UPDATE: Rio Tinto Increases Stake In Ivanhoe Mines

Anglo-Australian miner Rio Tinto PLC (RTP, RIO.LN) said Monday it increased its stake in Ivanhoe Mines Ltd. (IVN, IVN.T), a Vancouver-based miner developing one of the world's largest new gold-copper mines in Mongolia.

Rio Tinto said it bought 40.1 million Ivanhoe shares at US$10 each by exercising a $350 million convertible credit facility issued to Ivanhoe in 2007, increasing its stake by 5.3 percentage points to 34.9%.

Rio Tinto's increased stake in Ivanhoe follows news last week that Ivanhoe Mines' flagship Oyu Tolgoi copper-gold mine is on track to begin production at the end of 2012, and is expected to have average annual production during its first 10 years of more than 540,000 metric tons of copper and 650,000 ounces of gold. That compares with Rio Tinto's annual production at the end of 2008 of 699,000 metric tons of copper and 501,000 ounces of gold.

Rio Tinto also holds additional warrants on Ivanhoe shares; if it exercised all of them, it could increase its stake in Ivanhoe an additional 9 percentage points, to about 44%.

Ivanhoe shares rose 3.8% to $18.69 in recent trading on the New York Stock Exchange. Rio Tinto shares rose 89.50 pence, or 2.6%, at 3619.50 pence in recent trading in London.

-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@dowjones.com

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