000 (the "Gnat Pass Royalty Agreement").

Hotai Claims

In July 2012, the Company acquired the mineral property interest in the Hotailuh Slope mineral claims (the "Hotai Claims") located in central British Columbia adjacent to, and forming part of, the Galaxie Project. During the year ended July 2013, the Company made a cash payment of $5,000 and issued 14,286 of its common shares with a fair value of $5,000 under an earn-in agreement for the Hotai Claims. In September 2013, the earn-in agreement for the Hotai Claims was terminated.

(ii)     November 2012 agreement with Amarc Resources Ltd. (“Amarc”)

In November 2012, the Company and Amarc, a publicly traded company with certain directors in common with the Company, entered into an agreement (the “Letter Agreement”), pursuant to which Amarc earned an initial 40% ownership interest (the “Initial Interest”) in the Galaxie and ZNT Projects (the “Galaxie ZNT Project "), by making a cash payment of $1,000,000 to the Company (completed) and funding $1,000,000 in exploration expenditures to be incurred by Quartz Mountain relating to the Galaxie ZNT Project on or before December 31, 2012 (completed). The Company also granted to Amarc an option to acquire an additional 10% (for a total of 50%) ownership interest in the Galaxie ZNT Project, in consideration for Amarc funding an additional $1,000,000 in exploration expenditures in relation to the Galaxie ZNT Project, on or before September 30, 2013.

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In December 2012, pursuant to the Letter Agreement and upon satisfaction of the earn-in requirements by Amarc for its Initial Interest, the Company and Amarc formed an unincorporated entity subject to the joint control of the Company and Amarc (the “Joint Arrangement”) to conduct exploration activities at the Galaxie ZNT Project. The Company transferred into the Joint Arrangement its interest in the properties and the Gnat Pass Royalty Agreement. Pursuant to the Joint Arrangement agreement, Amarc agreed to pay its proportionate share (then 40%) of the principal amount due under the Debenture, together with interest thereon, on their respective due dates.

The Company recognized a gain of $1,578,969 in relation to the 40% disposition of the Galaxie ZNT Project to the Joint Arrangement.

(iii)     June 2013 agreement with Amarc

Effective June 26, 2013, the Company and Amarc entered into an amendment agreement (the "Amendment") whereby the Galaxie ZNT Project was split into two separate joint arrangements, named the "Galaxie Joint Venture" and the "ZNT Joint Venture". Each joint arrangement continued to be governed by the terms of the November 2012 letter agreement.

Under the Amendment, Amarc had an option until October 31, 2013 to increase its interest in the Galaxie Joint Venture from its then-40% interest to a 60% interest by paying to the Company a cash amount of $235,000 which the Company agreed to use to conduct a surface exploration program at the Galaxie Project. Amarc also had an option until October 31, 2013 to increase its interest in the ZNT Joint Venture from its then-40% interest to a 60% interest by paying to the Company a cash amount of $210,000 which the Company agreed to use to conduct a trenching and pitting program at the ZNT Project. Amounts received from Amarc totalling $402,636 pursuant to these funding requirements were recorded as reductions to the carrying amount of mineral property interest.

(iv)      Termination of the joint arrangements with Amarc

On March 31, 2014 the Company and Amarc agreed to terminate both the Galaxie Joint Venture and the ZNT Joint Venture. Pursuant to the terms of the termination of the joint arrangements, Amarc was released from all obligations of the unincorporated entities and relinquished its interests in the underlying mineral assets to the Company.

Consequently, the Company recorded an increase of $272,717 in mineral property interest in the Galaxie Project, representing Amarc’s share (40%) of the liabilities of the Galaxie Joint Venture assumed by the Company, net of Amarc’s share of certain financial assets of the Galaxie Joint Venture, as summarized below:

	Debenture obligation	$	240,000
	Balances due to a related party		44,779
	Other financial assets		(12,062	)
	Increase in the carrying amount of the Galaxie Project	$	272,717

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(b)	Angel's Camp Property
	The Company retains a 1% net smelter return royalty payable to the Company on any production from the Angel's Camp property located in Lake County, Oregon. The Angel's Camp property is currently held by Alamos Gold Inc.
	The royalty has been recorded at a nominal amount of $1.

6.	CAPITAL AND RESERVES

(a)	Authorized share capital
	At July 31, 2014, the authorized share capital of the Company comprised an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.
	No preferred shares have been issued to date. All issued common shares are fully paid. Reconciliation of changes in share capital:

	Issued share capital		Number of			Amount
			common shares
	Balance, July 31, 2012		22,032,793		$	24,514,381
	Common shares issued for cash, December 2012 (note 6(b))		461,914			115,479
	Flow–through shares issued for cash, December 2012 (note 6(b))		1,752,409			525,723
	Recorded as flow–through share premium liability (note 9)		–			(87,620	)
	Share issuance costs, December 2012 (note 6(b))		–			(25,422	)
	Shares issued for property acquisition (note 5(a)(i))		3,052,397			1,007,577
	Balance at July 31, 2013		27,299,513		$	26,050,118
	Balance at July 31, 2014		27,299,513		$	26,050,118

(b)	Private Placement and Flow-Through Financing
	In December 2012, the Company completed a non-brokered private placement (the "Private Placement") of 2,214,323 common shares for aggregate gross proceeds of $641,202. The Private Placement was comprised of:

	•	461,914 non-flow-through common shares issued at a price of $0.25 per share for gross proceeds of $115,479; and
	•	1,752,409 flow-through common shares issued at $0.30 per share, including a premium of $0.05 per share over the offering price for the non-flow through common shares, for gross proceeds of $525,723 (the "Flow-through Funds").

