Here is a tutorial by Chuddy Bear some time ago:
Part 1 Part 2 I used to use this exact method, but then made a couple modifications:
1) I used to contact cement too. It holds so well that if you have to rip it apart, the leather rips before the joint. In the style sheath demonstrated, there is no problem with contact cement.
However, in foldover style sheaths, or something with lots of bends, contact cement can take a while. A company called Beacon Industries makes a glue that is intended for fabrics, leather, etc. You put it on, hold it for about 30 seconds, and it holds! I feel the joint is even stronger with this glue as well. It is by far the coolest thing!
2) I used to drill holes, then I switched over to putting a sharpened, hardened finishing nail in my drill press and punching the holes. I like the results much better, although it is harder to do. Now I have a leather stitching machine, so I do neither.
3) If you are going to sand the sides away, cutting leather with a quality pair of tin snips is a breeze. Cutting with a razor is a learning curve, and not bad after you get used to it. I was doing it for years. Then a friend says "why don't you do this!" It was so easy, I could not believe I was not doing it.
Good luck with your leather, and let us know how it goes!
Brian