I just bought some carbide bits from ebay. They're not too expensive (I 
think) 
http://cgi.ebay.ca/ws/eBayISAPI.dll?ViewItem&item=150350480017&ssPageName=ADME:B:EOIBSA:CA:1123. 
The bits are 1/32" with 1/8" shank. Fit perfectly in my Dremel. I'm 
going to make a very simple drill press like this: 
http://www.instructables.com/id/PCB-Drill-Press-Using-Salvaged-Door-Hinges/ 
using a few pieces of scrap wood and door hinges (I'm going to look for 
the ones which don't wiggle around). I calculated the amount of 
horizontal movement for the bit. For a 1" vertical motion, the net max 
horizontal movement for the bit is around 1 mm. Of course, the PCB is 
very thin, and vertical movement a lot less than 1" is required - 
resulting in very very small horizontal movement for the drill bit. 
Therefore, this design seems to be effective for my purpose. I hope this 
works out.

Note: my Dremel has a top speed of around 30 000 RPM - should do the 
trick nicely. Also, I'm going to buy the thinner 1/32" FR4 copper board 
(as opposed to the 1/16" FR4 copper board that I have now). Easier to 
cut, easier to drill, more flexible and cheaper.

I wonder why paper phenolic boards are so hard to come by these days... 
I bet they're easier to drill and much less of a hassle for hobbyists.


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