Anglo-Australian miner Rio Tinto Limited said it will acquire additional 15 million shares, or 2.7 per cent more in Canada's Ivanhoe Mines Ltd, increasing its stake to 98.6 million shares or 22.4 per cent.

In a statement to the Australian Stock Exchange (ASX), Rio Tinto said the shares in the Canadian company will cost C$16.31 per share, aggregating to C$244.7 million ($233.7 million).

Under the deal, Rio Tinto and Ivanhoe are planning to jointly develop Oyu Tolgoi mines in Mongolia's Gobi desert, thought to be one of the world's largest untapped copper and gold deposits.

Mongolia with a population of just 2.6 million is a mineral rich country holding the world's largest undeveloped copper and coking coal reserves. It also has huge deposits of untapped uranium, gold, phosphorus and fluorspar as well as rare earth metals.

Nearly half of the gross industrial output and 60 per cent of the country's export earning come from the mining sector.

The company said it can increase its holding in Ivanhoe to about 44 per cent by converting a $350 million loan into stock and exercising all its share purchase warrants.

"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 in the statement.

"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," Andrew Harding, Rio's chief executive for copper, said.

''We are working with Ivanhoe Mines in finalising the conditions precedent for completion of the investment agreement with the government of Mongolia and are looking forward to moving into the development phase of the project,'' he added.

The shares are being issued to Rio Tinto in satisfaction of an arrangement with Ivanhoe Mines in 2008 to finance equipment for the Oyu Tolgoi copper-gold complex in Mongolia's South Gobi region.

By financing the equipment at that time, Rio Tinto provided Ivanhoe Mines with the funds necessary for the ongoing development of the Oyu Tolgoi project and maintained the critical long lead manufacturing time for the equipment.

''Rio Tinto and Ivanhoe Mines are development partners for the Oyu Tolgoi project. Production is expected to commence in 2013, with a five-year ramp up to full expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold,'' the statement added.

The London- based Rio Tinto and Canada's Ivanhoe Mines joint venture will be the largest foreign investment ever in Mongolia.

Early February, the Mongolian government had scrapped the auction of the Tavan Tolgoi coal deposits close to the Chinese border, the world's biggest untapped coking coal deposit in the South Gobi region, opting instead to own the entire stake and develop it through a mining contract or a production sharing arrangement (See: Mongolia scraps $2-billion Tavan Tolgoi coal auction, favours contract mining).

Rio Tinto, the world's third- largest mining company by market capitalisation, reported 2009 net earnings of $4.87 billion, up 33 per cent from $3.68 billion a year ago.

However, underlying earnings for the period declined 39 per cent to $6.30 billion from $10.30 billion a year earlier.

The mining giant's consolidated sales declined to $41.82 billion in 2009 from $54.26 billion last year.

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto Plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the ASX.