n the late nineties, when mining was more crap than shoot, the folks at junior exploration company Northfield Inc. had a bright idea. Bingo! Exactly. The Toronto-based firm would get out of mining and into bingo, a billion-dollar business in Ontario, built on the collaboration of charities and private gambling operators.
But Northfield announced yesterday that it won't play bingo after all, citing the scourge of anti-smoking legislation that is vaporizing bingo hall attendance.
"It's been a pain in the neck -- we're not particularly pleased," president Thomas Larsen said in announcing that Northfield has backed out of a series of planned bingo acquisitions.
Now it plans to move into a new hot industry -- mining. It is consolidating its stock and changing its name to Caprivi Resources Ltd., which will "seek, identify and acquire mineral resource projects."
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Northfield's strange, circular journey illustrates the challenges for a shell company, with $46-million of tax losses, to find a business with a future and the potential for a new stock listing for its backers.
Over the past decade, Northfield has been dealt a bad bingo card -- look under the T for "terrible timing." Mr. Larsen said that in the mid-1990s, Northfield was backing exploration work in South America when the Bre-X scandal hit. In the fallout, the junior mining business started to go sideways.
Mr. Larsen and his partners looked for more promising ways to make money, and decided to hitch their star to Len Stuart, a powerhouse in the Ontario bingo game.
The idea was to raise $10-million to invest in management contracts, bingo hall locations and notes secured by the cash flow from Mr. Stuart's halls in the Windsor, Ont., area. But after more than two years of trying to work out a deal, Mr. Larsen decided he was in another loser's game. Anti-smoking legislation, he said, was threatening to drive away 25 to 40 per cent of Ontario bingo gamblers, thus eroding revenue for the halls and the charities that depend on them.
Lynn Cassidy, executive director of the Ontario Charitable Gaming Association, said it is typical for bingo-dependent charities to lose nearly half their revenue in the first year after anti-smoking legislation is introduced. It tends to recover, but never to the levels of previous years. In addition, the stronger Canadian dollar is hurting business at border halls where a popular promotion aimed at U.S. visitors is "play with Canadian money, collect with American money." That pot is not as rich as it used to be.
In a statement, Northfield said the 2004 work-to-rule campaign by Canadian customs officers at border crossings had further depressed business. "It really is a diminishing industry," Mr. Larsen concluded.
With the industry consolidating, a new player, Boardwalk Gaming and Entertainment Inc., a collaboration of Mr. Stuart and sports tycoon Larry Tanenbaum, had picked up a number of the choicest sites, Mr. Larsen said.
Besides, Mr. Larsen was hankering to get back to his old mining game. "My belief is that we are in a long-term bull market with mining," he said.
Mr. Larsen, who is involved with two other junior miners, NFX Gold Inc. and Eloro Resources Ltd., is interested in the Caprivi area of northern Namibia.
Ms. Cassidy said the early exit of Northfield is typical of the bingo consolidation, which, in addition to smoking laws, can also be attributed to market saturation.
She said there are only 116 bingo centres in Ontario, down from more than 200 over five years ago. The number of charities involved in bingo has dropped by about 25 per cent in that time.