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	After issuance costs of $25,422, net cash proceeds from the Private Placement were $615,780, of which $87,620 was recorded as a flow-through share premium liability (note 9) and the balance of $528,160 was allocated to the common shares issued.
(c)	Equity-Settled Share-Based Payments
	The Company has a share purchase option plan (the “Plan”) approved by the Company's shareholders that allows the Board of Directors to grant share purchase options, subject to regulatory terms and approval, to its officers, directors, employees, and service providers. The Plan is based on the maximum number of eligible shares equaling 10% of the Company's outstanding common shares, calculated from time to time. The exercise price of each share purchase option is set by the Board of Directors at the time of grant but cannot be less than the five day volume weighted average trading price of the Company's shares calculated on the day prior to the grant. Share purchase options may have a maximum term of ten years (although share purchase options have generally been granted with a term of up to five years) and typically terminate 90 days following the termination of the optionee's employment or engagement, except in the case of retirement or death. The vesting period for share purchase options is at the discretion of the Board of Directors at the time the options are granted.
	The following summarizes the changes in the Company's share purchase options for the years ended July 31, 2014 and 2013:

			Number of
			options			Weighted average
	Continuity of share options for the year ended July 31, 2014		outstanding			exercise price
	Share purchase options outstanding at July 31, 2013		1,705,800		$	0.45
	Forfeited during the year		(118,800	)	$	0.45
	Share purchase options outstanding and exercisable at July 31, 2014		1,587,000		$	0.45

			Number of
			options			Weighted average
	Continuity of share options for the year ended July 31, 2013		outstanding			exercise price
	Share purchase options outstanding at July 31, 2012		1,767,600		$	0.45
	Forfeited during the year		(61,800	)	$	0.45
	Share purchase options outstanding and exercisable at July 31, 2013		1,705,800		$	0.45

The weighted average contractual remaining life of the share purchase options outstanding at July 31, 2014 was 1.5 years (2013 – 2.5 years).

The share-based payments expense recorded in the year ended July 31, 2013 represented the amortization of the fair value of options granted in fiscal 2012 over their remaining vesting term; those options were fair valued at $0.34 per option based on the Black-Scholes option pricing model using the following weighted average assumptions: grant date share price of $0.45; risk-free interest rate of 1.2%; expected volatility of 119%; expected life of 4.0 years; expected dividend yield of nil; and expected forfeiture rate of nil.

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7.	AMOUNTS PAYABLE AND OTHER LIABILITIES

			Year ended July 31
			2014			2013
	Amounts payable	$	6,438		$	125,268
	Accrued liabilities		406			10,869
	Total	$	6,844		$	136,137

8.	CONVERTIBLE DEBENTURE

	Convertible debenture issued, August 2013	$	650,000
	Portion of payment made pursuant to amendment by Amarc (note 5(a))		(20,000	)
	Payment made pursuant to amendment by the Company		(30,000	)
	Balance, July 31, 2013 and July 31, 2014	$	600,000

Pursuant to the purchase of the Galaxie Project (note 5(a)(i)), the Company issued an unsecured $650,000 convertible debenture (the “Debenture”) to Bearclaw as part of the purchase price.

In July 2013, Quartz Mountain and the holder of the Debenture entered into an agreement to amend the Debenture, whereby among other things, the Joint Arrangement made a $50,000 payment toward the Debenture reducing the outstanding balance to $600,000, the interest rate was increased to 10% per annum from 8% per annum, and the maturity date was extended to October 31, 2014 from October 31, 2013.

Interest on the Debenture is payable quarterly in arrears and the principal sum of Debenture, along with any unpaid interest, is convertible at the option of the debenture holder into the Company's common shares at $0.15 per share (previously $0.40 per share) on or before maturity of the Debenture on October 31, 2014. Upon initial recognition of the Debenture, management estimated that the residual value attributable to the conversion option was nominal.

9.	FLOW-THROUGH SHARE PREMIUM LIABILITY

	Balance, July 31, 2012	$	411,009
	Recognized as liability upon issuance of flow-through shares		87,620
	Derecognized upon eligible expenditures incurred		(462,990	)
	Balance July 31, 2013		35,639
	Derecognized upon eligible expenditures incurred		(35,639	)
	Balance, July 31, 2014	$	–

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	Pursuant to the Private Placement of the flow-through shares (note 6(b)) and in accordance with the Income Tax Act (Canada), the Company was obligated to spend the Flow-through Funds on eligible Canadian Exploration Expenses ("CEE") prior to December 31, 2013 (completed) and renounce them to the investors (completed).
10.	RELATED PARTY BALANCES AND TRANSACTIONS

(a)	Transactions with Key Management Personnel
	Key management personnel are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, and by definition include the directors of the Company.
	During the years ended July 31, 2014 and 2013, the Company compensated key management personnel as follows:

			Year ended July 31
			2014			2013
	Short-term employee benefits, including salaries and directors fees	$	169,096		$	420,943
	Equity-settled share-based payments		–			84,589
	Total	$	169,096		$	505,532

	Short-term employee benefits include salaries, director’s fees and amounts paid to HDSI (note 10(b)) for services provided to the Company by certain HDSI personnel who serve as directors or officers of the Company.
(b)	Entities with Significant Influence over the Company
	The Company's management believes that Hunter Dickinson Services Inc. ("HDSI"), a private entity, has the power to participate in the financial or operating policies of the Company. Scott Cousens, Robert Dickinson, and Ronald Thiessen, are directors of both the Company and HDSI. Pursuant to a management agreement between the Company and HDSI dated July 2, 2010, the Company receives geological, engineering, corporate development, administrative, management and shareholder communication services from HDSI. These services are provided based on annually set rates. HDSI also incurs third party costs on behalf of the Company on full-cost recovery basis.
	Transactions with these related parties were as follows:

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			Year ended July 31
			2014			2013
	HDSI: Services received based on management services agreement	$	511,241		$	2,462,779
	HDSI: Reimbursement of third party expenses paid		24,151			122,318

Outstanding balances were as follows:

			July 31, 2014			July 31, 2013
	Balance payable to HDSI	$	2,957,075		$	2,421,220

	The Company has received a confirmation from HDSI that HDSI will continue to provide services to the Company and will not demand repayment of amounts outstanding, prior to November 1, 2015.
11.	EMPLOYEES BENEFIT EXPENSES
	The amount of employees' salaries and benefits included in various expenses are as follows:

			Year ended July 31
			2014			2013
	Exploration and evaluation expenses	$	120,495		$	1,332,985
	General and administration expenses		408,306			1,071,064
	Equity-settled share-based payment		–			210,872
	Total	$	528,801		$	2,614,921

12.	OPERATING SEGMENTS
	The Company operates in a single reportable operating segment – the acquisition, exploration and evaluation of mineral property interests. The Company is currently focused on the acquisition and exploration of mineral property interests in Canada.
13.	TAXATION

(a)	Provision for current tax
	No provision has been made for current income taxes, as the Company has no taxable income.
(b)	Provision for deferred tax
	As future taxable profits of the Company are uncertain, no deferred tax asset has been recognized.

