Anglo American backs Teck deal despite production issues

(Sharecast News) - Anglo American said its blockbuster tie-up with Teck Resources remained firmly on track on Wednesday, despite the Canadian target cutting its full-year production guidance.

Teck posted third-quarter copper sales of 110,300 tonnes late on Tuesday, below forecasts for around 129,000 tonnes.

It also cut full-year guidance for copper production to between 415,000 and 465,000 tonnes. Teck had previously targeted 470,000 to 525,000 tonnes.

Production has been hit by ongoing issues at its Quebrada Blanca project in Chile, and the development of its tailings management facility in particular.

Teck said: "The ongoing TMF development...as well as the completion of the comprehensive review have resulted in changes to our previously disclosed guidance.

"The primary driver of the change is a slower ramp up, as work focuses on ensuring that the TMF is set up to support optimal long-term performance from 2007 onwards. Lower recoveries are now being assumed, consistent with recent performance."

However, Anglo - which agreed to acquire Teck a month ago - said the merger remained unaffected.

It said: "While the specific outcome of the operational review was not known at the time, the outcome presented by Teck is broadly consistent with Anglo American's independent due diligence and analysis

"On this basis, the overall strategic rationale for the merger and all synergy values and their timing remain unchanged."

The tie-up is set to create a $50bn copper-mining giant called Anglo Teck, headquartered in Vancouver but with its primary listing in London.

London-listed Anglo will own 62.4% of the new company with Teck shareholders owning the rest.

Anglo added that it was "fully supportive" of Teck's "more measured approach" to the ramp-up of QB over the coming years, having resolved similar issues at its Quellaveco mine in Peru.