Second day of heavy losses has Semafo investors reeling

Semafo Inc (TSX:SMF) suffered a second day of sharp losses on Thursday amid massive trading volumes, after a resource updated released yesterday disappointed investors.

By noon the miner was trading down 21.6% at $3.41 on the Toronto big board, following a dive of 17% on Wednesday. By midday the number of shares traded was 6.5 million, compared to a daily average of 1.3 million.

The Montreal-based company, now worth $930 million from $1.5 billion less than a month ago, currently operates three gold mines: the Mana Mine in Burkina Faso, the Samira Hill Mine in Niger and the Kiniero Mine in Guinea.

According to Semafo's press release on Wednesday, its total mineral reserves and resources for 2011 increased by 1.3 million ounces to 7.3 million ounces from 6.0 million in 2010, but the company kept mum on its 2012 exploration results.

Investors looking for fresh news from the company that in the past has fed the market a steady stream of good numbersĀ  from its high-quality properties in West Africa were let down.

The star among its exploration properties, Wona-Kona at Mana, boasts reserves of 1.7 million ounces, but the company's move from an underground to a superpit operation has negatively impacted the economics of the project.

The Yaho deposit, discovered in 2011, with 724,000 ounces in measured and indicated mineral resources and 620,000 ounces in inferred resources, also appears not to have been enough to satisfy investors looking for knockout numbers.

Semafo expects production of between 235,000 and 260,000 ounces of gold for its current financial year.