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As at July 31, 2014, the Company had unused non-capital loss carry forwards of approximately $4,459,000 (2013 – $4,489,000) in Canada and $40,000 (2013 – $21,000) in the United States.

The Company had approximately $4,343,000 (2013 – $4,519,000) of resource tax pools available, which may be used to shelter certain resource income.

Reconciliation of effective tax rate:

			Year ended July 31
			2014			2013
	Loss for the period	$	(865,427	)	$	(3,458,827	)
	Income tax expense		–			–
	Loss excluding income tax	$	(865,427	)	$	(3,458,827	)
	Income tax recovery using the Company's domestic tax rate	$	(225,000	)	$	(874,000	)
	Non-deductible expenses and other		147,000			693,000
	Change in deferred tax rates		–			(77,000	)
	Differences in statutory tax rates		(2,000	)		(9,000	)
	Changes in unrecognized temporary differences		80,000			267,000
		$	–		$	–

The Company's domestic tax rate during the year ended July 31, 2014 was 26.0% (2013 – 25.33%) and the effective tax rate was nil (2013 – nil).

As at July 31, 2014, the Company had the following balances in respect of which no deferred tax assets had been recognized:

									Equipment and
	Expiry:		Tax losses			Resource pools			other
	Within one year	$	131,000		$	–		$	–
	One to five years		8,000			–			78,000
	After five years		4,760,000			–			82,000
	No expiry date		–			3,439,000			114,000
		$	4,899,000		$	3,439,000		$	274,000

14.	FINANCIAL 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 investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

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(a)	Credit Risk
	Credit risk is the risk of potential loss to the Company if the 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 and amounts receivable. The Company limits its exposure to credit risk on liquid financial assets by only investing its cash and cash equivalents with high-credit quality financial institutions in business and savings accounts.
	The carrying value of the Company's cash and cash equivalents and amounts receivable represent the maximum exposure to credit risk.

			Carrying Amount
	Financial Assets		July 31, 2014			July 31, 2013
	Cash and cash equivalents (note 3(a))	$	1,025,320		$	706,393
	Amounts receivable (current and non-current) (note 4)		4,834			577,679
	Restricted cash (note 3(b))		38,563			158,387
	Total	$	1,068,717		$	1,442,459

(b)	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 that there is 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 following obligations existed at July 31, 2014:

						Payments due by period
						Less than 1
			Total			year			1-5 years			After 5 years
	Amounts payable and other liabilities (note 7)	$	6,844		$	6,844		$	–		$	–
	Convertible debenture (note 8)		600,000			600,000			–			–
	Due to related parties (note 10)		2,957,075			–			2,957,075			–
	Total	$	3,563,919		$	606,844		$	2,957,075		$	–

The Company has received a confirmation from HDSI (note 10(b)) that HDSI will continue to provide services to the Company and will not demand repayment of amounts outstanding, prior to November 1, 2015.

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The following obligations existed at July 31, 2013:

						Payments due by period
						Less than 1
			Total			year			1-5 years			After 5 years
	Amounts payable and other liabilities (note 7)	$	136,137		$	136,137		$	–		$	–
	Convertible debenture (note 8)		600,000			–			600,000			–
	Due to related parties (note 10)		2,421,220			2,421,220			–			–
	Total	$	3,157,357		$	2,557,357		$	600,000		$	–

(c)	Market Risk
	Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
	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 cash and cash equivalents mature impact interest income earned.
	Assuming that all variables remain constant, a 10 basis points change representing a 0.1% increase or decrease in interest rates would have resulted in a decrease or increase in the loss for the year ended July 31, 2014 of approximately $900 (2013 – $1,100).
	Foreign exchange risk
	The Company incurs substantially all of its expenditures in Canada and substantially all of its cash and cash equivalents held are denominated in Canadian dollars. Consequently the Company is not subject to material foreign exchange risk.
	Price risk
	The Company is not subject to any price risk.
(d)	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 liquidity available to fund ongoing expenditures and suitable business opportunities as they arise.

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	The Company considers the components of shareholders' equity 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. In order to maintain or adjust the capital structure, the Company may issue equity, sell assets, or return capital to shareholders as well as issue or repay debt.
	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 and that are readily convertible to known amounts of cash.
	There were no changes to the Company's approach to capital management during the year ended July 31, 2014.
	The Company is not subject to any externally imposed equity requirements.
(e)	Fair Value
	The fair value of the Company's financial assets and liabilities approximate their carrying amount.

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Quartz Mountain Resources Ltd.

 

MANAGEMENT'S DISCUSSION AND ANALYSIS

 

YEAR ENDED JULY 31, 2014

 

 

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

T A B L E   O F   C O N T E N T S

1.1	Date	3
1.2	Overview	3
1.3	Selected Annual Information	9
1.4	Summary of Quarterly Results	10
1.5	Results of Operations and Financial Condition	11
1.6	Liquidity	12
1.7	Capital Resources	14
1.8	Off-Balance Sheet Arrangements	14
1.9	Transactions with Related Parties	14
1.10	Fourth Quarter	16
1.11	Proposed Transactions	16
1.12	Critical Accounting Estimates	16
1.13	Changes in Accounting Policies including Initial Adoption	16
1.14	Financial Instruments and Other Instruments	17
1.15	Other MD&A Requirements	17
1.16	Risk Factors	19

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

1.1          DATE

This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the audited consolidated financial statements of Quartz Mountain Resources Ltd. ("Quartz Mountain" or the "Company") for the year ended July 31, 2014 as publicly filed on SEDAR at www.sedar.com. All dollar amounts herein are expressed in Canadian dollars unless stated otherwise.

