Got to agree with Loosie completely - that being said I'm going to assume you have taught him to yield - considering he keeps yielding from you and not just going out. It's funny you mention this today as I just moved to that step with my horse yesterday! My horse fully understands yielding every part of her body in both directions from my body language alone - no pressure is needed any more. So I know these skills are solid. So now I move on to lunging - I'm using this as a way to reinforce verbal cues for upward and downward transitions as I don't have a round pen - I don't see any other reason for lunging and would never lunge a horse to get them 'tired' or to try to bond with one - it simply doesn't work that way. I could go on about that if you want just ask, but I'm going to explain how I got my mare to lunge so that you can try.
I started using a lunge whip with the rubbery butt end pointed toward the horse. You make a triangle between the horse's nose - you - the horse's hind end with the butt end of the stick. Your body and line of sight should be in line with the horse's girth area. To get the horse to move forward use your verbal 'walk on' cue and step a little behind the girth - essentially driving them forward. You can wiggle the butt end of the stick in the direction of their rump to encourage movement of any kind. Now here's the reason I use the butt end - If the horse begins simply yielding his hind end, use the butt end of the stick to immediately yield the horses front end. If you're fast enough you'll get the horse out straight again. I find though if your body is positioned just right the horse will drive away from you and not yield. The next very important thing to make sure of is that the horse has enough rope - is he's constantly yielding his hind end, he may not have enough rope to move forward (or he may not know he does). So focus on keeping yourself in line - you will have to do a lot of walking about at first to keep yourself in that line - but any forward movement is huge and be so excited when they do it right. If they walk out a few steps correctly - major praise and let them rest a minute (gives them a minute to connect the dots) then ask again, each time asking a little more walk. Remember to practice this evenly on both sides. Remember the lunge should be a little slack at most times unless you need a correction - you don't want the horse bracing on it. Practice this with walk halt transitions until he has the concept solid. If when asked to whoa you can choose - do you want him to come to you or stay out and wait for further direction. There are a number of reasons to want to do either - you choose what works best for you and your horse. If you want him to come in ask for a halt and then slowly reel him in to you. Send him away again, sometimes in a different directions, sometimes the same, so he doesn't get programmed. If you want him to stay out, ask for the woah, if he starts to turn into you immediately use the butt end of the stick to yield his front end back out - only yield him as far back as where he was origionally.
Sound like you've got lots of work on your hands :) You'll have fun working with this horse! Good luck, practice often :)