MELBOURNE (Reuters) - Global miner Rio Tinto (RIO.L) will increase its stake in Canada"s Ivanhoe Mines (IVN.TO) by 2.7 percent to 22.4 percent for $233 million, in a move tied to plans to jointly develop the giant Oyu Tolgoi copper mine in Mongolia.
The move beefs up Rio Tinto"s (RIO.AX) position in Ivanhoe just after the Canadian group announced plans for possible corporate action lift shareholder value.
Ivanhoe hired investment bankers from Citigroup (C.N) and mining sector specialist Hatch Corporate Finance last month to look at a range of options, including offering new shares or bonds and "various corporate transactions.
Rio, which has long coveted Oyu Tolgoi, said on Monday it will buy 15 million Ivanhoe shares at C$16.31 per share, a 3 percent discount to Ivanhoe"s close last Friday.
The share issue fulfils an arrangement it had with Ivanhoe in 2008 to finance equipment for the Oyu Tolgoi copper-gold complex.
"Our further investment in Ivanhoe Mines underlines our confidence in the quality of the world class Oyu Tolgoi deposit and its priority in our project portfolio," Rio Tinto"s copper chief executive Andrew Harding said in a statement.
The two companies are working to complete their investment agreement with the Mongolian government ahead of moving into developing the project.
Under its partnership agreement with Ivanhoe, Rio can lift its stake to the "high 40s percentage" of Ivanhoe"s shares over the next two years, based on factors that are all in Rio Tinto"s control, a Rio Tinto spokesman said.
Rio shares rose 0.9 percent to A$71.10 on Monday as copper prices jumped on worries about supplies after the massive earthquake in Chile, the world"s biggest copper producer.
(Reporting by Sonali Paul; Editing by Balazs Koranyi)
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