The Company reports in accordance with International Financial Reporting Standards ("IFRS") and the following disclosure, and associated financial statements, are presented in accordance with IFRS. All comparative information provided is in accordance with IFRS.

For the purposes of the discussion below, date references refer to calendar year and not the Company's fiscal reporting period.

This MD&A is prepared as of September 24, 2014.

Cautionary Note to Investors Concerning Forward-looking Statements

This discussion includes certain statements that may be deemed "forward-looking statements". All statements in this disclosure, other than statements of historical facts, that address permitting, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Assumptions used by the Company to develop forward-looking statements include the following: the Company’s projects will obtain all required environmental and other permits and all land use and other licenses, and no geological or technical problems will occur. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploration and exploitation successes, continuity of mineralization, potential environmental issues and liabilities associated with exploration, development and mining activities, uncertainties related to the ability to obtain necessary permits, licenses and title and delays due to third party opposition or litigation, changes in laws and government policies regarding mining and natural resource exploration and exploitation, continued ability of the Company to raise necessary capital, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. The Company reviews its forward looking statements on an on-going basis and updates this information when circumstances require it.

1.2          OVERVIEW

The information comprised in this MD&A relates to Quartz Mountain Resources Ltd. and its subsidiary (together referred to as the "Company"). Quartz Mountain Resources Ltd. is the ultimate parent entity of the group.

Quartz Mountain is an exploration and development company focused on acquiring and advancing promising mineral prospects in British Columbia ("BC"). The Company’s most recent activities have been focused in northwestern BC and central BC.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

The Company holds a 100% interest in the Galaxie Project, which is situated in the Stikine Terrane, a region in northwestern BC that hosts a number of important copper and gold deposits. There is potential for the discovery of bulk tonnage copper-gold and/or molybdenum and vein-type precious and base metal deposits in the project-area. Historical exploration identified several copper occurrences, including the Gnat porphyry copper deposit.

Ground surveys were undertaken at Galaxie by Quartz Mountain in 2012 in the vicinity of the Gnat deposit and several other prospects across the property and followed up with a two-hole drilling program at the Gnat deposit in late 2012. The program confirmed the presence of porphyry mineralization at depth in the deposit, returning intervals of 55.7 metres grading 0.44% copper and 91.0 metres grading 0.37% copper in the two holes drilled.

Additional ground exploration was carried out on the property in 2013. A series of alkali intrusions which are known to be the principal hosts in the Stikine-Iskut porphyry belt for porphyry copper-gold deposits were observed in an area known as the Hu target. The potential at Hu and at another target, called Dalvenie East, which was identified during Quartz Mountain’s 2012 program, warrant further exploration. No ground work was done in 2014.

Market conditions, which have made financing for exploration projects difficult over the past two years, have prevailed in 2014. The Company has continued to seek partners to joint venture or farm out its exploration projects.

1.2.1      Agreements – Galaxie Project

Sale Agreement with Finsbury Exploration Ltd.

In August 2012, Quartz Mountain acquired a 100% interest in the Galaxie Project from Finsbury Exploration Ltd. ("Finsbury") through a sale agreement (the "Sale Agreement") dated July 27, 2012. The Galaxie Project area acquired from Finsbury included an area of 1,488 square kilometres, comprised of three mineral claims totalling approximately 1,294 hectares (the "Gnat Pass Property") and the surrounding mineral claims staked by Finsbury to that time.

Pursuant to the terms of the Sale Agreement, Quartz Mountain issued 2,038,111 shares to Finsbury and also assumed the rights and obligations of Finsbury under a mineral property purchase agreement (the "Bearclaw Agreement") between Finsbury and Bearclaw Capital Corp. ("Bearclaw") relating to the Gnat Pass Property. Quartz Mountain also assumed the rights and obligations under a net smelter returns ("NSR") royalty agreement which requires the payment to Bearclaw of a 1% NSR royalty on the Gnat Pass Property up to a maximum of $7,500,000.

The remaining payment obligations to Bearclaw for the Gnat Pass Property under the Bearclaw Agreement assumed by Quartz Mountain consisted of:

• a payment of $50,000 to Bearclaw (paid);

• the issuance of a convertible debenture (the “Debenture”) to Bearclaw in the amount of $650,000, bearing an interest rate of 8% per annum and with a maturity date of January 31, 2014 (issued; however, the interest rate and maturity date were later amended – see below); and

• the issuance to Bearclaw of 1,000,000 shares in the capital of Quartz Mountain (issued).

In July 2013, Quartz Mountain and the holder of the Debenture entered into an agreement to amend the Debenture, whereby the Galaxie Joint Venture made a $50,000 principal payment toward the Debenture, reducing the outstanding balance to $600,000. The interest rate was increased to 10% per annum, and the maturity date was extended to October 31, 2014.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

1.2.2      Technical Programs – Galaxie Project

The following disclosure on the Galaxie Project has been summarized from a technical report (the “2013 technical report”) entitled “Technical Report on the Galaxie Project, Liard Mining Division, British Columbia” effective date April 30, 2013 by B.K. (Barney) Bowen, PEng, and updated based on information from Company files.

The Galaxie Project is located on Highway 37, approximately 24 kilometres south of Dease Lake, BC. The Project-area currently consists of 306 mineral claims covering an area of approximately 1,165 square kilometres.

