MELBOURNE Nov 15 (Reuters) - Rio Tinto is unlikely to walk away from a bidding war for uranium developer Hathor Exploration, investors said on Tuesday, after rival bidder Cameco Corp trumped the global miner with a C$625 million ($615 million) offer.

Cameco, Canada's largest uranium miner, raised its offer for Hathor by 20 percent to C$4.50 a share, topping a friendly bid from Rio Tinto at C$4.15.

Given that Rio Tinto had been in talks with Hathor since early 2010, investors expect Rio Tinto is eager to take over the company and would have a bit more up its sleeve to top Cameco, especially since the target is not large.

"It wouldn't be out of character for them to come up with a higher bid. In the scheme of Rio, we're not talking about a lot of money," said Peter Chilton, an analyst at Constellation Capital Management, which owns Rio Tinto shares.

Rio Tinto declined to comment on the latest bid by Cameco.

Rio Tinto mines uranium in Australia, through its ERA unit, and owns the Rossing uranium mine in Namibia, but its Australian assets face environmental obstacles and the Namibia mine is considered fairly low grade.

The main attraction in Hathor is its large exploration-stage Roughrider project in the uranium-rich Athabasca region of Saskatchewan in Western Canada, which has the potential to produce at least 5 million pounds of uranium a year.

"Rio want to stay in the uranium game, and clearly (Hathor) ticked all the boxes -- high grade, exploration potential," Chilton said.

The key issue is whether it will be able to justify paying as much as Cameco is willing to fork out, as the Canadian company already has operations in the Athabasca region.

"Given the synergies with Cameco, I would think they are capable of paying a higher price than Rio," said James Bruce, portfolio manager at Perpetual Investments, which owns Rio Tinto shares.

Rio's shares fell 1.2 percent on Tuesday, underperforming a 0.4 percent dip in the broader market.

Uranium prices have fallen below $55 a pound since the March 11 tsunami that knocked out Japan's Fukushima nuclear plant. That compares with January's price of nearly $75, itself nearly half a high of $136 in 2007 .