Rio Tinto PLC (RIO) said Tuesday it reserves the right to increase its stake in Canadian mining concern Ivanhoe Mines Ltd. (IVN.T) but doesn't have any plans to make a full takeover offer after winning an arbitration process involving Ivanhoe.

The Anglo-Australian miner has been successful in its challenge to protect its rights against a poison pill defense adopted by Ivanhoe; Rio will be able to maintain its 49% stake if any bid for Ivanhoe triggers the smaller company's shareholder rights plan adopted last year, Ivanhoe said in a statement.

It also frees Rio to increase its stake beyond the 49% cap agreed between the companies under a five-year-old pact due to expire Jan. 18, something many analysts have said is likely at some point.

Depending on the evaluation of a series of factors, "Rio Tinto may seek opportunities to increase its shareholding in Ivanhoe to a majority position but currently has no intention of making a full takeover bid for Ivanhoe's shares," Rio Tinto said in a statement.

It however said it reserves the right to change its intention in the future.

Ivanhoe is majority owner of the massive Oyu Tolgoi copper and gold project in Mongolia, which founder and Chief Executive Robert Friedland has said could become one of the world's largest mines and a major driver of the small Asian country's economy for decades.

Rio already is Ivanhoe's largest shareholder, having steadily increased its holding over the past two years, and is manager of the Oyu Tolgoi project. It also effectively controls the Vancouver-based company's board, with three employees and four nominees among the 14 directors.

The companies had turned to arbitration after Rio claimed the so-called poison pill adopted by Ivanhoe's board in May 2010 breached its rights under a 2006 agreement between the companies.

Ivanhoe said its shareholder rights plan can remain in effect until April 2013, but if it is triggered it will be subject to Rio's right to maintain the relative size of its holding if Ivanhoe issues shares. Ivanhoe had argued the scheme was necessary to give its board time to consider any bid and to explore alternatives, which analysts have said was an attempt to create a bidding war if Rio launched a takeover bid.

Ivanhoe said the arbitrator also ruled against its counterclaim that Rio had breached certain obligations under their agreement.

"We will continue to strive to ensure that all Ivanhoe shareholders are treated fairly," said David Huberman, chairman of Ivanhoe.

Ivanhoe owns 66% of Oyu Tolgoi, which is due to start commercial production in the middle of 2013, and the Mongolian government owns the remaining 34% stake.

Oyu Tolgoi is expected to be one of the world's largest mines when fully operational. Annual output in the first 10 years is projected to average 1.2 billion pounds of copper, 650,000 troy ounces of gold, and more than three million ounces of silver.

-By Robb M. Stewart and Alex MacDonald, Dow Jones Newswires; +44 (0)207 842 9328; alex.macdonald@dowjones.com

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