Paved Highway 37 passes through the center of the Galaxie Project and provides year-round direct access to the adjacent project-area, including the Gnat Pass Property. Other parts of the Galaxie Project can be accessed by helicopter.

The operating season for surface exploration is from early June through to early October. Because of its close proximity to Highway 37, diamond drilling activities at the Gnat deposit, which is within the Gnat Pass Property, can be carried out throughout the year.

Dease Lake (population of about 600) offers an array of services, including motel accommodations, food, fuel, a variety of small equipment operators, post office, health clinic and government services. Mining and exploration make up the most substantial industry. Regional Power manages the off-grid Dease Lake Generating Station, located about 30 km west of Dease Lake. The facility supplies the entire energy load for the community of Dease Lake. Completion of a 287-kilovolt transmission line, extending 344 kilometres from the existing Skeena substation south of Terrace to a new substation near Bob Quinn Lake (located about 180 kilometres by road south of Dease Lake) was recently announced by the BC government. It will supply the new mine development under construction at Imperial Metals Corporation’s Red Chris Project by way of a spur line from Bob Quinn Lake.

Geology and Mineralization

The Galaxie Project is underlain mainly by volcanic, intrusive and lesser sedimentary rocks of the Middle Triassic to Lower Jurassic Stikine Terrane which, elsewhere in northern British Columbia is known to host the large Red Chris, Schaft Creek, Galore and KSM and Snowfield porphyry deposits. Upper Triassic Stuhini Group volcanic rocks and a quartz feldspar porphyry dike complex host the Gnat copper deposit. The Gnat deposit is located near the northern contact of the Late Triassic to Middle Jurassic, multiphase Hotailuh Batholith-Three Sisters Pluton intrusive complex, which occupies most of the remainder of the Galaxie project-area and hosts a number of base and/or precious metals prospects and showings.

History

The first record of exploration in the Gnat Pass Property area was in 1960 when prospecting work by Cassiar Asbestos Corporation discovered copper mineralization in the vicinity of Lower Gnat Lake. Since that time, at least nine companies have explored the property completing geological mapping, rock, soil and stream sediment geochemical sampling, magnetic and induced polarization (“IP”) geophysical surveys and diamond drilling during the periods of 1960-1971, 1990-1996 and in 2005. Most of the historical work focused on the Gnat deposit, and occurrences in the vicinity.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

During the period 1965-1969, previous operators completed 18,390 metres of diamond drilling in 110 holes in this area. Most of this historical drilling was carried out in the Gnat deposit over an area measuring about 600 metres by 600 metres, down to a maximum depth of about 300 metres below surface.

A historical estimate of "indicated reserves" of about 30 million tonnes grading 0.389% Cu for the Gnat Deposit was reported by Lytton Minerals Ltd, in 1972. The estimate uses categories that are not recognized by National Instrument 43-101 Standards of Disclosure for Mineral Projects. The qualified person for the 2013 technical report has not done sufficient work to classify the historical estimate as a current mineral resource or mineral reserve. Quartz Mountain is not treating the historical estimate as current.

Past work on other mineral occurrences on the Galaxie Project area includes:

• At Hu, during the period 1969 to 2007, several mining companies carried out: silt, soil and rock geochemical sampling; geological mapping; Induced Polarization ("IP") and ground magnetic surveys; and 22 bulldozer trenches.

• At Disco, Stikine Moly and Stikine, during the period 1970-79, two companies carried out: silt, soil and rock geochemical sampling; geological mapping; IP, ground magnetic and VLF surveys; and limited hand trenching and test-pitting.

• At Nup, during the period 1970 to 2008, six mining companies and one individual carried out: silt, soil and rock geochemical sampling; geological mapping; IP and ground magnetic surveys; and limited hand trenching and test-pitting. Three diamond drilling programs (14 holes) tested porphyry molybdenum+/-copper showings and soil geochemical anomalies.

• At Pat, during the period 1971-76, two companies carried out: grid soil surveys; IP and ground magnetic surveys; and a refraction seismic survey.

Prospecting and geochemical silt, soil and rock sampling program carried out by a previous owner in 2011 identified a number of target areas at Galaxie. Much of the work was outside of known areas of mineralization, but some work did overlap with known mineral occurrences, including some of those listed above.

Work in 2012-2013

Gnat Deposit

In 2012, Quartz Mountain relogged historical drill holes and carried out geological mapping in the Gnat deposit-area. Two deep diamond drill holes totaling 1,164 metres were also drilled to test for continuation of copper mineralization beneath the historical reserve estimate. Hole GT12001 intersected two intervals of significant copper mineralization, including 56 metres grading 0.44% Cu, well below the extent of the historical estimate, demonstrating that porphyry-style copper mineralization in the Gnat deposit extends over a known vertical range of about 500 metres. In their lower portions, both holes encountered a major thrust fault which has structurally superimposed older deposit host rocks over younger Hazelton Group sedimentary rocks.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

Geological mapping in the Gnat deposit area identified porphyry-style hydrothermal alteration characterized by occurrences of k-feldspar veining and flooding, tourmaline in veins or breccia bodies and chalcopyrite mineralization over a west-northwest trending zone measuring about 3.5 kilometres long by 700 metres to 1,000 metres wide. Contained within this large 'hydrothermal footprint' are the Creek Zone and Moss copper prospects, the two main known mineralized zones outside of the Gnat deposit area (see figure below).

There is considerable room to explore for new zones of copper mineralization at moderate to greater depths in portions of the Gnat deposit, in the Creek Zone and Moss prospect areas, and elsewhere along the 3.5 kilometre-long zone of porphyry-style hydrothermal alteration. Mineralization may include porphyry-type deposits or more constrained, but possibly higher grade, mineralized breccia bodies.

Other Targets

In 2012, Quartz Mountain also completed geophysical, geochemical and geological surveys on a number of other target-areas at the Galaxie Project. In 2013, an associated company completed ground exploration programs at some of the priority areas that Quartz Mountain had identified in 2012. These include Hu, Hotai and Silver Lode. The 2013 programs included geological mapping, 10 line kilometres of IP ground geophysical surveying and collection of 96 rock and 246 soil geochemical samples. No immediate drill targets were outlined, and some mineral claims in the area of the Hotai prospect were dropped.

