Edward Rochette, a hard-bitten American lawyer and a veteran of mineral exploration in 56 countries, pulls up a stool in the Square Grill Pub in central Ulan Bator and contemplates Mongolia's 21st century gold rush. The plush bar, with its fancy chairs and finger food, does not feel like an outpost of adventurers seeking their fortunes, but as it fills, the voices ordering the drinks are of Australian mining executives, British financiers and overseas-trained Mongolian consultants. They are here seeking coal, copper and gold – and lots of it.
"This is the place to be," declares Rochette as he extols the nation's virtues. "This is a frontier town."
Rochette's view of a land of opportunities is one at odds with many in this country, where about half the population live in tents (known as gers) and make their living from herding animals. Delicately poised between China and Russia, the buffer state is the size of Western Europe – but with just 3 million people, it is one of the least populated places on Earth.
However, Mongolia's fabulous reserves of gold and copper mean that it is on the brink of transformation, potentially making its people extremely rich. The International Monetary Fund expects the Mongolian economy to grow by 9.8 per cent this year – faster than China's.
The dramatic change in society is clear everywhere, no more so than on the streets of the capital where the manure from the horses of tribesmen is squelched beneath the wheels of the 4x4s of the new rich stuck in its traffic jams.
Rochette, who has his fingers in many pies in Ulan Bator and is married into one of Mongolia's premier horse breeding families, warms to his theme. "The only possible negatives are that the Government could screw it up, or commodity prices could crater," he says. "But the Government is good, and commodity prices are great."
For 16 years, Rochette worked with Robert Friedland, a controversial and charismatic mining financier who is one of the main figures responsible for discovering Mongolia's true natural resources potential. Friedland has few friends among environmentalists, but his uncanny ability to find rich veins of minerals is legendary and you will not hear a word said against him in The Square.
One of the deals Rochette worked on for Friedland was the 2002 agreement for the Anglo-Australian miner BHP Billiton to sell its rights in the Oyu Tolgoi copper-gold mine to Ivanhoe for £3 million.
Oyu Tolgoi, or Turquoise Hill, is the world's largest mining exploration project – it is bigger than Florida. When development of the mine is finished in a year or two, its output will account for more than 30 per cent of Mongolia's economy.
Oyu Tolgoi's neighbour in the Gobi Desert, Tavan Tolgoi, is the world's second largest coal deposit. Coal production doubled to 25 million tonnes last year to become Mongolia's top export, and the Government is trying to speed up the mine's development.
Robert Wrixon, the managing director of Haranga Resources, says: "Mongolia is awakening. The industry is about to take off. We are just starting out to help the Mongolians find what they've got."
But the influx of foreign interest has bred resentment. Outside of the bar, beyond the square and a huge statue of the country's most famous son, Genghis Khan, a group of fashionably dressed teenagers while away the hours at the Zaisan Memorial, a monument to Soviet soldiers killed in the Second World War.
They are keenly aware of the resources boom – and its implications. "We are a poor country. What options do we have? We need to do something today, otherwise we have to emigrate," says one young woman, Bolormaa.
There have been occasional attacks on mixed couples, usually foreign men with Mongolian women, and there are right-wing groups that oppose the arrival of so many foreigners. Much of this is focused on the Chinese, who ran Mongolia as a province until 1921 and for whom a visceral dislike lingers. However, China is set to be the prime customer for Mongolia's resources and is already its largest trading partner.
"The resources have to go to China, despite historical antipathies," says Wrixon. "Mongolia is happy to sell China commodities but is less comfortable about China having majority stakes in resource projects."
Since 1990, Mongolia has had a multi-party parliamentary democracy and – despite some violence after elections in 2008 – has largely been stable. Its Government is keen to transform the boom into meaningful jobs but there is a problem finding enough qualified locals to staff the mines. "The Mongolian Government is trying very hard to make things work," said Rochette.
The signs of the new wealth are emerging everywhere. In a pretty little pink building that was once a children's theatre on the city's main square stands the world's smallest – and fastest growing – stock exchange, founded by a descendant of Genghis Khan. The London Stock Exchange has just signed a partnership deal to take advantage of the massive international interest.
"We are pleased that we can become wealthy," says a foreign-educated young man named Bold, speaking in one of Ulan Bator's many bars. "We are very proud of our history but there is nothing much for the young people to do these days, so taking part in this is a great opportunity."
* One of the world's great nomadic cultures, modern Mongolia represents only a fraction of the 14th century empire carved out by Genghis Khan. In the 20th century, Mongolia was treated by the USSR and China as little more than a Cold War buffer state, with little development outside the capital, Ulan Bator.
More recently, Mongolia has abandoned Soviet-style one-party socialism and adopted a democratic constitution. Relations with China have also begunto change. A traditionally wary stance towards Beijing has been steadily undercut by the growing economic opportunities offered by trade with China.