The Diamondvale mine is located in the northeast of the Merritt coalfield, approximately 1 kilometre east of Merritt and 250 kilometres east of Vancouver.

The Merritt coalfield consists of several areas of isolated Tertiary sedimentary outcrops that occur with a 15-kilometre radius and cover an area of 105 square kilometres. More recent volcanics overlie some of the Tertiary sediments. Faulting and rapid lateral changes in stratigraphy have made seam correlation and underground mining very difficult. Up to ten coal seams containing high-volatile bituminous B-rank coal occur in the Eocene Coldwater Formation (Princeton Group), interbedded with sandstone, shale and conglomerate. The timing of the coal deposition coincides with the Laramide orogeny. Due to the instability of the depositional environment, coal seams can reach extraordinary thicknesses but exhibit extreme variation over short distances with seams tending to merge, split and exclude lots of partings. This has the effect of creating small areas with excellent coal development conditions. The seam numbers and thicknesses vary across the Merritt coalfield with seams lensing out into shale laterally and commonly containing seam splits. The number and thickness of coal seams decreases slightly from Coal Gully Hill (MINFILE 092ISE066) to Coldwater Hill (MINFILE 092ISE081), and significantly more toward the Normandale mine (MINFILE 092ISE061) in the east and the Sunshine mine area to the north of the Nicola River.

Six coal seams of high-volatile bituminous B-rank occur in the Middle Eocene Coldwater Formation (Princeton Group), interbedded with predominantly shale and sandstone. Five of these seams are known from mine workings and outcrops and two have been mined in the Diamondvale Numbers 3 and 4 mines. The seams at the mines range in thickness from 0.4 to 1.7 metres and include several shale and bone coal partings. Boreholes on the property have intersected coal seams up to 4.2 metres thick. A sample of Diamondvale coal contained 1.82 per cent moisture, 3.27 per cent ash, 36.99 per cent volatile matter, 57.92 per cent fixed carbon and 0.80 per cent sulphur and yielded 14 184 BTU per pound.

The structure consists of a southwest-dipping monocline striking approximately 235 degrees and dipping approximately 27 degrees southwest (steepening downdip). The area might be separated from the Coldwater area to the southwest by a broad northwest-trending syncline.

The Geological Survey of Canada first reported coal in the area between 1877 and 1878. From 1892 to 1904, three holes were drilled and coal outcrops along the Coldwater River were mined. In 1906, the rail connection to the main TransCanada rail line was completed and regular commercial coal production began. That year, the Nicola Valley Coal & Coke Company and the Diamondvale Coal & Iron Company began coal mining operations in the area. Nicola Valley Coal founded the Middlesboro Colliery approximately 1.6 kilometres southwest of Merritt. Most of the coal produced was sold as railroad coal. The Coldwater River formed the property boundary between the Middlesboro Collieries and the Diamondvale Coal & Iron Company holdings. The Middlesboro Collieries Number 2 mine in the Number 2 seam on the western end of Lot 166 (containing MINFILEs 092ISE066 and 092ISE081 and now contained within Coal License 389548) was driven toward the Coldwater River. The mine reached the property boundary at several points and was still in coal at these locations. Even though a significant amount of coal remained, the mine was eventually abandoned and allowed to fill with water. Middlesboro Collieries operated two mines on Coldwater Hill until 1944. The Diamondvale Coal & Iron Company sank several shafts on Lot 122 (northeast of Lot 166) near the boundary of the Number 2 Mine belonging to Middlesboro Colliery. Coal was reached but the mine was abandoned in favour of smaller seams on the eastern side of the basin. Seams at the Diamondvale operation were mined intermittently, but as of 1948 total production was less than 45 360 tonnes (50 000 short tons; Coal Assessment Report 150).

In 1910, the Coal Hill Syndicate began mining operations on Lot 1227 on the western boundary of the Middlesboro Colliery. Mining took place in the same seams as the Middlesboro mines. Yearly production was entirely dependent on railroad demands and in 15 years the mine produced more than 453 592 tonnes (500 000 short tons) of coal. Pacific Coast Coal Company later sank a shaft immediately north of Lot 166. A coal seam was reached within 30.48 metres (100 feet) of the surface; however, the coal was not of satisfactory quality or thickness and only a minimal amount of work was completed before the operation was abandoned. In 1912, an explosion at one Diamondvale mine killed seven people, after which production ceased. Government records from the time refer to a dangerously gassy adit on the Diamondvale property.

After 1945, Samuel Gerrard continued small-scale mining on Coldwater Hill. In an effort to rejuvenate coal mining in the Merritt area, the BC Department of Mines sponsored a 1946 drilling program that targeted the area between Coal Gully and Coldwater hills. Results of this drilling proved the continuity of coal measures between the two hills and on the eastern side of the Coldwater River. In the 1940s, Coldwater Coal Mines acquired the lots formerly owned by the now-dissolved Middlesboro Collieries and Diamondvale Coal companies. The lots formed a continuous property running approximately northeast to southwest through the Merritt coalfield. Coldwater Coal Mines dewatered the abandoned Number 2 mine on Lot 166 to within 213.36 metres (700 feet) of the portal. Very little caving was encountered and moderate amounts of coal were successfully recovered from the pillars. By 1948, a total of more than 1.81 million tonnes (2 million short tons) of coal had been produced by coal seams mined on the southwest side of the basin. Most of the coal was produced from several medium-sized mines rather than a single large operation. One mine projected more than 609.6 metres (2000 feet) from the portal, but most extended a much smaller distance. Seven larger coal mines and numerous small coal mines were in operation in the area. The last coal mine in the area closed in 1963.