Preliminary prospecting of two gossans in the Dalvenie East target-area in 2012 was successful in locating encouraging copper mineralization in chalcopyrite +/- bornite veins up to 10 cm wide, hosted in chlorite-altered diorite to monzodiorite wall rocks. Narrow k-feldspar alteration envelopes surrounding the veins also contain chalcopyrite and bornite. Magnetic signatures at Dalvenie East suggest that regional-scale faults, or subsidiary faults related to them, could control vein-type or fault-controlled copper-gold mineralization similar to that seen at the nearby Dalvenie prospect. This target was not followed up in 2013.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

At Hu, a series of alkali intrusions which are known to be the principal hosts in the Stikine-Iskut porphyry belt for porphyry copper-gold deposits were observed during work in 2013. The potential of the intrusions at Hu and the Dalvenie East target warrant further exploration.

1.2.4      Other Properties

ZNT Project

The Company holds a 100% interest in the ZNT property, which consists of 21 claims covering an area of approximately 102 square kilometres located in central British Columbia, some 15 kilometres southeast of the town of Smithers, BC. The property was staked by Quartz Mountain in 2012. Target definition was carried out in 2012 and 2013, and an initial drilling program was done but no economic mineralization was encountered. No further work is planned.

Angel's Camp Property

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

1.2.5      Market Trends

The discussion in this section references calendar years and dollar amounts are stated in United States dollars.

Copper prices showed a significant increase between late 2003 and mid-2008, and after a steep decline in late 2008 and early 2009, steadily increased until late 2011. The price of copper was variable in 2012 and 2013, but averaged lower each year. Prices were on a downtrend to late March 2014, and have been variable since that time.

The gold price was on an uptrend for over the five years to 2012. Prices were on a general downtrend in 2013, but have been variable in 2014, with a decrease in the average price.

Silver prices were impacted by economic volatility in 2008-2009. An upward price trend began in 2010, and continued to late September 2011, with prices reaching as high as $43/oz, and resulting in the average price in 2011 being the highest since 2008. Prices ranged between $26/oz and $35/oz between October 2011 and the end of 2012. As with gold, silver prices were on a downtrend in 2013, but have been variable in 2014, with a decrease in the average price.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

Average annual prices through 2013 as well as the average prices so far in 2014 for copper (Cu), gold (Au) and silver (Ag) are shown in the table below:

Source: www.metalprices.com

1.3          SELECTED ANNUAL INFORMATION

The following selected annual information is from the Company's annual financial statements which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB") and interpretations of the IFRS Interpretations Committee ("IFRIC") effective for the respective reporting years of the Company and are expressed in Canadian Dollars. The Company's audited financial statements are publicly available on SEDAR at www.sedar.com.

Amounts are expressed in thousands of Canadian dollars (except per share amounts).

Statements of Financial Position – Selected Information		Jul 31, 2014			Jul 31, 2013			Jul 31, 2012
Total current assets	$	1,037		$	850		$	2,743
Total non-current assets		938			1,620			78
Total assets	$	1,975		$	2,470		$	2,821
Total current liabilities	$	3,564		$	2,593		$	1,832
Total non-current liabilities		–			600			–
Total shareholders’ equity		(1,589	)		(723	)		989
Total liabilities and shareholders’ equity	$	1,975		$	2,470		$	2,821

Total assets are comprised of mineral property interests, cash and cash equivalents, amounts and other receivables, and restricted cash. The decline in total assets from 2012 to 2013 is related to a decrease in cash as the Company funded its on-going exploration activities. The decline in total assets from 2013 to 2014 is due to a reduction in the carrying value of the Galaxie Project.

Total liabilities increased in fiscal 2013 and 2014 primarily due to an increase in amounts payable to HDSI for geological, engineering, corporate development, administrative, management and shareholder communication services provided by HDSI.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

		Year ended			Year ended			Year ended
Statements of Comprehensive Loss – Selected Information		July 31, 2014			July 31, 2013			July 31, 2012
Expenses:
Exploration and evaluation	$	262		$	3,880		$	2,247
General and administration		604			1,360			1,166
Equity-settled share-based payments		–			211			381
Loss from operations		(866	)		(5,451	)		(3,794	)
Gain on disposition of mineral property interest		–			1,579			–
Other items		1			413			206
Loss for the year	$	(865	)	$	(3,459	)	$	(3,588	)
Basic and diluted loss per common share	$	(0.03	)	$	(0.13	)	$	(0.20	)

1.4          SUMMARY OF QUARTERLY RESULTS

These amounts are expressed in thousands of Canadian Dollars, except per share amounts and the weighted average number of common shares outstanding. Minor differences are due to rounding.

(i)	"Other items" includes flow through share premium, interest income, interest expense, foreign exchange and tax related to flow-through financing.

Exploration and evaluation (“E&E”) expenditures increased in the first half of fiscal 2013 due to the acquisition of the Galaxie Project, and ZNT project. E&E costs decreased after January 2013 as the Company had been mainly focused on property evaluation activities. In the quarter ended July 31, 2013, the Company accrued a $200,000 estimate for Mineral Exploration Tax Credit (“BCMETC”) receivable within E&E expenses.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

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

Expenses for share-based payments typically fluctuate based on the timing of share purchase option grants and the vesting periods associated with these grants.

During the quarter ended January 31, 2013, the Company recognized a gain of $1,579,000 in relation to the 40% disposition of its mineral property interest to the Letter Agreement.

1.5          RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following financial data has been prepared in accordance with IFRS and are expressed in Canadian dollars unless otherwise stated.

1.5.1      Comprehensive loss for the year ended July 31, 2014 vs. 2013

The Company recorded a loss from operations of $865,000 in the current year compared to a loss from operations of $3,459,000 in the prior fiscal year, primarily due to a decrease in E&E activities during the current fiscal year.

