Anglo American has backed its own due diligence on its merger with Teck Resources, after the Canadian firm slashed its copper output guidance.

The FTSE 100 British mining firm agreed to combine with Teck last month to create Anglo Teck, with Anglo American shareholders holding 64.2% of the $53bn global copper group.

The merger is set to unlock $1.4bn in average annual EBITDA and $800m in pre-tax recurring annual synergies.

However, Teck announced yesterday that it had lowered its copper production estimates for its Quebrada Blanca operation in Chile from between 210,000 and 230,000 tonnes to between 170,000 and 190,000 tonnes, following an operational review.

Following the announcement, Anglo American said that it had conducted significant due diligence ahead of the merger agreement and the outcome presented by Teck is "broadly consistent" with its analysis. The British company stated that it was fully supportive of Teck’s more measured approach" to the ramp up the Quebrada Blanca operation over the next few years.

Despite Teck lowering its production expectations, Anglo American has seen its share price increase by almost 2% following its update.

Investment director at AJ Bell, Russ Mould, said that while it is never a good look when a firm comes out with bad news after receiving a bid, the latest update has not been severe enough to derail the merger.

He concluded: "Anglo implies it was already aware of operational challenges at one of Teck’s projects following due diligence on the company. While Anglo wasn’t privy to the downgraded guidance now announced following Teck’s operational review, it has implied to the market that the news isn’t a complete shock.

"The fact it says the strategic reasons behind the merger with Teck and associated synergies remain unchanged was enough to reassure investors, sending its shares higher."

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