NEW YORK, June 18 (Reuters) - Rio Tinto

agreed to pay $138.75 million to settle a lawsuit accusing the

Anglo-Australian mining giant of defrauding investors by failing

to disclose problems with its $7 billion underground expansion

of the Oyu Tolgoi copper and gold mine in Mongolia, according to

court records.

A preliminary settlement was filed late on Wednesday with

the U.S. District Court in Manhattan, and requires a judge's

approval.