* Rio closes second phase of financing deal with Ivanhoe

* Ivanhoe says current cash balance now about $610 mln (All figures in U.S. dollars, unless noted)

TORONTO, Oct 28 (Reuters) - Canada's Ivanhoe Mines (IVN.TO: Quote, Profile, Research) said on Wednesday Rio Tinto (RIO.AX: Quote, Profile, Research) (RIO.L: Quote, Profile, Research) has raised its stake in Ivanhoe to 19.7 percent from 9.9 percent as part of a deal struck in 2006, when the companies agreed to partner on the Oyu Tolgoi project in Mongolia.

Earlier this month, the government of Mongolia finally wrapped up a long awaited deal with Ivanhoe and Rio Tinto to develop Oyu Tolgoi, one of the world's largest untapped copper and gold deposits. [ID:nSP495396]

Ivanhoe said it has received $388 million from Rio Tinto, completing the second phase of the mining giant's private placement financing deal with its Canadian counterpart.

Ivanhoe said the additional funds will be used to help build and commission the Oyu Tolgoi project.

The cash infusion from Rio Tinto has boosted Ivanhoe's current cash balance to about $610 million.

Under the financing agreement between the two companies, Rio has the right to buy 43.1 percent of Ivanhoe's common shares over the next two years. It may increase this stake to 46.6 percent through purchases on the open market. ($1= $1.07 Canadian) (Reporting by Euan Rocha, editing by Dave Zimmerman)