I always thought that a Chapter could recover even if there was only a handful of Space Marines left. It would just take a VERY long time.
Here's the link to an article on GW's site about the Creation of a Space Marine. It's been a while since I've read it and not quite sure how it's done, but it should give us the answer. I'll reread it myself later as I don't quite feel like reading it all right now.
http://us.games-workshop.com/games/40k/spacemarines/extras/creationofamarine/default.htm
Here's the link to an article on GW's site about the Creation of a Space Marine. It's been a while since I've read it and not quite sure how it's done, but it should give us the answer. I'll reread it myself later as I don't quite feel like reading it all right now.
http://us.games-workshop.com/games/40k/spacemarines/extras/creationofamarine/default.htm