"We appreciate having quickly attained Stage 1 agreement with Rio Tinto's Nuton team and look forward to further advancing the MacArthur and Yerington projects," Lion's CEO Travis Naugle said.
Rio is to provide US$3.75 million in funding to Lion for the Mason Valley project development and exploration. Rio has the option to earn a 65% interest in the assets.
The deal was made following Rio's Nuton labs undertaking bulk metallurgical sample testing from both the MacArthur and Yerington deposits.
Rio will consider commercial deployment of its Nuton technologies which offer copper heap leaching, which is intended to enable greater copper recovery and access new sources, such as low-grade sulphide resources and the reprocessing of stockpiles and mineralized waste.
Within 45 days of completing stage 1, Rio is to decide whether to proceed with stage 2, which is to see Rio paying up to $5 million for further works.
Stage 3 envisions Rio funding a feasibility study and ancillary work of up to $50 million.
The agreement is part of a recent programme of investments by Rio into junior copper developers as it seeks to further test the Nuton processing technology.
Lion said that it has been in contact with the US Bureau of Land Management to formally initiate the environmental permitting process.
Lion's share price was C$0.085 (US$0.07) on May 18, having increased by 13% day on day. The company has a market capitalization of C$25.85 million.