Total E&E costs during the twelve months ended July 31, 2014 decreased to $262,000, compared to $3,880,000 in E&E during the twelve months ended July 31, 2013.

The following tables provide a breakdown of exploration costs incurred during the year ended July 31, 2014 and 2013:

Recorded under geological expenses are cost recoveries pertaining to Mineral Exploration Tax Credits from the provincial government of British Columbia.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

In the prior fiscal year, administrative salaries and benefits increased in support of exploration activities as the Company advanced work on the Galaxie and ZNT Projects. During the current fiscal year, the administrative costs have been reduced to reflect the Company's decreased level of activity.

In the prior fiscal year, the Company expensed stock options to employees and directors in the amount of $211,000, compared to $nil in the current fiscal year. No stock options were granted in the year ended July 31, 2014.

1.6          LIQUIDITY

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

At July 31, 2014, the Company had cash and cash equivalents of $1.0 million and a working capital deficit of $2.6 million. Of the total short-term liabilities of $3.6 million at July 31, 2014, $3.0 million was payable to Hunter Dickinson Services Inc. ("HDSI").

To address its working capital deficit at July 31, 2014, the Company has obtained a confirmation from HDSI that HDSI will continue to provide services to the Company but will not demand repayment of amounts outstanding, prior to November 1, 2015.

Management believes that its liquid assets at July 31, 2014 are sufficient to meet its known obligations it expects to pay over the next 12 months and to maintain its mineral rights in good standing for this next 12 month period. The Company is actively managing its cash reserves, and curtailing activities as necessary in order to ensure its ability to meet payments as they come due.

Additional debt or equity financing will be required to fund additional exploration or development programs. The Company has a reasonable expectation that additional funds will be available to meet ongoing exploration and development costs. However, there can be no assurance that the Company will continue to obtain additional financial resources or that it will be able to achieve positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will be required to reevaluate its planned expenditures and will rely on short term borrowings to finance its minimum expenditure requirement until additional funds can be raised through financing activities.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

General market conditions for junior exploration companies have resulted in depressed equity prices, despite higher commodity prices. Although the Company was able to successfully complete private placements in each of the 2012 and 2013 fiscal years, a further and continued deterioration in market conditions will increase the cost of obtaining capital and limit the availability of funds to the Company in the future. Accordingly, management is actively monitoring the effects of the current economic and financing conditions on our business and reviewing our discretionary spending, capital projects and operating expenditures, and implementing appropriate cash and cash management strategies.

Debenture

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

In July 2013, Quartz Mountain and the debentureholder entered into an agreement to amend the Debenture, whereby among other things, a $50,000 principal payment was made reducing the outstanding balance to $600,000, the interest rate was increased to 10% per annum, and the maturity date was extended to October 31, 2014.

Interest payments for the Debenture are payable quarterly in arrears and the Debenture is convertible into the Company's common shares at an exercise price of $0.15 per share (previously $0.40 per share) on or before maturity of the Debenture on October 31, 2014. Any interest accrued, but unpaid, shall also be converted at an exercise price of the higher of $0.15 per share (previously $0.40 per share) and the market price at the time of conversion.

Table of Obligations and Commitments

The following obligations existed at July 31, 2014:

		Payments due by period
					Less than 1
		Total			year			1-5 years			After 5 years
Amounts payable and other liabilities	$	6,844		$	6,844		$	–		$	–
Convertible debenture		600,000			600,000			–			–
Due to related parties		2,957,075			–			2,957,075			–
Total	$	3,563,919		$	606,844		$	2,957,075		$	–

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

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

1.7          CAPITAL RESOURCES

The Company had no material commitments for capital expenditures as at July 31, 2014.

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

At July 31, 2014, there were no externally imposed capital requirements to which the Company is subject and with which the Company has not complied.

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

1.8          OFF-BALANCE SHEET ARRANGEMENTS

None.

1.9          TRANSACTIONS WITH RELATED PARTIES

Key management personnel

The required disclosure for the remuneration of the Company’s key management personnel is provided in note 10(a) of the accompanying audited consolidated financial statements for the years ended July 31, 2014 and 2013. These are also available at www.sedar.com.

Hunter Dickinson Inc.

Description of the relationship

Hunter Dickinson Inc. (“HDI”) and its wholly owned subsidiary Hunter Dickinson Services Inc. ("HDSI") are private companies established by a group of mining professionals engaged in advancing mineral properties for a number of publicly-listed exploration companies, one of which is the Company. The following directors or officers of the Company also have a role within HDSI.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

The business purpose of the related party transactions

HDSI provides technical, geological, corporate communications, regulatory compliance, and administrative and management services to the Company, on an as-needed and as-requested basis from the Company.

HDSI also incurs third party costs on behalf of the Company. Such third party costs include, for example, directors and officers insurance, travel, conferences, and technology services.

As a result of this relationship, the Company has ready access to a range of diverse and specialized expertise on a regular basis, without having to engage or hire full-time experts. The Company benefits from the economies of scale created by HDSI which itself serves several clients. The Company is also able to eliminate many of its fixed costs, including rent, technology, and other infrastructure which would otherwise be incurred for maintaining its corporate offices.

The measurement basis used

The Company procures services from HDSI pursuant to an agreement dated July 2, 2010. Services from HDSI are provided on a non-exclusive basis as required and as requested by the Company. The Company is not obligated to acquire any minimum amount of services from HDSI. The fees for services from HDSI are determined based on a charge-out rate for each employee performing the service and for the time spent by the employee. Such charge-out rates are agreed and set annually in advance.

Third party costs are billed at cost, without markup.

Ongoing contractual or other commitments resulting from the related party relationship

There are no ongoing contractual or other commitments resulting from the Company's transactions with HDSI, other than the payment for services already rendered and billed. The agreement may be terminated upon 60 days' notice by either of the Company or HDSI.

