Mr. Stephen Mann reports

LION ONE CHAIRMAN WALTER BERUKOFF ANNOUNCES RED LION CREDIT FACILITY, CORPORATE UPDATE, AND FIJI OPERATIONS REVIEW

Red Lion Management, a private merchant banking company owned by Lion One Metals Ltd. chairman and chief executive officer Walter Berukoff, has agreed to provide a bridge loan facility to the company to be utilized for working capital at the company's 100-per-cent-owned and fully permitted high-grade Tuvatu gold project, located on the island of Viti Levu in Fiji on the South Pacific Ring of Fire. The company has also provided the following corporate update and review of its operations in Fiji:

• Red Lion credit facility;
• Ground mobilization and site preparation;
• Project optimization and metallurgical work;
• Fiji fuel supplies;
• Results from 2015 annual general meeting.

Red Lion credit facility

The company has entered into an agreement with Red Lion for a non-arm's-length credit facility consisting of an initial $500,000 line of credit to finance development expenditures at Tuvatu in Fiji and for general working capital. The credit facility will be available for drawdown in multiple tranches with interest payable at 9 per cent per year. The credit facility will be secured by a general security agreement granting an encumbrance over all assets of the company and subordinate to subsequent acceptable credit facilities secured by the company. Lion One will retain the right to prepay the credit facility at any time without penalty. The credit facility provides liquidity and financial flexibility to the company as it evaluates financing alternatives.

About Red Lion Management

Red Lion is a merchant banking company owned by Mr. Berukoff, with diversified investments in real estate development, agriculture, mining and private equity. In 2007, Red Lion acquired the Fijian asset base of Emperor Gold Mines of Australia, including the Tuvatu gold project; the operational Vatukoula gold mine, a greenfield exploration portfolio; and the Vatia Wharf diesel fuel storage and distribution facility. Emperor had invested an estimated $30-million advancing Tuvatu and, in 1999, completed approximately 1,600 metres of underground development to enable the collection of bulk samples for metallurgical, laboratory test work, detailed mapping and sampling. In 2000, prefeasibility and feasibility studies were completed, with positive economic results; these reports are now treated as being historical in nature as they were prepared prior to the introduction of National Instrument 43-101. Vatukoula, which has produced over seven million ounces of gold since the 1930s, was sold in 2008, while Red Lion financed and advanced Tuvatu privately for three years before the project was taken public by Lion One in 2011.

Mr. Berukoff stated: "This initial credit facility will enable Lion One to continue to advance Tuvatu while taking the time to properly evaluate financing options with lenders and other financial institutions. Red Lion is firmly committed to Lion One and the timely development of Tuvatu."

Ground mobilization and site preparation

The company has cleared the Tuvatu site for the proposed processing plant facilities and infrastructure, which includes an administration block, warehouse, stores and assay laboratory. The proposed processing plant consists of a conventional two-stage crushing and screening circuit, with a two-stage grinding circuit and gravity separator feeding flotation cells, with a regrind circuit for concentrates. The processing facility has been designed to potentially treat 219,000 tonnes per year over seven years at a projected throughput of 600 tonnes per day, at an average head grade of 11.3 grams per tonne gold, to produce gold dore at estimated cash costs of $567 (U.S.) per ounce. Anticipated capital costs are $48.6-million (U.S.) with a 15-month preproduction schedule. The proposed development work is based on the results of the technical report and NI 43-101 preliminary economic assessment dated July 14, 2015; a summary of this report is shown in the attached table.

  
     SUMMARY OF JULY 14, 2015, NI 43-101 REPORT
                                   
Preproduction capital costs         $48,602,515 (U.S.)
Gold production (oz)                         352,931
Average feed grade (g/t)                       11.30
Process recovery                               86.3%
Life of mine (years)                            6.16
IRR (pretax)                                     67%
IRR (after tax)                                  52%
Payback (pretax)                                1.25
Payback (after tax)                             1.50
Pretax NPV (5%)                    $116,990,874 (U.S.)
After-tax NPV (5%)                  $86,541,639 (U.S.)

Project optimization and engineering

Metallurgical test work, process plant design and tailings storage facility optimization are continuing. The metallurgical and tailings test work is based on the process flow sheet utilized in the preliminary economic assessment and is designed to evaluate potential improvements in metallurgical recoveries from the average 86.3 per cent estimated in the current study and to determine if costs can be potentially reduced on the tailings storage facility. The metallurgical test work and tailings test work are expected to be complete in the first quarter of 2016. The board has instructed management to move forward with detailed engineering for the Tuvatu processing plant and tailings storage facility adjustments pending the completion of current test work.

