MELBOURNE - Mining giant Rio Tinto will acquire 15 million shares in Ivanhoe Mines, increasing its stake in the company to 22.4 per cent.
Rio Tinto said the move underlined its confidence in the Oyu Tolgoi copper and gold deposit in Mongolia.
Rio Tinto will acquire the shares in theCanadian company for C$16.31 per share, or C$244.7 million ($332.7 million), increasing its ownership in Ivanhoe Mines by 2.7 per cent.
Under the deal, in which Rio Tinto and Ivanhoe are planning to jointly develop the Oyu Tolgoi deposit, Rio Tinto has the right to lift its stake in the smaller company up to 44 per cent.
"Rio Tinto also has, among other things, the right to acquire additional securities so as to maintain its proportional equity interest in Ivanhoe Mines, and the right to acquire additional Ivanhoe Mines securities in certain other circumstances and subject to certain limits," Rio Tinto said.
Andrew Harding, chief of Rio Tinto's copper division, said both companies were working on finalising details of the Oyu Tolgoi project and moving into the development phase.
Oyu Tolgoi, in the Gobi desert, is thought to be one of the world's largest untapped copper and gold deposits.
It is expected to begin production in 2013, and over five years ramp up to produce 450,000 tonnes of copper and 330,000 ounces of gold annually.
The Rio Tinto and Ivanhoe Mines joint venture will be the largest foreign investment ever in Mongolia.
Ivanhoe Mines is the parent company of Ivanhoe Australia.
