Despite recent weakness in copper prices, OZ Minerals remains confident about the metal's prospects.

Copper is regarded as a key indicator commodity for global economic growth and especially in China.

The price peaked of $US10,190 a tonne in February, but has retreated by around 14% to just under $US8,800, according to prices on the London Metal Exchange.

The company's CEO. Terry Burgess told the AGM in Melbourne yesterday that it believes the market for copper "is strong.

"Analysts foresee a supply deficit of copper this year with the consensus among brokers and analysts for the copper price at or above US$4/lb for the next four to five years.

"Looking further out, we continue to look at the new supply which is proposed and see challenges for the industry to deliver this supply.

"There are projects which have long been discussed, but still not started.

"Many are in challenging jurisdictions, have lower grades, are located in environmentally or socially sensitive regions or are very high capital cost.

"While some will succeed - and Oyu Tolgoi in Mongolia - is a great example of a visionary project coming to fruition - not all will, and particularly not within the timeframes suggested.

"This will result in a continued tight supply outlook, he told the meeting.

Mr Burgess said that despite the intervention by the Chinese government to contain inflation, the company's customers still expect strong metals demand growth in China, with China expected to consume more than 7.5 million tonnes of refined copper this year, representing around 40 per cent of global demand.

"Other regions are showing high demand; India and recently even some OECD countries," he said.

On gold, which is OZ Minerals other major commodity, Mr Burgess said "we can probably not be so sure about - the prices today are certainly robust but the various factors driving the gold price are always difficult to predict. But we shall enjoy the prices while they persist!

Gold prices are down 6% from a record $US1,577.40 on May 2. It closed at $US1,491.30 on Monday.

Mr Burgess said that both copper and gold enjoyed strong price growth in US Dollar terms through 2010 with copper up 30% and gold up 26%.

Over the year, in Australian Dollar terms, copper and gold increased by 17% and 12%.

"We saw record prices in 2010 at averages of $US3.42/lb copper and $US1,226/oz gold, and continue to enjoy the much higher prices we have seen so far in 2011," he said.

OZ Minerals' key asset is its evolving Prominent Hill mine in South Australia which produces copper and gold.

OZ is looking for similar resources and earlier this year bought one based in South Australia.

Mr Burgess explained why to the AGM.

"One of the areas of success was the recent acquisition of the Carrapateena copper project in South Australia for US$250 million which we completed last week.

"This acquisition makes sense for OZ Minerals for a number of reasons.

"First and foremost it is a high quality resource of copper in a world where quality copper resources are becoming more and more difficult to find.

"We have already been able to report an initial resource of 203 million tonnes at 1.3 per cent Cu and 0.5g/t Au for the southern part of the deposit.

"It is a good strategic fit for us in that it is in South Australia about 250 kilometres from Prominent Hill, it is the same style of ore body as Prominent Hill and it has the potential to produce at levels similar to Prominent Hill in the middle of our target range of 50,000 to 150,000 tonnes per year of copper.

"This project meets all the parameters that we clearly laid out in the Company's Strategy that was defined in November 2009 in terms of commodity, location, scale and life.

"Like every mining project, it does have some challenges.

"The ore body starts at a depth of 470 metres below surface and therefore mining will need to be underground .

"Some of the underground methods we will be investigating are bulk mining methods, like block caving.

"While block caving is becoming increasingly common in mining projects, this is a new challenge for the Company but one with a growing expertise to draw upon.

"The project is at the advanced exploration stage and our immediate focus is further exploration drilling.

"We anticipate that we have between four and five years of exploration and studies ahead and then a further two years of construction and development.

"While it is too early to accurately gauge capital costs, this project will likely be a similar scale to Prominent Hill with the plant and infrastructure having a similar cost of about $1 billion and from similar underground projects we see a further $1 billion of pre-production capital for mining," Mr Burgess told the meeting.

OZ Minerals shares rose 1.5c to $1.45 yesterday.