In northern Colorado, located 4½ miles west of Highway 287 and less than a mile from the Wyoming border
at 5850 feet, is a rarity of geology that few people know about, even ones that have lived in Larimer County
all their lives…a diamond mine.  And this is not the only Kimberlite deposit, found in this arid alpine environment.
There are at least 4 near-by claims that have produced diamonds in Colorado and at least four others just
north in Wyoming.
         More info here
Map (of sorts) of the Kelsey Lake area found here

   World-wide only 14% of Kimberlite deposits are diamondiferious.  Here almost all of the Kimberlite deposits
are diamondiferious. The Kelsey Lake Group diatremes are part of the State Line Kimberlite District in the
very northern end of Larimer county Colorado, in the Front Range, of the Laramide Orogeny, which stretches
from Alaska to Mexico (1994-1998 Encyclopædia Britannica, Inc.) and is part of the Rocky Mountains.

   The area is thought to have been formed by a backarc thrust belt caused when the Pacific coast lithosphere
started subducting under the Pacific coast volcanic arc, from British Columbia to southern California about 65
million years ago.

Drawing by Malcolm.McCallum Ph. D. Colorado State University

  These carrot or funnel shaped volcanic breccias were produced when explosive igneous intrusions burst through
the areas Proterozoic granite & gneiss terrain.  Fracturing the overlying limestone from the Cambrian, Ordovician
and SILURIAN periods.  It had been thought that since Colorado was above the sea or the layers were eroded
or not deposited, there were no Silurian (443-412mya) layers. And so far only pocket, not layers of Silurian age
have been discovered.

As to the point of the mine being open?  Here is a EPA wetlands impact statement from
March 13, 2003, this is a public document, found on the internet. Look for the latest overlay
on Google Earth.  The latest image of ths site looks as though the area has been "reclaimed"
and hence closed!!                                             June 1, 2007  TomT

Colorado Diamonds, rocks & Minerals, Sept. 2000, Jack A. Murphy-curator of geology in the
Department of Earth and Space Sciences at the Denver Museum of Natural History.
                                                                                                        Copyright 2000 Heldref Publications.
Kelsey Lake Open Pit Diamond Mine
                Link for  'Diamond Ring' Forum

  The Kelsey Lake group has the distinction of holding the record for North America’s largest faceted diamond,
16.86 carets cut from a 28.18 carat crystal (Denver Post 1997).   In 1997 it was reported that the mine was
producing 65% gemstones, 50% weighing more than 1 carat and 35% industrial crystals.
                                    Found at: http://minerals.usgs.gov/minerals/pubs/state/985698.pdf

 In 2000 the mine was sold by Redaurum Limited, to McKenzie Bay International Ltd (to Gary Westerholm, Brighton, Michigan),
since then it has closed down and seems to have gone into bankruptcy.
  This is an open pit mine, oxidized Kimberlite has been recovered as deep as 350 feet and they recovered diamonds
from less than 2 mm in diameter to 4.6 carets per 100 tons.   From page:
 

 The pipe’s first ½ kilometer down breeches through lower Paleozoic sediments, from there to at least 5 km. is a layer
of upper crustal Precambrian crystalline rocks.  The pipe itself was originally covered by a intrusive breccia of Kimberlite,
down to about 1½ km.  Below that to at least 5 km is a massive (hypabyssal- igneous rocks of undetermined mode due to
it’s microscopic crystalline makeup) Kimberlite. This information was gathered from a Wetlands Impact Summary submitted
on March 14, 2003.  For 9.4 acres on-site, on a tributary to fish Creek.
                                     KM_Maps580294d.pdf
                      From http://www.nwo.usace.army.mil/html/od-tl/pn/580294t.doc

It was thought early on in the discovery process that the Kimberlite/Lamproite pipes were of the Early Devonian age
(390 mya), but more recently it has been determined by radiometric dating that some of these diatremes are as old as
640-570-  that's Precambrian age!  Yet pipes can be found in the world as young as 20 million years.

To Find Diamonds:
   Start searching for placer diamonds, work a pan upstream, since diamonds are quite dense, they will
settle to the bottom of the pan much like gold.  When searching for pipes in-situ, take note that being a breccia, Kimberlite,
will easily erode on top of the ground, but be aware of craters or maars, unless this is an area of intense glacialization.
At the surface oxidized Kimberlite appears yellow, at depth  it’s bluish, while unaltered it exhibits a dark greenish-brown color.

Then also look for characteristic indicator minerals such as::
Diopside-              CaMgSi₂O₆
Enstatite-              MgSiO₃
Pyrope Garnet-   Mg₃Al₂(SiO₄)₃
Ilmenite-                FeTiO₃
Magnetite-           MnO(OH)
Olivine-               (Mg,Fe)₂SiO₄
Phlogopite-        K Mg₃ AlSi₃ O₁₀ (OH)₂
Perovskite-        CaTiO₃
Spinel-                MgAl₂O₄
Pictures of these minerals were found at:  http://mineral.galleries.com/minerals/by_name.htm
From Dr. Ralph Moberly, Professor, Department of Geology and Geophysics, University of Hawaii, Honolulu, HI 96822
at: http://www.soest.hawaii.edu/GG/ASK/diamonds.html.

                                     Pyrope Garnet has been found in this area
 A new and exciting method to locate Kimberlite deposits has just been tried. Recently a NorthwestCanada Company,
Diadem Resources, Ltd has been locating them by hi-resolution aeromagnetic survey & mapping.  Below are some results.
'   Diamond concern in Canada .  

Several miles north of the Kelsey Lake group, Diadem has identified several areas of magnetic anomalies for Fleck Resources Ltd.
(Fleck Resource Ltd., Press Release, April, 15, 1997).
                                                                                                                                                                            Starmon