Imperial Metals acquired Lot 166 from Samuel Gerrard and in 1960 drilled 16 rotary drill holes totalling 1157 metres on Coal Gully and Coldwater hills. Two of the sixteen holes were later deepened by diamond drilling. From 1968 to 1969, Sumicol Consultants Company Limited of Japan Co. evaluated the property, providing an estimate of 35 million tonnes indicated resource on Coldwater Hill and recommending an underground mining operation. A detailed coal-sample analysis was conducted in 1970.

Shell Canada Resources and its subsidiary company, Crows Nest Resources, optioned the property from Imperial Metals from 1978 to 1982. During this time, 24 holes were drilled, most on the north end of Coal Gully Hill. From 1978 to 1979, exploration work included detailed geological mapping, bulldozer trenching on coal occurrences and a location survey that included all locatable coal occurrences, drillholes and mine portals. Geophysical surveys, including reflection and refraction seismic and resistivity surveys, were conducted on Coal Gully and Coldwater hills. Results from the surveys were considered questionable. During this time, 3877 metres were drilled in 20 rotary drill holes. All but one of the holes were drilled on Coal Gully and Coldwater hills. Most of the drilling was completed on the south end of Coal Gully Hill and on the flat foreground where a small potential pit had been delineated. The delineated pit contained an estimated 5.1 million tonnes of geological in-place coal reserves. At the request of the District Mining Inspector, Crows Nest Resources bulldozed all the old portals that could be found on the property in 1979. In 1980, Crows Nest Resources drilled three holes totalling 663 metres in the Normandale area without encountering any coal seams of commercial mining potential.

As of 1983, coal was reported to be burning underground on Coldwater Hill and hot steam was escaping from shafts on Coal Gully Hill, although coal exposed by old mining operations was standing well at many other locations. In 1991, the BC Geological Survey drilled four holes. One hole drilled at Diamondvale intersected three coal seams. Analysis of the drilling results determined that the Merritt coalfield had good potential for methane gas.

Forum Ventures Limited acquired a 50 per cent interest in the Merritt Coal property from Imperial Metals Corporation in 2001. Shortly thereafter, Forum Ventures acquired additional claims in the vicinity of the Merritt Coal property, including the Diamondvale property. Forum intended to investigate coalbed methane and conventional coal mining opportunities. At the time of acquisition, the property was in the very early stages of evaluation for coalbed methane potential. Shortly thereafter, the company changed its name to Forum Development Corporation. By early 2002, Forum had acquired 100 per cent interest in the Merritt coal property. In 2003, Forum retained Westwater Mines Limited to guide coalbed methane activities on the property. A Notice of Work and Reclamation was submitted later that year, which proposed a work program consisting of three drillholes totalling 962 metres to test the full thickness of coal measures in the Coldwater Hill area and assess the potential for coalbed gas production and coking blend or thermal coals. In 2004, the company had initiated a baseline ground-water survey and planned to drill a 455-metre borehole to test the potential quantity and flow rates of natural gas from coal seams and to recover samples for coal quality and gas desorption testing. By 2006, Forum Development Corporation had ceded their interests in the property. As of 2010, the Merritt Coal property was owned and operated by Robert Frederick Weicker.

Between 1906 and 1963, approximately 2.6 million tonnes of coal were produced from underground mining operations in the area (Coal Assessment Report 762). Approximately 80 per cent of the coal production in the area occurred at Coal Gully Hill. From 1932 to 1936, Middlesboro Collieries produced 124 150 tonnes (136 852 short tons) of coal (MacDonald, 1936). Between 1906 and 1944, Middlesboro Collieries was able to recover more than 9071 tonnes (10 000 short tons) of coal per 0.4 hectares (1 acre) of ground broken (Coal Assessment Report 150). Mines at Diamondvale produced 42 087 tonnes of coal before closing in 1945 (Press Release, Forum Development Corporation, November 27, 2001). In 1983, an unofficial resource estimate indicated 11.4 million tonnes (5.1 million tonnes of indicated and 6.3 million tonnes of inferred in-place reserves) of surface resource at Coal Gully Hill and 120 million tonnes (40 million tonnes of indicated and 80 million tonnes of inferred in-place reserves) of underground resource in the Coal Gully Hill, Coldwater Hill and Diamondvale areas (Coal Assessment Report 762). In 1989, a resource estimate for the Merritt coalfield (not National Instrument 43-101 compliant) was released stating measured geological reserves of 10 million tonnes, indicated reserves of 20 million tonnes and inferred reserves of 40 million tonnes of high-volatile bituminous B-rank coal, respectively (Open File 1992-1; Geological Survey of Canada, Paper 89-4). The predominant rank of coal in the Merritt coalfield is high-volatile A to C bituminous coal.