Share Tips: Glittering prospects from gold mining

Vatukoula Gold Mines (3.29p) is a smaller miner based in Fiji that is ramping up production at what was once known as the Emperor Gold Mine. The mine has been producing gold for 80 years. It is estimated that it currently contains 4.3m ounces of gold, and the company is targeting production of 100,000 ounces per year.

The Fijian government is stable and supportive of the mine. Vatukoula has a five-year tax holiday from the government, with royalty payments on gold sales being just three per cent.

The Aim-listed company is small, with a market capitalisation of 135m, and so it should be treated as a speculative play. However, the shares are likely to be re-rated as production increases and cash costs fall. The company is expected to move into profit this year. Buy.

Car dealership Lookers (61p) said in its third-quarter trading update last week that it was continuing to trade ahead of expectations, and it looks like earnings upgrades are in prospect. In sales terms, it has outperformed the 7.8 per cent increase in the UK new car market.

Used car volumes increased by 8 per cent on a year-on-year basis and margins continue to be at "satisfactory" levels. The shares are trading on a December 2010 earnings multiple of 10.2, falling to 9.2 next year and yielding 2.8 per cent. Buy.

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Aim-traded oil exploration firm Providence Resources is exploring in the Celtic Sea, the Irish Sea and off the west coast. Some projects are at an early stage while others are more mature. In most cases it has teamed up with larger partners to provide financial help and operational expertise, working with oil giants such as ExxonMobil, Chevron and Petronas.

The group also has assets in production, including the Singleton oil field in West Sussex and a couple of fields in shallow waters in the Gulf of Mexico. Overall, the company produces 1,500 barrels of oil a day and this should rise to 1,800 by the end of the year. Providence is delivering 20m a year in revenue.

The group has debts of 60m but is in talks with its banks about refinancing. It may also secure cash by selling assets that are not a central to its business.

Providence shares are 178.5p but should rise fast in the next six to 18 months. Several Irish projects are soon to enter a new phase and some analysts believe that the shares are worth more than 700p. This stock is not for the cautious, but the adventurous might do well. Buy.