(FORTUNE Magazine) – I was in Mongolia, doing your standard business interview with a local gold-mining executive named Myanganbayar, when a member of the band he sponsors walked into the conference room, wearing a tan velour FUBU jumpsuit. Myanganbayar was in the process of explaining his business, Mongol Gazar, Mongolia's second-largest gold-mining company and the employer of 700 people. He mines two tons of gold a year and has revenues that are "not a little." The company started off in the cashmere business and then moved into the hotel business but settled finally in its current incarnation in 1992, once it became clear that gold mining in Mongolia was the "same as printing money."

Myanganbayar--32, short, wearing a gray Marvin Martian T-shirt, smoking Korean cigarettes--took an envelope of concert tickets from the kid in the jumpsuit. The band is called Camerton, and it is the most popular boy band in Mongolia. Besides sponsoring Camerton, Myanganbayar is the benefactor of the country's biggest annual fashion show, Goyol. He's also married to a fashion model and former Miss Mongolia contestant.

Still, you have to separate yourself from the crowd. So Myanganbayar was also the first person in Mongolia to have a Hummer H2. Hummers have to be hauled in from Russia at about $90,000 a pop. His is black and retains the sticker, half peeled off on the back window. Competition being what it is, there are now nine other H2s in the country. One is red, another belongs to the local sumo-wrestling champion, and--can a working man never rest?--seven of the nine H2s belong to other gold miners. It's just that hard to keep up.

Oh, to be young and rich in Ulan Bator.

There is, at this moment, a flat-out, run-for-the-hills gold rush in Mongolia. In fact, if you were Mongolian, you would probably be about to quit your job. You might go from, say, cashmere into gold, as Myanganbayar did. You could go to work for one of the international mining giants that have recently come to town, like AngloGold. Or you could easily be one of the 30,000 people from all across Mongolia--600,000 square miles of mountain, desert, and steppe, where livestock outnumber people 12 to one and the average menu is likely to include a choice of mutton, mutton soup, or mutton dumplings--who have heard the rumors, packed up the ger, and lit out for the gold fields to strike it rich. (A ger, a circular felt tent, is known elsewhere as a yurt.)

The starting point--the initial clink!--of the Great Mongolian Gold Rush took place in July 2001, when a Canadian company called Ivanhoe Mines announced a large gold and copper deposit at Oyu Tolgoi, which is Mongolian for "turquoise hill." Within days of the discovery, mining companies from around the world were drawn to the Gobi like sharks to blood.

Today 18 drilling rigs and 200 people are working round the clock at Ivanhoe's Oyu Tolgoi site, which is the biggest mining exploration project in the world. According to the most recent estimates from the company's independent consultants, the ore body could hold 14 million ounces of gold and 19 million tons of copper, which would make it the second-largest gold-copper deposit ever discovered, with a combined metal value of $46 billion at today's prices.

For a chunk of metal buried nearly half a mile beneath the Gobi, the deposit has generated an extraordinary amount of worldwide attention. The timing couldn't be better. Copper is trading near six-year highs. Next-door neighbor China passed the U.S. as the largest consumer of copper in the world in 2002, and demand there shows no sign of slowing. Meanwhile gold is having a renaissance of its own, trading near $402, its highest point since 1996.

On top of all that, mining companies everywhere have been starved for business. Since the Bre-X scandal in 1997, when a highly touted mine in Indonesia turned out to be full of nothing, exploration money has been particularly hard to come by.

So there is a lot at stake here in Mongolia. The country itself, which desperately needs the money, is all but counting its chickens: Even the Prime Minister, N. Enkhbayar (most Mongolians use only one name; fancy Mongolians will occasionally have an initial), is talking about how the latest gold and copper finds will double the country's GDP.

Double the GDP! One of the largest copper-gold discoveries ever! Boy bands! Hummers! It hasn't always been so in this desolate country. Mongolia's potential mineral riches have been common knowledge among geologists since the dark years of Soviet domination, when Russian scientists thoroughly mapped it all out. "For a long time it was quiet," says Jargalsaikhan, chairman of the Mineral Resources Authority, gleefully smoking a Parliament, then stubbing it out. "Then it was poof! poof! Lots of noise."

TOXIC BOB

The biggest noisemaker in Mongolia can barely contain himself. As our plane approaches Oyu Tolgoi, Robert Friedland unbuckles his seat belt and runs up the aisle of the Air Mongolia turboprop. "Look!" he exclaims. "Out the window! We own the exploration rights 500 kilometers that way and 700 kilometers that way!" Friedland, Ivanhoe Mining's 53-year-old American chairman, is speaking to a clutch of visitors who include two mutual fund managers, two mining analysts, and other highly interested parties. About twice a week Ivanhoe loads up a chartered Air Mongolia plane with investor types and flies them to Oyu Tolgoi. "So, with the curvature of the earth," Friedland continues, "that's about six times the distance the eye can see!"

