LION COPPER & GOLD CORP.

3.4 PROJECT BACKGROUND

Copper mining was first recorded at the Yerington Mine site from 1918-1920 at the Empire Mine, and later, beginning in 1953 by Anaconda. From that time forward, the Yerington mine operated under different companies until 1999 when Arimetco, the last operator, closed the operation. Soil and groundwater contamination from the former mining operations have been identified on the Yerington Property.

As a result, a portion of the Property acquired by Lion CG in 2011 is now being remediated under jurisdiction of NDEP. Liability for the contamination on site is the responsibility of a third party which is actively engaged in remedial investigation and remediation activities under the supervision of NDEP.

To establish Lion CG's position and rights, the acquisition by Lion CG of the Arimetco properties required a series of rigorous environmental, legal, and technical due diligence studies. In 2008, Chambers Group, Inc. and Golder Associates Inc. conducted a Phase I Environmental Site Assessment (Phase I ESA) for the Yerington Mine Site. A Phase I ESA is intended to serve as an appropriate, commercially prudent, and reasonable inquiry regarding the potential for recognized environmental conditions in connection with the subject property. The 2008 Phase 1 ESA was updated by SRK Consulting (U.S.) Inc. (SRK) in 2010 and again in 2011. These were completed to allow Lion CG to establish liability protection as a BFPP. Prior to closing on the Property, Lion CG received letters from the NDEP, BLM and the USEPA indicating the post-closing requirements then applicable to the Yerington Mine Site for Lion CG to maintain its defense to liability as a BFPP regarding the activities of the former mine owners and operators.

Technical due diligence included the review and compilation of a wealth of historical data in the Anaconda Collection, American Heritage Center, University of Wyoming, in Laramie. Numerous reports, maps, and historical drilling data have been scanned and entered into an internal data base, allowing an initial review of both past production and remaining mineralization throughout the Yerington District.

The company controls approximately 6,014-acre ft of primary groundwater rights permitted for mining and milling use at the site. The places of use for each of the water rights which make up this total are on the site, which also contains a pit lake now estimated to contain approximately 43,000-acre ft of water to be dewatered during mining activities. The company believes this water will have a variety of beneficial uses but will require some costs to make the water available for those beneficial uses.

If Lion CG elects to conduct exploration on unpatented lode mining claims on public lands administered by the BLM, a Notice of Intent is required if the proposed disturbance is less than five acres.