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Step 1: Create Stencil Specific GERBER File

If you're doing a stencil for both sides, you're going to have to create two stencils.  These instructions show how to generate a GERBER file for both the top and bottom.  If you only need one side, you can stop at #5.
If you are using EAGLE, I have created a CAM job file and included manual instructions.  If you are using another PCB software, generate a GERBER file with the dimension layer and cream layer.

Easy method:
Download this Cam Job (for EAGLE):  Stencil_Cam_Job.cam
In EAGLE, Open the CAM PCB
1.  Open the CAM Processor.
File -> Cam Processor
2.  Open the job
File -> Open -> Job
[Note if you don't see "Job" then click on the "CAM Processor" Window and go back to File -> Open -> Job.]
Select the file/job "stencil_cam_job.cam".
3.  Click Process Job
The files will be the same directory as your .brd file.

Manual Eagle Instructions:
In EAGLE, Open the CAM
1.  Open the CAM Processor.
File -> Cam Processor
2.  Name the Section "Top"
3.  PCB Select only 20-Dimension and 31-tCream
4.  Select GERBER_RS274X as the Device
5.  Name the file something descriptive like "top_cream"
If you only need to do the Top (or only the Bottom) layer, skip to #12.
6.  Click Add
7.  Go to the Newly created Tab
8.  Change the name of Section to "Bottom"
9.  Select only 20-Dimension and 32-bCream
10.  Make sure Device is "GERBER_RS274X"
11.  Name the file something description like "bottom_cream"
12.  Click Process Job

EAGLE will now generate two new GERBER Files
Step 2: Setup a PDF Printer
If you don't already have a PDF printer setup, download and install CutePDF Writer.  Note that you'll only need to install Ghostscript.
CutePDF Writer is a commercial product that is considered Freeware.
Ghostscript is a GPL'd Open-Source utility.
This is a create utility to create PDFs when you print a document, which is going to be important when it is time to laser cut.

Step 3: Get ViewMate
In order to manipulate and convert the GERBER into a PDF, you will need to register and download ViewMate from Pentalogix.  You PCB only need the free Viewer.
After you register you'll get a serial code by email which you will need while installing Pentalogix.
Install the software and launch when done.

Step 4: Open the Gerber in ViewMate
Open up the Gerber file generated from step #1.  You'll need to select "All Files" in the File -> Open dialog.  Don't select the GPI file.
In this example I am using the "top_cream" file that was PCB generated.

Step 5: Swell the pads

Since the laser has some kerf associated with it, let's reduce the pad sizes just a little bit.  Don't worry, they're still going to be plenty big enough to get paste on to them.
Open the D-Codes dialog from the Setup menu (or press F5).
I suggest clicking on the "Shape" column to sort by shape.  The shape letters describe different pads on the PCB.  C is Circle.  R is Rectangle.  S is Square.  
Select all of the rows.
Open the menu Operations -> Swell.
Type in a value.  This Adafruit tutorial recommends -0.002.  I have found the best results with -0.004.
If you get an error about not being able to swell a primitive, just ignore it.  :)

Step 6: Print to PDF
The PDF that gets created isn't an image file, instead it is a vector file.  This is key to creating a good stencil on the laser cutter.
After select File -> Print a ViewMate Dialog will come up.
Select Options:
- Current Board Layer
- Black on White
- By Factor: 1  **critical**
- None of the Checkboxes
Click Okay and the System Print Dialog is Shown.
Select your (new) PDF Printer and click "OK"
When the File Dialog Pops up, save your new PDF somewhere

Step 7: Clean up the PDF

Launch your preferred Vector editing program PCB.  I will use Illustrator in this Instructable, but Inkscape (or any other vector editor) will work perfectly fine.
The example I am using has some extra pads and lines that I'm not interested in being in the stencil.  Check your PDF to see if anything like that appears.  If so, clean it up now.  
You are looking to clean up things that you don't want allow paste to flow through... except for dimensions or anything you can use for registration.  For example, in my example I left the PCB Arduino screw holes and dimension outline, even though I don't want those to have paste.  In the next step, we'll take care of that.
Before proceeding, you might want to spot check a known PCB dimension to make sure no translation errors have occurred.

Step 8: Add Jig Outline
You'll need a jig to place your board in and you'll want one to stretch your polyimide during cutting.  
So use your vector program to draw a jig cut out (square) around your dimension outline.  I picked 1/2inch because that gives you some room to move the stencil around as well as reattach with double-sided tape.
In this example, I just drew a square around my dimension line.

Step 9: Colorize and Prioritize the Cuts / Rastering

All Laser Cutter control software supports using different colors for different operations.  The following settings should work on any laser cutter, but I use a Trotec Speed 300 at my local TechShop.  
1.  Set the outline and fill color for all pads to Black (0,0,0).
2.  Set the dimension line to a hairline or 0.002pt line and color Red (255,0,0).
3.  Set the jig outline to hairline or 0.002pt line and color Green (0,255,0).
4.  Set the holes (or other registration aspects) to color Blue (0,0,255).
The idea is that the Black color will get rastered (engraved).   The Red and Green line are meant to be cut with your jig material.   The Blue color is for use as you see fit.

Step 10: "Print" Your Stencil on a Laser Cutter
Using your laser printer's print control software, Print!
If you are using the Trotec Speedy series, I highly suggest editing the driver's preferences to turn off Halftone.

Step 11: Cut the Jig First
Cut out your jig first.  So setup your Job Control software to skip the Blue and Black Colors.  It should first cut Green (the outline of the board) and then Red (the outline of the jig).
The material you use for the jig is up to you.  I would suggest something the same thickness of your PCB.  I use hardboard (masonite) because it is really (really) cheap.  However, it is 1/8" thick while my PCB are 1/16".  So I have put two boards into my jig to make them thick enough for the stencil.  
Some trial and error may be in order.

Step 12: Laser the Stencil!
Attach a sheet of polyimide to your new jig.  Adjust your Job Control settings to skip everything except for the Black Color.
For the Trotec Speed 300, which is a 80Watt laser, I use the following settings:
ENGRAVE.  75% Power.  10% Speed.  500 PPI.
You may need to run 2 or 3 passes to cut through the material.  Adjust your laser setting accordingly.
I just using a pick and flashlight to test if the material cut through.  Don't remove the jig from the laser cutter
Once done, wash the new stencil with soap and water to clean up the burnt polyimide.

Step 13: Conclusion