Friedland's usual plane is his Gulfstream V, which he's been flying all over the world, drumming up interest in Oyu Tolgoi. His stated mission is for Ivanhoe to build the mine itself or bring in another partner. He also spends a lot of time making friends in China, the primary market for any metals he extracts.

The first thing you notice about Friedland is his inability to stop waxing rhetorical about Oyu Tolgoi. After we land and arrive at the camp, his rapid-fire superlatives intensify. Ivanhoe has exploration rights to 46,000 square miles, which is the "largest privately held land position in the world!" It's bigger than Florida, he says, five times the size of Belgium. (Well, bigger than Ohio, at least, and four times the size of Belgium.) So far the company has drilled more than 150 miles of holes. The new UDR 5000--the biggest mining drill in the world, flown here by the biggest plane in the world, a Russian Antonov--can reach nearly two miles into the earth's crust, where it's pulling up core samples of 0.73% copper and 0.17 grams per ton of gold. That copper quotient is "bonanza great," Friedland says, "off the end of the scale," and the "highest-grade copper porphyry ever discovered."

If you've ever heard of Friedland, you probably know his nickname, "Toxic Bob," which he was saddled with in the mid-1990s when an EPA Superfund project spent $200 million to clean up a gold-mine project he had financed in Summitville, Colo. If you know that, you might also know that before Oyu Tolgoi, the last big thing in mining was also a Friedland project--a nickel discovery in Voisey's Bay, Labrador, that he sold to Inco in 1996 for $3.3 billion, although the value of the find ultimately wound up being less than the purchase price. Inco had to write down $1.6 billion on the project, which is only just being built now. Friedland, meanwhile, took home about $310 million from the deal. (His 40% stake in Ivanhoe is currently worth around $820 million.)

Friedland has been extremely fortunate. "Now the question is, Has Robert Friedland done it again?" says Tony Lesiak, a mining analyst at HSBC in New York City. "Could someone be that lucky--to find two sites of that magnitude in a ten-year time frame? Most people look their entire lives and don't find anything like it." A more pointed question: Could all this Mongolia mania be another Bre-X? No, at least not in the sense that there's possibly nothing there. The real question is how big the find is and how costly it will be to extract. No one will have the answers to those extremely important questions for at least another year, when Friedland's team finishes drilling and studying what comes out of the holes.

BLACK-MARKET CARTOGRAPHY

Mongolia's hopes are based on two big ifs: whether the current mining boom is sustainable and whether Ivanhoe's project lives up to expectations. For now, more than 30% of the population still lives in poverty. Ulan Bator itself, where a quarter of the population of 2.7 million live, is shabby and depressing. Drunk men stumble the icy streets day and night, relieving themselves in public view and passing out cold on the sidewalk. Dirt-covered street kids beg for money near the expat restaurants and sleep in the sewers near the hot-water pipes at night. Around the clock, smokestacks to the south and west pump thick gusts of exhaust into the air, which settles over the city at night like low fog, diffusing the light given off by street lamps.

Under such conditions it's easy to see why everyone in Mongolia is so eager for an economic silver bullet. "I overhear conversations all the time, people sitting around, having beers, talking about how they can get a piece of the action," says Layton Croft, who has been in Mongolia for the past seven years--first with the Peace Corps, now with the Asia Foundation--and speaks passable Mongolian. "You know, stuff like, 'My mother's brother's uncle who works in the land title deed office knows a guy who sold a claim to a foreign company for $200,000. If only we could get a deal like that.' There are real stories out there of people winning the lottery--and for a lot of people now, that's what mining is: a lottery. And a not entirely implausible one."

If mining is Mongolia's lottery, to get a ticket you need to stake an exploration claim. The best way to do that is to show up at offices of the Mineral Resources Authority in the middle of the night. This is according to Ulziisaikhan, 32, who has worked there for five years. When a well-known claim expires, she says, it will be announced in the paper. You sleep in your car to make sure you're first in line when the doors open. When they do, be ready to tussle: Fights often break out, and the office had to be moved from the third floor to the first, nearer security, after a small mob broke the lock and busted the door in. More than 30% of Mongolia is now under claim, according to Jargalsaikhan, the chairman of the Mineral Authority.

There are other ways to find a good claim that no one else is after, such as going to the Mineral Authority's archives and poring through room upon room of documents and logbooks for 50 cents an hour. You would, of course, have to know your geology. And who wants to do that when you can buy the real inside dope--by tapping into the black market for Russian maps?