Fiji fuel supplies

The Vatia Wharf terminal is a diesel fuel import and storage facility located in western Fiji that was part of Emperor Gold Mines' Fijian asset portfolio when acquired by Red Lion in 2007. It is now held in a private company controlled by Mr. Berukoff, Lion One's chief executive officer. The terminal is located 100 kilometres by road from Tuvatu and comprises a 200-metre jetty with a deepwater wharf and docking station, a fuel storage facility, and a truck filling station. The fuel terminal has been rehabilitated and upgraded to compliance with the International Ships and Port Facility Security Code, the guidelines of Fiji's Maritime Safety Authority, and is classified as a safe port with Lloyd's Maritime Directory List and Shipping Gazette. The company has commenced discussions to secure stable long-term fuel supplies from this facility, which is expected to become operational in 2016.

Results from the 2015 annual general meeting

All of the resolutions that were presented at the company's annual general meeting held on Dec. 10, 2015, were approved by the shareholders, including the nomination of the directors and auditor, and approval of the stock option plan. Shareholders elected Walter H. Berukoff, Richard Meli, Stephen Mann and Kevin Puil to the board of directors with an average approval rating of 97.81 per cent. A total of 93 shareholders, representing approximately 32 per cent or 19,276,294 of the company's 60,175,608 outstanding shares, were represented at the meeting to vote on the resolutions presented.

The TSX Venture Exchange has accepted for filing the annual renewal of the company's stock option plan approved by shareholders at the Dec. 10, 2015, annual general meeting. The company has implemented an amended rolling stock option plan, whereby a maximum of 10 per cent of the issued shares will be reserved for issuance under the plan. A total of 6,017,560 shares are eligible to be issued under the plan.

During the subsequent board meeting, Stephen Mann was re-elected managing director of the company; Sam Shorter as chief financial officer; Hamish Greig as vice-president and corporate secretary; Stephanie Martel as vice-president, administration; and Walter H. Berukoff as chief executive office and chairman of the board. Mr. Meli and Mr. Puil were reappointed to the audit committee.

About Tuvatu

Tuvatu is a high-grade, low-sulphidation epithermal-vein-hosted gold deposit located on Fiji's main island, Viti Levu, 17 kilometres from the international airport in Nadi. The tenement package includes 12,000 hectares held under special prospecting licences 1283, 1296 and 1465 and 384.5 hectares under a special mining lease (SML 62). Discovered in 1987, Tuvatu had significant development in the late 1990s by the Emperor Gold Mining Company of Australia, which completed over 87,000 metres of drilling, 1,600 metres of underground development and trial mining, and a feasibility study in 2000. Lion One Metals acquired the project through a merger between X-Tal Minerals Corp. and American Eagle Resources Inc. in 2011.

In 2015, the company was granted SML 62 by the government of Fiji through the Mineral Resources Department, completing the permitting process for development, mining and processing operations at Tuvatu. In 2014, the company secured environmental approvals through the Fiji government's Department of Environment, for its environmental impact assessment and environmental management plans. Also in 2014, the company finalized a 21-year surface lease agreement following extensive consultations and meetings with heads of local communities and landowners. The surface lease agreement and environmental approvals follow over 200 consultations that took place over a period of four years with various groups, including the Mineral Resources Department, Rural Local Authority, Town and Country Planning, Lands Department, Forestry Department, and i-Taukei Land Trust, in addition to numerous communities and stakeholders in the district. Tuvatu contains a mineral resource estimate of 1,101,000 tonnes of indicated resources at 8.46 grams per tonne containing 299,500 ounces gold, as well as 1,506,000 tonnes of inferred resources at 9.67 grams per tonne containing 468,000 ounces gold, at a three-gram-per-tonne cut-off. For further details of the project, please refer to the company's technical report and preliminary economic assessment dated July 14, 2015, available for download on the company's website or on SEDAR.

Qualified persons

Rob McLeod, PGeo, a consultant to the company, is the company's designated qualified person for this news release, within the meaning of NI 43-101, and has reviewed and confirmed that the information contained in the release is consistent with that provided by the independent qualified persons responsible for the underlying preliminary economic assessment.

We seek Safe Harbor.