Ivanhoe Mines announced that it would scrap its shareholder rights plan for Mongolia’s Oyu Tolgoi project. The moves clears the way for Rio Tinto to take over the project which is expected to become of the largest copper-gold projects in the world.

The shareholder rights plan was originally aimed at blocking Rio Tinto from raising its stake in Ivanhoe Mines as a separate agreement capping Rio Tinto’s holding at 49 percent expired.

Rio Tinto has built its stake in the miner as it has helped fund construction of Oyu Tolgoi, Reuters reported.

“As the 49 percent cap on Rio Tinto’s ownership of Ivanhoe expires today, we are free to increase our shareholding as we see fit,” a Rio spokesman said.

Ivanhoe said Rio Tinto had recently told Ivanhoe’s board that it intends to buy additional shares to raise its stake to more than 50 percent.

Ivanhoe’s rights plan, backed by shareholders in 2010 and due to expire next year, was dealt a fatal blow in December when a court ruled it could not be used to dilute Rio Tinto’s stake.

The ruling recommended Ivanhoe consider scrapping the provision, which would have triggered a massive rights issue in the event of a bid.

Cancelling the shareholder plan will require approval of shareholders at the company’s annual meeting on May 11.

Analysts said Rio Tinto, still scarred by its costly takeover of Canadian aluminum giant Alcan in 2007, was unlikely to move aggressively to take over Oyu Tolgoi or Ivanhoe - or get into a potentially bruising battle with Ivanhoe CEO Robert Friedland.

Rio Tinto’s preference, they said, is most likely to lie with a friendly deal with Ivanhoe directors to give Rio Tinto control of Oyu Tolgoi in a cash and share swap, leaving behind Ivanhoe’s other assets, including stakes in coal miner South Gobi Resources, Ivanhoe Mine Australia and Kazakh project Kyzyl Gold.

There are no other apparent buyers for Oyu Tolgoi, with Rio Tinto already controlling a blocking stake in Ivanhoe. It already operates the project and is one of few companies with the deep pockets necessary to fund a similar sized mine.

Oyu Tolgoi, which translates to Turquoise Hill, is located about 50 miles north of Mongolia’s border with China and is considered one of the world’s largest copper and gold deposits.

Development of the $6 billion project was delayed for years as Ivanhoe hammered out a complicated royalty agreement with Mongolia, finally agreeing to a deal in 2009 that gave the country 34 percent of the project.

Once at commercial production in 2013, Oyu Tolgoi is expected to produce more than 494 kt/a (544,000 stpy) of copper, 20 t/a (650,000 ozpy) of gold, and 93 t/a ( 3 million ozpy) of silver on average over its first ten years.

Ivanhoe also said it had obtained second $1.8 billion bridge loan as a stopgap measure while it negotiates $4 billion in long-term financing for Oyu Tolgoi. The bridge loan is subject to Rio's approval.