Besides being brutal and heartless--mass executions, wholesale destruction of Buddhist temples, and so forth--the Soviets were thorough and systematic loggers of important geological data. (There are even rumors that the very best stuff is locked in a vault in Moscow.) Some of the geologists are still around, and what they know is all of a sudden very valuable.

And so it came pass that I met a secretive man in a dark bar called the Chinggis Club to talk about Russian maps. He said he'd chosen the place because he knew it was safe. The only other person in the bar--it was 11 A.M.--was his associate, who sat two tables behind us, smoking cigarettes. (Almost everyone in Mongolia smokes cigarettes, and the custom at meetings is to arrive, neatly organize your materials--pack, lighter, ashtray--just to the side, and then smoke as many as you can.)

Once it was clear that I was not from the government, the police, or the Russian mafia, the man began to explain why he was so sure his claim was going to make him rich. His story involved an old Russian geologist, late-night vodka drinking, and a box of handwritten maps. He said he'd paid, stone sober, over $500,000, smuggling the payoff in installments of cash stitched into the lining of an old coat. He noted that he had recently begun a drilling project on the property, and he expected to make $7 million next year on it.

After all that, he decided it would be okay to give his name. It was Bayaraa. In fact, here was his number too. And his claim registration number. On his way out he mentioned that if I knew of any foreign companies that might be interested in financing such a project, he was looking for a partner.

NINJAS

Of course the vast majority of the people involved in Mongolia's gold rush have nothing to do with black markets, Hummers, and G5s. Most of them are just trying to make ends meet.

In fact, large swaths of the country are dotted with wildcatters--groups of people who have left home to take up digging and sifting for gold full-time. There are roughly 30,000 of these "ninjas," as everyone calls them, and their numbers are growing by about 5,000 a year. (They're called ninjas because they wear their green plastic pans on their backs, and someone thought it made them look like Teenage Mutant Ninja Turtles.) Big scores are rare; the average ninja makes $10 or so a week. Many students on summer break will arrive at the gold fields with their parents to help pay tuition.

The largest ninja mining area in Mongolia is at Zaamar, about a five-hour drive from Ulan Bator. There are only a few paved roads outside the city, and the one to Zaamar runs out about halfway and then continues through the mountains over dirt and packed snow. Along the way you pass the occasional ger, trucks full of animal skins, and roadside towns that look like sets in a Western.

On the snowy hillsides of Zaamar, the ninjas are at work, usually in teams of three or four. They use heavy iron stakes to dig holes ten to 15 feet deep. When they reach a depth where the gold content is strong, nearby holes will be connected underground, like a rabbit warren. When the hole is done, one of the ninjas will climb down to the bottom with a candle and dig out a bucketful of dirt. The bucket is pulled up by another ninja on the surface and delivered to a third member of the team, who sifts it. This last ninja, on one team I watched, squatted on the edge of a hole cut in a shallow, frozen pond, where she ran the icy water through the dirt to sift out the gold. She wouldn't talk about her pre-ninja life but was happy to show off the day's work--a tiny dusting of gold flecks collected on one side of a little round yellow case, which she quickly snapped shut and popped inside her glove.

THE CAMEL DEPARTS

"We love what we do," Friedland says, bristling at the suggestion that he's merely a promoter. We're on another Air Mongolia flight to Oyu Tolgoi, this time with a new set of co-passengers--musicians, acrobats, and a man known as the "Liberace of Mongolia." We're on our way to another Ivanhoe PR event--the second annual State Camel Polo Championship. The event features a 14-team tournament; a ten-kilometer, 70-camel cross-country race; and lots of handshaking, camel-cheese eating, and vodka-shot drinking between Friedland and various politicians from around the south Gobi.

Friedland goes on: "This is great shit. We go to strange places and meet interesting people. We're in Zambia one day and then in Angola or Russia the next. We've seen civil wars, and anacondas in Guyana, and swarms of mosquitoes in Labrador that could take down a caribou. We've been all over the planet. We've got hot showers in the Gobi Desert. Hot showers in the Gobi Desert! You think that's easy? I mean, who the fuck has a camel polo championship at their company? Nobody!"

After we land Friedland put on native winterwear--a traditional Mongolian winter cloak and a square, furry hat--got on a kneeling camel, and readied himself to assume his role as master of ceremonies. The huge, shaggy, double-humped animal stood up. It bucked forward, bleated loudly, and then, despite the event organizers' desire that it remain in place for a few more quick photos, went trotting off into the Gobi with Toxic Bob on its back, holding on for dear life.

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