1. False start

The search for diamonds in Canada goes back as far as French explorer Jacques Cartier, who thought he found some in the 1540s at the mouth of the Rivière Cap-Rouge near present-day Quebec City. Unfortunately, these turned out to be quartz crystals. The name Cap Diamant remains on the dramatic promontory where the Château Frontenac overlooks the St. Lawrence. Cartier's mistake, pointed out to him by geologists when he got home, became a part of French folklore. Something fake is still described in parts of France as “ faux comme un diamant du Canada.”

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2. De Beers arrives

Over the next four and half centuries, there were occasional reports of diamond finds in Nova Scotia, Quebec, Ontario, Saskatchewan and British Columbia. In 1963, there was a flurry of activity after an ex-convict, with the backing of a rich family in Winnipeg, staked a claim along the North Saskatchewan River. But things really got serious when South African diamond giant De Beers SA began sniffing around sites in Canada in the 1980s.

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3. Geology lesson

The telltale sign of diamonds is the “kimberlite” rock formation, an iron-magnesium ore body that is often shaped like a funnel. These blasted to the surface during volcanic activity, bringing diamonds – formed billions of years ago deep underground – with them. New technology developed in the 1970s made it easier to figure out which deposits of kimberlite might contain diamonds by looking at “indicator minerals” that form along with the precious gems. The vast majority of diamonds are mined in Russia, Botswana, South Africa, Zaire, Namibia and Angola.

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4. Fipke's findings

Mining folklore credits the discovery of Canadian diamonds to Charles Fipke, a determined geologist who found them in the Lac de Gras area of the Northwest Territories in 1991 after years of dogged searching. Millions of acres were then staked by Mr. Fipke's Dia Met Minerals Ltd. and other multinational diamond players. The first mine – called Ekati – was jointly owned by Dia Met and Australian partner Broken Hill Pty. Co., and began production in October, 1998. A second mine – Diavik – owned by Toronto-based Aber Diamond Corp., (now called Harry Winston Diamond Corp.) and British miner Rio Tinto PLC, started up in 2003.

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5. Rocky times

It hasn't been smooth sailing for all Canadian diamond mines. Tahera Diamond Corp.'s Jericho mine in the Northwest Territories shut down in January after the company filed for court protection from creditors. The project was staggered by the high Canadian dollar and leaping fuel prices. In February, De Beers wrote down the value of its Canadian assets, including its Snap Lake diamond mine in the Northwest Territories and its Victor diamond mine in Northern Ontario, by nearly $1-billion (U.S.). The problem: rising costs and construction difficulties.