* Rio holds 41 pct, short of original 50 pct target
* Will pay A$16.50 a share if gets to 47 pct by April 6
* No comment on outcome of Rio's talks with CSN
* Passive funds could get Rio Tinto to 47 pct (Recasts with Rio statement)
By Michael Smith and Sonali Paul
MELBOURNE/SYDNEY, March 29 (Reuters) - Global miner Rio Tinto said it would go ahead with its A$3.9 billion ($4 billion) takeover offer for Riversdale Mining even if it ended up with a minority stake in the Mozambique-focused coal miner.
The offer, announced in December, was originally conditional on at least 50 percent acceptances, but so far Rio Tinto has secured only about 41 percent in its third major deal attempt since a badly timed $40 billion takeover of Alcan in 2007.
Rio was locked in talks with one of Riversdale's top shareholders, Brazil's biggest steel maker CSN , on Tuesday trying to secure a majority stake. Tata Steel is the other major shareholder in Riversdale.
Rio Tinto revised its plan late on Tuesday, saying it would pay those who had accepted its offer A$16 a share, and if it reached a 47 percent stake by April 6, it would pay A$16.50.
"Given how close they are, it looks as though they are prepared to roll the dice for another week and that buys them some time in terms of talking to CSN and until the institutional investors have a clearer picture on where they want to get to in that time," said Pengana Capital portfolio manager Tim Schroeders.
Pengana owns shares in Rio Tinto.
Rio Tinto could reach its 47 percent target with the help of passive index funds who will now be likely to sell their shares into the offer. Passive funds track indexes by matching their holdings to index weightings.
With the bid declared unconditional, meaning Rio will not walk away from it, Riversdale is set to be dropped from the market's benchmark S&P/ASX 200 index , as its free float will likely end up at less than 30 percent.
Rio has targeted Riversdale because of its hard coking coal projects in Mozambique, which could eventually supply as much as one-tenth of the global market for the key steel-making ingredient.
Riversdale had no immediate comment on Rio's decision, but the company is likely to be relieved, as analysts had predicted Riversdale's shares were likely to sink below where they had been trading prior to the bid, if Rio Tinto walked away.
It was not clear whether Rio Tinto was still talking to CSN. Rio Tinto spokeswoman Karen Halbert declined to comment on the status of the talks.
CSN, Brazil's largest steelmaker, recently increased its Riversdale stake to 19.9 percent but has said nothing publicly about how it views Rio's offer.
CSN's chief spokesman was not available earlier for comment.
Neither CSN nor Tata wants the offer to fail but both were reluctant to reduce their holdings because it would lessen their bargaining power to control coal supplies, sources say.
Tata Steel, the world's no.7 steelmaker, is a long-time shareholder in Riversdale and recently increased its stake in the Australia-listed company to 27 percent.
It has a director on Riversdale's board who backed Rio Tinto's offer, without saying whether Tata would accept it.
Tata Steel Managing Director Heman Nerurkar told Reuters last month the company was mainly interested in securing coal supplies from Riversdale and was talking to Rio about a range of options.
Riversdale's shares were put on a trading halt on Tuesday pending an announcement from Rio Tinto. The stock closed on Monday at A$16.10, indicating investors expected Rio Tinto to drop the 50 percent condition on its offer of A$16.50 a share.
UBS is advising Riversdale and Macquarie is advising Rio Tinto on the deal. ($1 = 0.976 Australian Dollars) (Editing Dhara Ranasinghe and Vinu Pilakkott)