Most important is diesel fuel for the drill that clatters around the clock, pulling greenish rock from 700 feet under the lakeshore. The rig sits atop a kimberlite, a carrot-shaped plug of hardened magma that geologist Eric Friedland is betting brought up lots of diamonds when it shot through a crack in the Canadian granite 70 million years ago.

Friedland's Peregrine Diamonds Ltd. and some 60 other companies - De Beers, the world's largest diamond seller, among them - are spending millions of dollars probing the Arctic in a race to replicate two massive strikes in the early 1990s. Those mines turned struggling geologists into millionaires and made Canada the third-largest producer of uncut diamonds in an $11 billion-a-year global market.

New fortunes have been elusive. Building a mine in the far north can cost $1 billion, so diamond-bearing kimberlites - called ''pipes'' in the trade - must be either huge or laden with stones. ''It's a very, very rare beast,'' says Friedland, 41.

Historically, such pipes have turned up every 10 years or so, says Buddy Doyle, head of exploration at Vancouver-based Arctic Star Diamond Corp. ''We're due,'' he says.

Whoever makes the next big find will enjoy soaring prices and eager buyers. South Africa-based De Beers boosted prices 14 percent for uncut, unpolished stones in 2004. A polished, 1-carat, flawless white diamond now sells for $15,000, up from $12,000 in 2002, according to PolishedPrices.com, based in Belgium.

''Prices are rising, and supply has never been tighter,'' says James Passin, 33, manager of the $360 million Firebird Global Fund in New York.

Passin invested $1 million from his hedge fund in closely held Peregrine 18 months ago, wagering that Friedland would beat the industry's long odds and find a rich deposit. Only 15 percent of the 7,000 kimberlites discovered worldwide bear diamonds, says Bruce Kjarsgaard, a minerals research scientist at the Geological Survey of Canada in Ottawa. Fewer than 1 percent have yielded enough stones to merit a mine.

Proving that a kimberlite is worth exploiting takes years. ''Diamond exploration is one of the riskiest businesses on earth,'' Passin says.

Canada, where many kimberlites are in the remote Arctic, is a case in point. After four decades of exploration, the country has two mines, Ekati and Diavik, 20 miles apart in the Northwest Territories. Geologists Chuck Fipke and Stewart Blusson discovered Ekati in 1991 and own 20 percent of it. Melbourne-based BHP Billiton Ltd., the world's biggest mining company, owns the rest.

Three years later, Doyle and then 26-year-old geologist Eira Thomas unearthed Diavik. Toronto-based Aber Diamond Corp., the once tiny company started by Eira's father, Grenville Thomas, owns 40 percent. The rest belongs to London-based Rio Tinto Group, the world's No. 3 miner and parent company of Utah's Kennecott Corp.

Together, the two mines produce about 11.5 million carats a year, or about 13 percent of the world's total by dollar value.

''There hasn't been a monster score in a long time,'' says John Kaiser, a California analyst who has a Web site about stocks called Kaiser Bottom-Fish Online.

Doyle, Friedland, Thomas and others are banking on ending the dry spell. Friedland is drilling in what has been the most disappointing diamond property in Canadian history: an ore body called Tli Kwi Cho. The name means dog's balls in the local Dogrib language and refers to the way the deposit - two kimberlites side by side - looks on images made by airplane- borne magnetometers, devices that measure small differences in Earth's magnetic field. Kimberlites have different magnetic properties than the surrounding granite.

In 2002, the same year Friedland founded Peregrine, BHP Billiton agreed to assess readings of Tli Chi Kwo it had taken the previous year. After the assessment, the company decided to focus on properties elsewhere. Friedland read up on the deposit and concluded that previous efforts had never reached the center of the kimberlite, missing the part of the deposit most likely to contain greater concentrations of diamonds. In April 2004, he paid an undisclosed amount for BHP Billiton's stake and raised $5 million to drill more holes.

In February, Peregrine shipped a drill over the ice road to Tli Kwi Cho. By April, the crew had extracted 150 metric tons of kimberlite from six holes, each 14 inches in diameter.

In June, Friedland announced the results: The sample returned 1,806 diamonds, 21 of which were bigger than half a carat. Overall, the drill holes showed a grade of 0.98 carats per metric ton of ore, almost three times what had been found in 1994.

Kaiser says Tli Kwi Cho may be the next big thing in Canadian diamonds, worth as much as $1 billion to a big mining company looking for a new project. On Aug. 29, Friedland announced that the stones Peregrine pulled from five of six holes at Tli Kwi Cho were worth an average of $58.54 to $77.77 a carat.

He hopes to pull 3,000 metric tons of kimberlite out of Tli Kwi Cho by situating a drill directly on top of the lake. That means waiting for the ice to thicken, probably in February.

After that, Friedland, his backers and the rest of the diehards camped on the tundra will be one step closer to knowing whether their quest to snap Canada's diamond dry spell will reward them - and their investors - with gems under the ice or whether their ambitions will crumble like the kimberlite rock they've been probing for so long.