Under the agreement, Lion One will acquire all the shares in Avocet by issuing its shareholders with one share for every nine Avocet shares held.
The ratio implies an offer price of A7.2c per Avocet share, a 28% premium to its Thursday closing price.
Avocet shareholders will hold around 18.5% of the merged entity.
Avocet - formerly known as U3O8 - has a 25% stake in the Olary Creek iron ore project in South Australia, as well as projects in Western Australia, Queensland and Argentina.
Lion One is focused on the Tuvatu gold project in Fiji, which has resources of around 650,000 ounces of gold.
It is estimated the new entity will have cash of around $C18 million ($A17.4 million) and a market capitalisation of more than $35 million.
The companies expect the deal to be completed by April.
Avocet shares were untraded at A5.6c.