TORONTO (miningweekly.com) - Diversified miner Rio Tinto has doubled its holding in Vancouver-based Ivanhoe Mines for $388-million, the firms announced on Wednesday.

Rio, led by CEO Tom Albanese, now owns 19,7% of Ivanhoe, up from the previous 9,9%. The investment was completed as part of a 2006 agreement between the two companies.

The investment was made after the two companies signed an agreement earlier this month with the government of Mongolia, to develop the giant Oyu Tolgoi copper/gold mine in the country.

Ivanhoe said on Wednesday that the additional funds will be used to help build and commission the openpit mine and to advance development of the underground block-cave mine at Oyu Tolgoi.

The cash received from the private placement increased Ivanhoe's current consolidated cash balance to around $610-million.

In a separate statement, Rio said that, if it were to exercise and convert all its remaining warrants and securities of Ivanhoe, it would own approximately 257,9-million common shares of Ivanhoe, representing 43,1% of Ivanhoe's common shares.

The two companies are due to complete an updated development plan for Oyu Tolgoi in the next couple of weeks.

The project currently has estimated mineral resources of about 79-million pounds of copper and 45-million ounces of gold in measured, indicated and inferred resources, and both Rio and Ivanhoe have said they believe there is potential to grow the asset by exploration.

Based on current plans, the mine is expected to produce about one-billion pounds of copper, and 500 000 oz of gold a year in the first ten years of its 35-year-plus life.

As part of the investment agreement signed last week, the government of Mongolia has agreed to buy 34% of the Oyu Tolgoi project, and Ivanhoe will hold the balance.

The mine is expected to cost about $4,5-billion to build.

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