Transactions and balances

The required disclosure for the transactions and balances with HDSI is provided in note 10(b) of the accompanying audited consolidated financial statements for the years ended July 31, 2014 and 2013. These are also available at www.sedar.com.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

1.10        FOURTH QUARTER

The Company recorded a net loss of $117,000 for the quarter ended July 31, 2014, compared to a net loss of $222,000 during the same quarter in fiscal 2013.

		For the three months
					ended July 31
		2014			2013
Expenses		($ 000's	)		($ 000's	)		Discussion
Exploration expenses (excluding share- based payments)		(5	)		(20	)		In the quarter ended July 31, 2014, the Company accrued estimated cost recoveries of $8,000 within exploration and evaluation expenses, in respect of the BC Mineral Exploration Tax Credit. In the comparative quarter ended July 31, 2013, the Company had accrued estimated recoveries of $200,000 in respect of BC METC.
Administration expenses (excluding share- based payments)		112			242			The decrease in administration expenses was mainly due to the generally reduced activities of the Company.
Equity-settled share-based payments		–			23			Share-based compensation expense typically fluctuates based on the timing of share purchase option grants and the vesting periods associated with these grants.

1.11        PROPOSED TRANSACTIONS

There are no proposed material assets or business acquisitions or dispositions before the Board of Directors for consideration.

1.12        CRITICAL ACCOUNTING ESTIMATES

Not required. The Company is a Venture Issuer.

1.13        CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION

The required disclosure is provided in Notes 2 of the accompanying audited financial statements as at and for the year ended July 31, 2014, publicly available on SEDAR at www.sedar.com.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

1.14        FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The carrying amounts of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities, and balances due to related parties, approximate their fair values due to their short-term nature. The required disclosure is provided in Note 14 of the accompanying audited financial statements as at and for the year ended July 31, 2014, publicly available on SEDAR at www.sedar.com.

1.15        OTHER MD&AREQUIREMENTS

1.15.1    Additional Disclosure for Venture Issuers Without Significant Revenue

(a)	exploration and evaluation assets or expenditures		The required disclosure is presented in the unaudited condensed interim consolidated statements of comprehensive loss and Section 1.5 of this MD&A.
(b)	expensed research and development costs		Not applicable
(c)	intangible assets arising from development		Not applicable
(d)	general and administration expenses		The required disclosure is presented in the unaudited condensed interim consolidated statements of comprehensive loss and Section 1.5 of this MD&A.
(e)	any material costs, whether expensed or recognized as assets, not referred to in paragraphs (a) through (d)		None

1.15.2    Disclosure of Outstanding Share Data

The following details the share capital structure as at the date of this MD&A:

		Number
Common shares		27,299,513
Share options		1,587,000
Convertible debenture		4,000,000

1.15.3    Internal Controls over Financial Reporting Procedures

The Company's management, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision of the Chief Executive Officer and Chief Financial Officer, the Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company's internal control over financial reporting includes those policies and procedures that:

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

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

There has been no change in the design of the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting during the period covered by this Management's Discussion and Analysis.

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of July 31, 2014. In making the assessment, it used the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on their assessment, management has concluded that, as July 31, 2014, the Company's internal control over financial reporting was effective based on those criteria.

1.15.4    Disclosure Controls and Procedures

The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in reports it files is recorded, processed, summarized and reported within the appropriate time periods and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

1.15.5    Limitations of Controls and Procedures

The Company's management, including its Chief Executive Officer and Chief Financial Officer, believe that any system of disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

1.16        RISK FACTORS

The risk factors associated with the principal business of the Company are discussed below. Due to the nature of the Company's business and the present stage of exploration and development of its projects in British Columbia, an investment in the securities of Quartz Mountain is highly speculative and subject to a number of risks. Briefly, these include the highly speculative nature of the resources industry characterized by the requirement for large capital investments from an early stage and a very small probability of finding economic mineral deposits. In addition to the general risks of mining, there are country-specific risks, including currency, political, social, permitting and legal risk. An investor should carefully consider the risks described below and the other information that Quartz Mountain furnishes to, or files with, the Securities and Exchange Commission and with Canadian securities regulators before investing in Quartz Mountain's common shares, and should not consider an investment in Quartz Mountain unless the investor is capable of sustaining an economic loss of the entire investment. The Company's actual exploration and operating results may be very different from those expected as at the date of this MD&A.

Going Concern Assumption

The Company's 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 a negative working capital position, and has incurred losses since inception. Failure to continue as a going concern would require that Quartz Mountain's assets and liabilities be restated on a liquidation basis, which could differ significantly from the going concern basis.

Additional Funding Requirements

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

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

Future Profits/Losses and Production Revenues/Expenses

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

Exploration, Development and Mining Risks

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

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

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

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

Permits and Licenses

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

Infrastructure Risk

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

Changes in Local Legislation or Regulation

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

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

Environmental Matters

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

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

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

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

Market for Securities and Volatility of Share Price

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

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

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

Conflicts of Interest

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

General Economic Conditions

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

Reliance on Key Personnel

The Company is dependent on the continued services of its senior management team, and its ability to retain other key personnel. The loss of such key personnel could have a material adverse effect on the Company. There can be no assurance that any of the Company's employees will remain with the Company or that, in the future, the employees will not organize competitive businesses or accept employment with companies competitive with the Company.

Furthermore, as part of the Company's growth strategy, it must continue to hire highly qualified individuals. There can be no assurance that the Company will be able to attract, train or retain qualified personnel in the future, which would adversely affect its business.

Competition

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

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QUARTZ MOUNTAIN RESOURCES LTD.

FOR THE YEAR ENDED JULY 31, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

Uninsurable Risks

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

Land Claims

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

Property Title

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

The Mineral Property Underlying the Company's Net Smelter Return Royalty Interest Contains no Known Ore

The Company holds a 1% net smelter return ("NSR") royalty interest on the Quartz Mountain Property (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.

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